Cover Story

ing the Skill Crunch

January 2011

In February 2008, CW’s cover story on the manpower shortage in the construction industry highlighted the need to add about 5 million people every year to sustain the industry’s growth rate. More than two years hence, there has been little improvement in the state of affairs, more so in the skilled workforce segment where a survey suggests the numbers are actually going down rather than up. Janaki Krishnamoorthi investigates.

In the past decade, the construction industry has become synonymous with growth. According to a study conducted by the National Skill Development Corporation in 2008, the industry has grown at a CAGR of about 11.1 per cent between 2000 and 2008 owing to massive infrastructure investment and rapid rise in housing demand. Being a manpower-intensive industry, naturally this has resulted in a surging demand for workforce from engineers to skilled and unskilled workers.

While the supply has not kept pace with the demand in all categories of workforce, the shortage is more pronounced in the labour pool as labourers account for over 90 per cent of total manpower in the industry. Even amid workmen, the dearth is more acute in the skilled workers group spanning across various trades; from plumbing, masonry, fabrication, welding, drilling, carpentry and electrical wiring to bar bending, stone cutting and excavating. As a result, some construction companies have been reportedly compelled to hire skilled workers from countries like China, Malaysia and Indonesia.

The numbers

“The number of skilled workers available in the construction industry at present is believed to be nearly 0.8 million,” reveals Jaikant Singh, Head – MIS & Monitoring, National Skill Development Corporation (NSDC). “With only 2 per cent formally trained, the minimum shortfall of skilled workers in the construction industry is about 33 per cent. Unfortunately, there is no authoritative data on the shortfall in different segments such as plumbing, masonry, etc.”

“The assessment of shortfall in respective trades is a very complex and dynamic process; the macro figures for shattering carpentry and plumbing are at 18 per cent and 29 per cent respectively,” avers Dr PR Swarup, Director General, Construction Industry Development Council (CIDC). “The shortfall is increasing in both the skilled and unskilled workers segment. The requirement for FY 2010-11 is 34.72 million whereas availability is only 32.87 million.” Established in 1996 by the Planning Commission as the apex body to coordinate and monitor construction activities, CIDC had conducted a nationwide survey in 2004-05 and submitted its recommendations for the Eleventh Five Year Plan (2007-2012). The study depicted a rise in the industry’s employment figures from 14.6 million in 1995 to more than double in 2005; that is
31.46 million personnel comprising engineers, technicians, foremen, clerical staff and skilled and unskilled workers. This has evidently come true as today the industry employs over 33 million people, second only to the agricultural sector. The survey also revealed that while the industry had employed 2,241,000 skilled workers in 1995, the figure had gone up to only 3,267,000 in 2005, an increase of a mere 10 lakh (1 million) over a decade. But what is more alarming is the fact that the strength of the skilled workforce has also been consistently going down from 15.34 per cent in 1995 to 10.57 per cent in 2005.

In 2008, NSDC carried out a study on the human resource and skill requirements in the construction industry in India. According to the study, the incremental workforce requirement is around 4 million per year for 2008 to 2015 to sustain current growth. Based on the expected growth in the infrastructure and real-estate sectors, the study also predicts that about 83 million people will be employed in the construction sector by 2022 and the incremental human resource requirement between 2008 and 2022 would be about 47 million.

There are no specific figures available on the skilled workforce but the number is expected to be substantial though there is also a possibility of the numbers significantly reducing if new construction technologies and modern equipment are used in a big way. But skill levels would go up according to the NSDC study, which reports: “With the increasing use of new technologies and modern machinery, the proportion of skilled workers required at site is expected to reduce but skill levels would go up. Skills required would span use of prefabricated components, total solution-based applications, operation of complex machineries, working in high-rise buildings, etc.” Evidently, an explosion in the demand for skilled workmen in quantity and quality is imminent. “It is anticipated that whereas overall members may not see a major change, the segment variation (skilled/ unskilled) shall change substantially,” laments Dr Swarup. “Over the next five years, the number of skilled persons needs to rise at the rate of 150 per cent per annum to keep pace with demand. Unfortunately, the resources required are just not in position.”

