Some aspects of unskilled labor markets for civil construction in India : observation based on field investigation

Some Aspects of Unskilled Labor Markets for Civil Construction in India: Observations Based on Field Investigation World Bank Staff Working Paper No. 223 .. . S. ~I ,.. .~~a .p, ' . , . 33. .  This paper is prepared for staff use and is not for publication. The views are those of the author and not necessarily those of the Bank. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOMENT Bank Staff Working Paper No. 2 2 3 November 1975 SCME ASPECTS OF UNSKILLED LABOR MARKETS FOR CIVIL CONSTRUCTION IN INDIA: OBSERIATIONS BASED ON FIELD INVESTIGATION A study of unskilled labor markets for civil constrnction was proposed by the Transport Research Division of the Bank within its ongoing major study of the Substitution of Labor and Equipment in Civil Construction. Based essentially on the author's field investigation in Spring 1975 of some civil construction projects in rural India, this paper represents a first attempt in that direction. It discusses the sources, wages and methods of recruit- ment of construction laborers, the extent of female participation, and male-female wage differential. It examines the responsiveness of labor supply to wages, tries to identify the important determinants of construction labor supply, and focusses attention on the areas in which future research is likely to be productive. The paper was presented at an internal semi.nar of the Bank and it benefitted from comments of a number of persons. Prepared by Swadesh R. Bose Transport Research Division, Transportation and Urban Projects Department; and Employment and Rural Development Division, Development Ec6nomics Department  SOME ASPECTS OF UNSKILLED LABOR MARKETS FOR CIVIL CONSTRUCTION IN INDIA: OBSERVATIONS BASED ON FIELD INVESTIGATION Table of Contents Page No. Objectives, and Methods of Enquiry.. ................ 1 Project Organization, Methods of Labor Hiring and Wage Payment . . . 4 Sources of Labor Supply for Civil Construction . . . . . . . . . . . 8 Wage Rates of Construction Laborers, and Male-Female Wage Differential. 13 Determinants of Local Labor Supply for Civil Construction . . . . . . 22 The Role of Migrant Labor . . . . . . . . . . . . . . . . . 34 Summary, and Concluding Remarks on Possible Future Research ...... 41 List o-L Appendix Tables Table No. Title 1 Daily Wage Rates for Construction Work (Data Collected Through Field Survey) in India During February- March 1975 2 Piece Wage Rates for Construction Work in India 3 Some Data on Population and Agriculture in Three Districts 4 Seasonality of Agriculture and Local Agriculture Wage Rates (Males) in Three Districts  Some Aspects of Unskilled Labor Markets for Civil Construaction in India: Observations Based on Field Investigation Swadesh R. Bose Objectives ard Methods of Enquiry 1. This paper reports the observations and findings of a field investigation of unskilled labor markets for civil construction in India, conducted during February-March 1975 as part of the World Bank Study of Substitution of Labor and Equipment in Civil Construction. Despite the seemingly labor surplus situations in many parts of rural India, partic- ularly in the slack agricultural season, several observers had reported that the availability of local labor to civil works projects (exogenous to the rural economy) at fixed project wage rates is often very limited. This brief field enquiry was intended to gather some information on sources, availability and costs of unskilled construction labor in India, and to identify and analyse the factors that determine its supply func- tion. In particular, an attempt was made as far as possible to arrive at some informed judgement about (a) the effects of such factors as population density and agricultural land-man ratio, size of small farmer and landless population and their alternative income-employment opportunitiefs, tenurial conditions, hierarchy and other ,institutional constraints  -2- on the supply of (especially local) labor to civil works; (b) the response of labor supply to wage rate changes; (c) the extent of female participation and male-female wage differential; and (d) the role of migrant labor. 2. Given the large size and the great diversity of the country, it is impossible to make even superficial field observations of the whole of rural India during the course of a few weeks. Field trips were confined to the two largest States - Madhya Pradesh (M.P.) and Uttar Pradesh (U.P.) - situated in central and northern parts of the country. A large number of civil works sites were visited in these two States. But field investigation efforts were concentrated on Raisen district and Raipur district of M.P. and Rae Bareli district of U.P. Rae Bareli is about 300 miles south-east of Delhi, Raisen about 400 miles south of Delhi, and Raipur is about 200 miles south-east of Raisen. There were a fairly large number of on-going civil construction projects in these districts. However, these districts differ from one another in some important respects. Rae Bareli is very densely populated with a low agricuLltural land-man ratio, Raisen is relatively scarcely populated with a more favorable agricultural land-man ratio, and Raipur stands in between tut 'twG -n', these respects but is more prone to periodic drought. 