SOIL Report 2008 - ACCESS Development Services

Chapter IVConstruction requires no external impetus to be a growth sector, as the economy hinges substantiallyon infrastructure growth, and there is both public and private investment being made in constructionprojects. Considering the high LPPI in construction, a large number of new livelihoods will be createdin this sector.The currentskill-levelrequired forentry intoconstruction atthe bottom isfairly low, whichcontributesto its highlivelihoodpotential.However, theskills gap needsattention, asmore people willbe dependent onconstruction astheir primarysource oflivelihood.This is the only fast growing sector with a low differential between the GDP and employment growthrates, implying perhaps that construction is not perpetrating ‘jobless growth’ 7 , most unlike other sectors.The current skill-level required for entry into construction at the bottom is fairly low, which contributesto its high livelihood potential. However, the skills gap needs attention, as more people will be dependenton construction as their primary source of livelihood.The construction sector engages around 6 per cent of the total unorganised sector workforce, numberingover 22 million persons. Of these over 70 per cent are rural and around 91 per cent are males. Further,at over 73 per cent, most of the construction workforce is engaged as casual labour, only around 8per cent are regular wage/salary employed, and around 17 per cent are self-employed. This workforcestructure, with a very high share of casual labour, typically poses very low entry barriers. Even as thissector engages women, they are employed only at the lowest levels of skills.The employment elasticity in construction is high at 0.78, which shows that the number of workers willhave to increase by this ratio, for a unit increase in output. The productivity decline in construction is theinverse of employment elasticity. This can be attributed largely to the influx of large numbers of workersin this sector. 8 Construction absorbs a lot of the seasonal agricultural labour in the non-agriculturalseasons, as the entry barriers in the sector are very low.Wages are a significant part of the value of output. The wage share of construction as a proportion oftotal value of output is very high at over 33 per cent. This proportion of wage share changes perceptibly,only with substantial changes in technology such that labour input can be reduced. This is likely tohappen only over the long run. For construction, however, the labour share as a proportion of value ofoutput has increased by 2 per cent between 1997-’98 and 2002-’03. Also the labour-capital ratio, whichshows the value of labour required/generated per unit of capital, is the highest for construction at 3.51.Construction will therefore engage Rs 3.5 worth of labour for every Re 1 of capital. All this data pointsto the labour-intensity of construction and the potential of more livelihoods therefore.As per the NIC classification, construction is divided into activities such as site preparation, building ofcomplete constructions or parts thereof, building installation, and building completion. This, however,does not show the diversity of livelihoods in the sector. There are several activities within each of thesesectors such as head-loaders, bar-benders, masons, tile layers, electricians, insulation workers, shutteringworkers, drillers, painters, plasterers, pipe layers and fitters, plumbers, carpenters, sheet-metal workers,equipment operators, RCC workers, general works supervisors, storekeepers, etc. Within each of these,there are further subcategories. Further there is gradation of type of work that they are capable of,starting from unskilled brick layer to mistri, rajmistri, etc.With time, as workers gain experience, they move up this gradation from one level to the next. Thismovement is very slow however, as the system does not encourage it. The movement is a function ofindividual capabilities, motivation and access to financial resources. The proportion of people who moveup therefore is very small. This professional ladder for construction workers is social as well as economic.Workers typically cannot specialise in more than one trade. The quality of work delivered by a workerin construction has a clear premium in terms of higher incomes and more demand.7Banga 20068http://www.adb.org/Documents/Reports/Consultant/TAR-IND-4066/Agriculture/jha.pdf, 16th June 200890