The cause

Why are resources not in place? It is not that the government, industry and its associates were unaware of the hanging sword of Damocles. As Dr Swarup enumerates, “Some of the reasons behind the present crunch of skilled workers are reduced migration of workers from traditional locations like Orissa, Chhattisgarh, Bihar and Rajasthan on account of availability of local employment opportunities (like rural road constructions and National Rural Employment Guarantee schemes); poor service conditions, inadequate capacity of vocational training institutes; and lack of good and trained trainees.” Concurs Kavi Luthra, Vice-President (Strategic Alliances), Rustomjee Academy for Global Careers (RAGC), “Manpower has to be sourced from various rural areas. As such it was difficult to convince these workers to relocate to construction sites leaving behind their family and land as agriculture is the most dependable source of income for many. With local employment increasing owing to various government schemes, rural youth have become complacent.”

Being migrant and seasonal, and their workplace, project and employers changing frequently, hiring companies seldom invested in training. Nor were the workers ready to sacrifice their earnings to attend courses or undergo training. The non-industry status of the construction business is also a major reason, according to S Natarajan, Head–Construction Skills Training Institute (CSTI). “First, as construction is not treated as an industry, the development of skilled workers was not taken seriously,” he says. “Second, there was no government legislation to engage skilled workers in the construction industry. Vocational training on construction-related trades was not included in vocational training schools. The workers being migratory switch over to agriculture during harvesting time owing to which sustained skilled development was not happening over the years. Agricultural labourers who have routinely migrated to the construction industry have of late been attracted to manufacturing/service sectors and support services to IT sectors because of better initial pay and working environment.” In fact, CSTI was established by Larsen & Toubro (L&T) in 1995 to meet the company’s manpower requirements.

The consequence

The effects of the skill shortage are apparent: inadequate quality, accidents and collapses even in projects under construction, and delays in completion. “It affects safety, quality, productivity and costs,” asserts Natarajan. “Infrastructure is the key driver for propelling economic growth and delay in creation of quality infrastructure will make the project economically unviable and cause a loss to shareholders, stakeholders and the public. We can realise more than 9 per cent growth in GDP provided there is proper infrastructure in place.”

At the micro level, it also reduces the company’s production capacity and even leads to losses as evinced by Luthra. “When we conducted a survey within our group we realised many of our projects were being delayed owing to shortage of skilled manpower at the bottom of the pyramid,” he reveals. “Some workers who come through contractors with no formal training are trained on the job by us and their productivity is low until they are fully trained. This makes all project dates go haywire and accumulates losses for the construc-tion company.”

In fact, while discussing the causes behind inadequate quality in construction work, the Eleventh Five Year Plan lists “lack of prequalification requirements for trained and certified workmen” as one of the major reasons. It also suggests that to enhance the technological capabilities of the industry, all stakeholders should actively support training and certification levels for skilled workers, supervisors, and managers, and promote new construction techniques.

The coaching

So it all boils down to imparting training and upgrading workers’ skills. But why is this so onerous considering we have a host of institutes created for the purpose of producing skilled workers?

Let’s examine the ground realities. There are 1,244 polytechnics under the aegis of the Ministry of Human Resource Development, 699 community polytechnics and 5,114 industrial training institutes (ITIs), of which 1,896 are under state governments and 3,218 are private. Besides, there are 9,583 secondary schools with Vocational Education & Training (VET) stream and 3,218 industrial training centres (ITCs) in the private sector. In addition, we have institutions like CIDC, NSDC, National Academy of Construction (NAC) and National Institute of Construction Management and Research (NICMAR) who are all involved in train-ing directly or indirectly. (NICMAR, however, is involved only in management-level programmes.)

