People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 24 

June 14, 2009


Impact Of Economic Meltdown On Indian Construction Industry


M K Pandhe


ACCORDING to the Planning Commission, Indian construction industry employs around 3.1 crore workers in various branches of construction sectors.  However, as per the assessment of the employers organisation in this industry, the total employment would be of the order of 4 crore.


The Delhi Regional Office of the International Labour Organisation conducted a study in the National Capital Region of Delhi, Ghaziabad, Gurgaon, Noida, Greater Noida and also in Bangalore to find out the impact of global meltdown on the construction industry in India.


However, major defect of the study is that due to the Common Wealth games in 2010, a lot of construction activity has been going on in and around Delhi and the real impact of the recession on the construction industry was not seen in this area.  It is only in case of Bangalore that some impact could be seen.  The results of the study have clearly shown this shortcoming.





The survey found that in the National Capital Region there was no decline in construction activity. “In most cases no difference than the pre-recession period” was the conclusion of this survey, even when several largescale government projects are being undertaken in Delhi due to the Commonwealth Games.


In Ghaziabad, the survey team found some impact in private construction work ––“slowdown visible in several sites”.  It further noted, “several sites which must have employed at least 400 workers are left with 40-odd only.”  The survey team however found that the contractors deduct wages from the workers in the form of commission which indicate that workers are paid much less than actually shown in record by the contractors. This further proves the utter failure of the state government in stopping such common malpractices prevailing in the industry.


In Gurgaon, although a lot of construction activity is going on due to Commonwealth Games, still in some parts of the region the impact of recession was seen. As noted by the survey, “lack of activity on construction sites has also affected Ready Mix Concrete units where the work has been slow”.  It further noted that the contractors are asking the workers to do extra hours of work but no overtime is being paid to them. The survey team found that “Delay in payments is quite common in projects along the Gurgaon-Sohna Road, and in several cases it was found to be up to two months.”  In such cases of the failure of the state government to take any action against contractors for non-payment of overtime wages, illegal deduction of commission from wages of workers and delayed payment violating the Payment of Wages Act was clearly visible.


In Noida, the team observed that “non-payment of wages was found to be quite frequent” The survey team noted reduced work for construction workers in the area. It found only 15 to 20 days work is available for workers in a month. In case of major developer Unitech Ltd., the survey team found that, there was “no construction in eight sites for the last six months.”  It further observed, “Each site had at least 300 labourers majority of whom went back to their respective villages.  Some found jobs elsewhere”.  Several builders told the survey team that the work on their project has slowed down. Payment is delayed by up to two months everywhere.


In Bangalore’s construction industry, it is observed that there is large scale migration of workers from Andhra Pradesh, Tamilnadu, Orissa, Rajasthan, U.P., Bihar and West Bengal.  In addition to this, several workers from Gulbarga, Bidar and Raichur are migrating for seasonal work. The survey team observed, “Labour colonies at the periphery of the city for these workers since then have disappeared”.  It further noted, “Around 2.5 lakh migrant labourers have left Bangalore in the last six months for lack of jobs.


All these issues were raised in the past by the Construction Workers Federation of India (CWFI) but the government of India failed to take any steps to correct the situation.  Now that the official agencies have put their stamp on this factual position, the trade unions stand point stands strengthened.


However, the survey is a gross under estimation of the extent of job losses that have taken place in the construction industry as a result of global economic meltdown and its adverse impact on Indian economy.  According to the trade unions in construction industry, the loss of jobs in this industry would be to the tune of 20-25 lakh during the last 10 months.





The government of India has announced several packages for building and construction industry but no relief has been provided for the workers who lost their only source of livelihood. The last session of Indian Labour Conference saw all the trade unions demanding payment of unemployment allowance to the workers who are victims of the present ongoing recession  but the government has not given any serious thought to this proposal.


In the same Indian Labour Conference, all the trade unions demanded extension of Employment Guarantee Scheme to urban areas also so that some relief is given to the workers affected by the economic recession. They further demanded a rise in daily wages under the scheme to Rs 100 per day and increase the work entitlement from present 100 to 180 days as suggested by the ILO. However, the government of India has not taken any steps to implement the unanimous recommendations of the trade unions.


The trade unions criticised the violation of all labour laws by the employers while the government failed to take any action against the employers.  They therefore demanded strict observation of labour laws in the country and the government of India should ensure this.


The meeting convened by the ILO in New Delhi on June 5, 2009 discussed the progress of implementation of the Construction Labour Law passed by the parliament around 13 years ago.  So far only five states have framed rules under the Act and taken some steps to implement the provisions of the law. However, other states are keeping silent on the subject and have not taken any steps to implement the law.  It was suggested by trade unions that the central government should frame model rules which should be made applicable to the states which have not taken any steps to implement the law.  Another suggestion made by the trade unions was to amend the Act to provide formation of Construction Labour Board to regulate the employment in construction industry. The contractors are not paying the PF and ESI contribution, which should be made compulsory in the entire construction industry.


The trade unions suggested that the government of India should take up a massive programme of construction of low cost housing for the poorer sections of the people so that more jobs can be created in a period of recession and houses will be made available to needy people at affordable cost.


The meeting also proposed construction of proper houses for the construction workers wherever construction project is undertaken.  In absence of this, the working and living conditions of construction workers is extremely bad. The Director General of the ILO is talking about decent work but in the construction industry the work is extremely indecent which needs to be improved drastically so that they will have decent work in reality.





The trade unions pointed out that the conditions of working women in the construction industry worsened due to the economic recession. They not only are the first to become victims of loss of jobs in the industry but they also have to face several difficulties in day to day work.  Maternity benefit is denied to them while elementary requirements for a woman worker are not available in the construction industry. Perhaps the cases of sexual harassment and molestation are the largest in this industry. Though the employment of women in construction industry is more than 30 per cent of the total employment, the central government has not taken any meaningful steps to protect their interests.


During the course of discussion it came to light that the Delhi government raised Rs 800 crore for the welfare of construction workers but the amount has not been spent at all so far.  The meeting proposed that the matter should be enquired into as soon as possible.


The director of the ILO, Leila Tegmo Reddy, noted that the global recession is going to be a long drawn one and the overall rate of growth all over the world has come down to only 1.5 per cent.  According to ILO Director General, over 20 crore jobs will be lost all over the world due to the present global recession. Citing this, she expected that the governments in developing countries would introduce unemployment insurance for the workers affected by the global economic recession.