Wages Zoom 250% & Construction Slows Down 75% As Labour Crisis Unfolds

THE building sector in Pune and neighbouring areas is in dire straits. The mass exodus of migrant workers from UP and Bihar, following alleged threats from Raj Thackeray’s Maharastra Navnirman Sena , has forced  builders to invoke the force majeure clause to escape liabilities of delays and cost overruns.
With the labour rates in the building industries almost trebling due to insufficient workers and absence of skilled employees, buyers will have to shell out more for their flats.

“We have informed our customers that there will be a delay in the delivery of flats due to this force majeure situation,” said  Gera Developers chairman Kumar Gera. “We can’t say when the sub-contractor’s labour will be back, when normalcy will return or when flats will be ready.” Added Mr. Gera who is also the founder chairman of the confederation of  Real Estate Developers Association of India. “ The number of labourers on our project site has come down from 2,300 to 1,400 now. This has resulted in a 75% slowdown in construction,” he explained

A force majeure clause in a contract excuses a party from not performing its contractual obligations due to unforeseen events beyond its control. Kumar Builders chairman and president of the Promoters and Builders Association of Pune (PBAP) Lalit Kumar Jain said that the labour rates have shot up by 250% to Rs 750 a day. This means  that it is only a matter of time before prices of residential properties go up as builders pass on this hike to the buyers.

“ We believe that 50% of labourers have gone back and labour rates have surged from Rs.350 a day to Rs.750. We are not even sure if the labourers will come back,” Mr.Jain said. He added builders have sent people to Bihar and UP to try and force the labourers return to work, but the response so far has been poor. “ The Builders Association will wait till the end of March and assess the situation. The members will then take a decision on informing their customers about the possible rate hike,” he added.