CIDC, which offers training in 47 trades, operates through 137 training locations and central vocational skill upgrade centres in Faridabad, Ghaziabad, Amethi, Sitapur and Palwal. The total outcome capacity of these centres is over 200,000 people per year. “For the past two decades, CIDC has sensitised stakeholders, encouraged new entrants, developed training materials, trained the trainers and established the training institutes,” affirms Dr Swarup. “The establishment of NAC and now the Chhattisgarh Nirman Academy are some examples where CIDC has joined hands with state governments. Several companies from the corporate sector like Teesta Urja, HPCL, Mittal Energy, Universal Machines and Reliance Industries avail CIDC support.”

The first-of-its-kind public-private partnership (PPP) in India, NSDC was set up as part of a national skill development mission to fulfil the growing need for skilled manpower across sectors. It provides viability gap funding to build vocational training institutes and provide support systems such as quality assurance, information systems and train the trainer directly or through partnerships. “NSDC has also convinced major employers in the construction sector to consider training as a business and not a CSR activity and facilitate the training of workers and assure them of better employability at enhanced wages,” reveals Singh. “Thus far, NSDC has funded four projects and approved another eight for funding that would train youth in different segments, including construction.”

Spread across 46 acre in Hyderabad, NAC provides training and knowledge upgrade not only to workers but to engineers, contractors and supervisors. Apart from classrooms and hostels, the campus also has an auditorium, seminar halls, material display block, practice ground and quality control and testing laboratory for construction materials. It has an experienced in-house faculty of 750 and has 170 centres all over Andhra Pradesh.

However, all the efforts being made for training and certification are like a drop in the ocean, say some industry pundits. The ITIs along with NAC and CIDC collectively train and contribute only about 5 lakh quasi-skilled workers into the national pool each year, which is only 13 per cent of the 4 million average supply required every year as per various projections. In addition, the quality of training offered in the majority of these ITIs is considered dated, requiring restructuring of the curriculum. “It is true that the training being provided now is not meeting the desired purpose,” concedes Singh. “The mode of training needs to be revisited. On-job, on-site training will provide the right mix of exposure to equipment and the ecosystem.”

“There are number of steps required to bring a semblance of order, uniformity and delivery of quality of training,” opines
KAN Prasad, Additional Director-General, NAC. “We need sector-wise training centres, qualified trainers and industry-driven curriculum with correct methodology and pedagogy. In addition, there should be proper assessment and certification with regular monitoring. In order to raise our workers’ standards on a par with the global level, we should have world-class, sector-wise testing facilities, soft skills and personality development, scope for upward mobility, periodical upgrade of skills, trade-wise uniforms, proper wages and good working conditions.” In the recent past, several leading construction companies like L&T, DLF Ltd, Rustomjee Group and Ingersoll Rand (India) have also set up their own training institutes. Some others like Hindustan Construction Company, Gammon India and Nagarjuna Constructions invest considerably in training their construction workers.

L&T’s CSTI, headquartered in Chennai with seven training centres in major metros, offers training in various trade skills. Students are trained at these centres as well as their major construction sites and paid a stipend. Likewise, RAGC set up by Keystone Realtors Pvt Ltd (Rustomjee Group), provides training at centres in Dahisar, Juhu, Pune, Bandra, Karjat, Khar, Virar, Gadchiroli (Nagpur) on its own and through industry tie-ups who sponsor the entire training programme. But even such industry initiatives have had little impact, admits Natarajan. “We train 6,000 workers every year in our training centres and through tie-ups with NGOs we train nearly 10,000 workers every year,” he shares. “However, this sum does not have any significant impact on the industry.”

For his part, Prasad says, “What CIDC, NAC and the ITIs are doing is no doubt much less than what is required. But somewhere a beginning had to be made. This gauntlet has been picked up by many government and non-government agencies. They have had a late start but are confident of reaching targets.” Industry associations have also been attempting to
tackle the issue. For instance, in 2008 Confederation of Indian Industries (CII) set up its first National Centre of Excellence for Skill Development in Chhindwara district, Madhya Pradesh. Federation of Indian Chambers of Commerce and Industry (FICCI) launched a Skill Development Forum in 2008 to extend financial, technical and managerial support to private-sector initiatives in skill building. And the Builders Association of India (South Centre) has started training programmes for women in painting, plumbing, electrical and carpentry works.