3. In Raisen district, the largest on-going construction project was the comltirni-ion of a dam, a diversion road and canals in the Barna-Bari area, which employed about 5,000 workers. Relatively small groups of workers  -3- were working on other road and bridge construction projects, but construction work on the major highway projects in Raisen and adjacent districts was almost practically stopped because funds sanctioned by the government had been exhausted. The major projects in Rae Bareli district were canals and aqueducts which employed about 4,000 workers. In Raipur district, severely affected by drought in 1973 and 1974, extensive construction work on roads and canals employing tens of thousands of workers was going on under a famine works program. 4. At the various construction sites in these three districts, the following information was collected, as far as possible: (a) project organization (whether executed by local government or state/central govt. department; whether work is done by force account of the department or by contractors); (b) geographical source of labor supply, and caste/tribe affiliation of workers; (c) methods of hiring labor; (d) methods of wage payment,- and wage rates; (e) other cost of labor to employer, (f) extent of female participation in construction work and male-female wage dif- ferential; (g) rural/agricultural wage rates in the project area, and in areas where the workers came from; (h) main occupation and land-holding status of the construction workers; (i) availability of more construction laborers at the prevailing wage rates.  5. The respondents were the project authorities (including engineers), contractors, supervisors, laborers, and labor-gang leaders. This field survey was not based on a systematic sample design, nor were respondents required to fill in any questionnaire. A diary method was used for recording the respondents' answers to brief and informal questions on the topics mentioned in Paragraph 4. Supplementary information on seasonal pattern of agriculture, rural agricultural wage rates etc. in the relevant districts and tehsils (a revenue collection area which constitutes a part of a district) were collected from local revenue officials, and some local informants. In addition, district level information on total population, population of scheduled tribes and castes, size and occupational categories of labor force, distribution of land holding, cropping pattern and crop yields were obtained from some official publications (e.g. Census of India 1971, and Agricultural Census 1970-71). 6. Because of the very nature of this field investigation, the small geographical area covered and the limitations of the data obtained from some ad hoc respondents, the views on the construction labor market, particularly regarding the supply function of construction labor should be considered as highly tentative. This is more so because of the high probability of a systematic bias in the respondents' answers regarding wages and other costs (e.g. transportation, housing, water supply etc.) of employing construction labor. At several sites it was obvious that the workers took the investigators to be hirers of labor, and contractors often imagined that an enquiry into labor welfare was being conducted. Such misconceptions probably resulted in exaggeration of wages and other benefits received by or paid to the workers.  Project Organization, Methods of Labor Hiring and Wage P t 7. The construction projects observed during the field investigation in the districts of Raisen, Raipur, and Rae Bareli were large-sized projects of Central/State Governments. These were being implemented either by direct force account of the relevant State governmunt department(s) or through contractors, or a combination of both. The funds were sanctioned by the Central/State Governments. Except the 'famine' works in Raipur, which was being carried out entirely by departmantal force account, by far the greater portion of construction work in the projects of the other two districts was being done through contractors. A project was usually divided into several parts (e.g. bridges, dams, or sections of roads, canals, etc.) for being contracted out for construction. The size of contractors (in terms of command over capital, and value of construction work done per year) varied. However, by far the larger portion of project work was with medium or large-sized contracting firms located in big urban ceritres. There were a few petty contractors from nearby areas of the project sites, who unidertook some odd and small parts of the project work. A distinguishing feature of these construction projects was the absence of any participation or involvement of any local government institution in the planning or execu tion of the projects 8. Civil construction work in most part,s of India is done almost entirely during the dry season (November through May) and hardly any work is done during the rainy season extending from June through October. Construction employ- ment Is, therefore, seasonal. In all projects, irrespective of whether the  -6- emnoloyer was a government department or a contractor, construction laborers were hired for a pert of or the whole of the construction season depending on the exp