As labour shortage grows, the construction industry looks increasingly towards mechanisation and prefab technology

India’s labour shortage is pegged to go up by 65 per cent by the next decade, as more workforces move from traditional brick and mortar industries like construction to more lucrative industries such as IT, ITeS, banking and telecom.

Today, India’s construction sector is the second largest employer in the country after agriculture, employing roughly 20 million workers directly and about 15 million indirectly. This is one reason why the rate of mechanisation here is a low 20 per cent compared to 60-70 per cent in developed countries.

But this is already changing. In 2002, the number of labourers required to build half a million sq. ft in India was about 700-800; in 2012 with gradual mechanisation, this number fell to about 200; and by 2022, it looks set to reduce further.

The labour shortage in the sector will drive the industry towards large-scale mechanisation, project management, and pre-cast or prefab technology, finds a recent report produced by Synergy Property Development Services, a project management consultancy. It is predicted that heavy equipment such as batching plants, tower cranes, hot plant mixers, earth moving equipment, stone-crushers, excavators, and soil compactors will come into demand in order to bring down construction times and, therefore, reduce cost overruns.

The report ascribes two reasons for the labour shortage. One, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), under which villagers are getting 100 days of work with minimum wages, which has reduced their migration to cities as construction and other labourers. The other reason is that the latest generation of masons or painters is not too keen to continue the profession, opting instead for higher education and better jobs.

One reason why mechanisation has not been very widespread thus far is because of its high costs against the easy availability of cheap labour. However, as housing and infrastructure projects get larger, greener and more quality-conscious; and as project timeframes get tighter; manual labour is likely to be increasingly replaced by mechanisation and prefabrication. Metros now have 50-storied skyscrapers while several thousand kilometres of expressways and highways are being laid across the country with foreign and public funding. All this requires sophisticated equipment both for construction and to meet project and quality deadlines.

Another area to benefit would be pre-fabricated structures, which can be pre-assembled in factories and set up at the building site very quickly. For instance, around 1,000 sq. ft. can be erected on site in approximately two to three days. Prefab structures use wood, PVC, cement fibre boards (CFB), and GI (galvanised iron) sheets, and are reportedly as sturdy as traditional structures. As of now, prefab is used mainly by government and industrial projects, but like the West, there might soon be a trend towards prefab housing as well.

The construction sector, which grew at a compounded annual growth rate (CAGR) of about 29 per cent from 2003-04 to 2007-08, is expected to slump to 10 per cent in 2012-13. How much these trends will affect growth is not clear yet but they are likely to change the dynamics of the sector substantially.