The government too has pitched in with its skill development mission aimed at providing a pool of trained and skilled workforce within a period of five to eight years. Identifying real estate as one of the 10 high growth sectors on the service side, the government has acknowledged the PPP mode as the major vehicle for absorbing expenditure in skill development. One major initiative in this direction will be the upgrade of ITIs into centres of excellence in specific trades and skills under PPP. “Under the Skill Development Initiative (SDI), the Government of India has established a Skill Development Council with a budget of Rs 1,000 crore to develop skilled manpower in several sectors,” maintains Prasad. “Established under the SDI, NSDC is spearheading a campaign to develop skills with agencies like NAC and CII doing their part.”

Working conditions

Meagre salary and poor working conditions are also cited as a major reasons for shortage of skilled personnel. The majority of construction labourers work in inhuman and unsafe conditions. Indeed, India has the world’s highest accident rate among construction workers — a recent study carried out by the International Labour Organisation (ILO) reveals that 165 out of every 1,000 workers are injured on the job.

On the surface there are many laws like the mandatory provision for instituting the Provident Fund Scheme among casual workers and the introduction of the Workers Welfare Cess. But implementation is reportedly far from satisfactory. The Building and Construction Workers (Regulation of Employment and Conditions of Service) Act 1996 was enacted for regulating the safety, health, welfare, and other conditions of service. However, only a few states have implemented the provisions of the Act. Good compensation, improved working conditions and recognition are also some of the issues being addressed by various industry associations and training institutes that will go a long way in attracting more skilled manpower to the industry who are now moving to greener pastures.

In sum, it is clear that the construction industry is gearing up to tackle the skilled man-power shortage, albeit belatedly. But it must gallop to win the race against time!

SDC Study: Highlights

The study was conducted in 2008 on mapping human resource skill gaps in India till 2022 and the report was prepared by ICRA Management Consulting Services Ltd.

• The Indian construction industry has grown at a CAGR of about 11.1 per cent between 2000 and 2008 owing to massive infrastructure investment and a rapid rise in housing demand.
• Spending on infrastructure sectors such as ports, power plants and roads is projected at more than Rs. 2.5 trillion annually from 2008 to 2014 and will require 92 million man years of labour.
• Construction investment accounts for around 52.4 per cent of the Gross Fixed Capital Formation in India.
• Incremental workforce requirement is around 4 million people per year for the period 2008 to 2015 to sustain the current growth rate.
• The industry currently employs around 33 million persons, 30 per cent of them in the real-estate segment and 70 per cent in the infrastructure segment.
• Unskilled workers (82.5 per cent) form the bulk of the workforce in the construction industrywith 10 per cent comprising skilled workers and the rest being engineers, technicians, foremen and clerical staff.
• 81 per cent of the workforce has not studied beyond 10th standard and 13 to 14 per cent have done vocational courses at ITI and other centres. The rest are engineering graduates, diploma holders and others.
• About 83 million persons are expected to be employed in the construction sector by 2022. The incremental human resource requirement between 2008 and 2022 is expected to be about 47 million.
• A large portion of employment will be in Maharashtra, Tamil Nadu, Delhi, Uttar Pradesh and Haryana, apart from Rajasthan.
• The major sectors that will drive employment are real estate, power and roadway segments.


“The infrastructure industry is growing at a fast pace and hence the existing skilled manpower does not match the demand. We overcome this by developing our employee's skill set. We generally source skilled workers through consultants but over the past few years we have developed a database of past site employees and references which largely helps us secure manpower. We always get the number of people we want but sometimes quality may suffer. We believe strongly in training and development and we organise focused training sessions and workshops to continuously improve the skill set of our employees. Our Classroom@ site Programme has been very successful.”– S Paramasivan, Executive Director, Finance & Commercial, Afcons infrastructure

“As we subcontract, it is the contractor who brings in the skilled labourer. But we are aware of the shortage as we do not get the required number. If we need 10 people, we hardly get three or four. As a result there are delays in completing projects because we cannot compromise on quality. For example, casting a slab, which should not take more than 12 days, takes 16 to 25 days now. There is shortage even at supervisory levels like junior or senior foremen whom we employ directly. We recruit them from ITIs and give them in-house training and they in turn train the contractors' workers. To counter the problem we go for mechanisation wherever possible and with the help of the structural consultant we reduce the number of labourers in certain areas like steel fixing.”– Cyrus Pithawalla, Director, Hiranandani Constructions Pvt Ltd

“There is definitely a huge shortage of skilled workers and the few trained are in great demand and their rates are going up. The capacity of such workers has gone down considerably in the past decade owing to conditions at construction sites, resulting in health problems. Apart from increasing training programmes for workers, we should improve their working and living conditions.”– KD Lalla, City Engineer, Thane Municipal Corporation

“There is an acute shortage of skilled workers and retaining the few available is a major problem. We have to pay them a competitive remuneration that has gone up by 300 per cent in the past decade. In the past three years alone, salaries have gone up by 100 per cent. Because of our long-standing reputation and good payments and working conditions, we have been able to cope. Several other contractors have been affected immensely by the shortage. Even we have not been able to grow at the pace we planned owing to this problem. There are sufficient labourers but they need to be trained in construction skills, which is not happening. Even those who come out of ITI institutes are not trained specifically in construction areas and we have to train them on the job.” – Rajesh Patel, Director, RRC Ventures

What's on offer?

Centres: Chennai, Bengaluru Panvel, Ahmedabad, Delhi and Kolkata
Training: Formwork carpentry, masonry, bar bending and steel fixing, plumbing & sanitary, electrical wiring welding, pre-stressing, P&M mechanic
Contact: HO: Chennai; Tel: 044-2252 0560, 2252 0866; Website:

Construction Industry Development Council (CIDC), New Delhi

Centres: Operates through 137 training locations in India. Has central vocational skill upgrade centres in Faridabad, Ghaziabad, Amethi, Sitapur and Palwal
Training: 47 trades including concreting, bar bending, steel fixing, carpentry, shuttering carpentry, rubble masonry, plastering, painting, tiling, plumbing, roof sheet laying, stone cutting, drilling, blasting, excavating, electrical fitting, fabricating, apart from courses for supervisory level personnel
Contact: Delhi; Tel: 011-2643 3709, 2645 1766, 2623 4770; E-mail:; Website:

Rustomjee Academy for Global Careers, Mumbai

Centres: Bandra, Khar, Juhu, Dahisar, Virar, Karjat , Pune, Gadchiroli
Training: Carpentry, masonry, fitting, plumbing
Contact: Dahisar; Tel: 022 6528 2011

National Academy of Construction (NAC), Hyderabad

Campus: Eight constituent units covering all sectors of the construction industry. The campus has an auditorium with 500 seating capacity, seminar halls, classrooms, hostel blocks, dormitory, quality control and testing laboratory for construction materials, material display block, practice ground Centres: Three zonal centres, six regional centres, and 166 other centres throughout Andhra Pradesh
Training: 21 trades including welding, masonry, plumbing, sanitation, bar bending, steel fixing, electrical fitting
Contact: Hyderabad; Tel: 040-2311 1916; E-mail:; Website:

Quick Bytes

• The requirement for skilled workers for FY 2010-11 is 34.72 million whereas availability is only 32.87 million.
• The major effects of this skill shortage are inadequate quality, accidents and collapses even in projects under construction, and delays in completion.
• The government has acknowledged the PPP mode as the major vehicle for absorbing expenditure in skill development.