Some Aspects of Unskilled LaborMarkets for Civil Construction in India:Observations Based on Field Investigation
World Bank Staff Working Paper No. 223
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This paper is prepared forstaff use and is not forpublication. The views arethose of the author and notnecessarily those of the Bank.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOMENT
Bank Staff Working Paper No. 2 2 3
November 1975
SCME ASPECTS OF UNSKILLED LABORMARKETS FOR CIVIL CONSTRUCTION IN INDIA:OBSERIATIONS BASED ON FIELD INVESTIGATION
A study of unskilled labor markets for civil constrnctionwas proposed by the Transport Research Division of the Bank withinits ongoing major study of the Substitution of Labor and Equipmentin Civil Construction. Based essentially on the author's fieldinvestigation in Spring 1975 of some civil construction projectsin rural India, this paper represents a first attempt in thatdirection. 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 responsivenessof labor supply to wages, tries to identify the important determinantsof construction labor supply, and focusses attention on the areas inwhich future research is likely to be productive. The paper waspresented at an internal semi.nar of the Bank and it benefitted fromcomments of a number of persons.
Prepared by
Swadesh R. BoseTransport Research Division, Transportation and Urban ProjectsDepartment; and Employment and Rural Development Division,Development Ec6nomics Department
SOME ASPECTS OF UNSKILLED LABORMARKETS FOR CIVIL CONSTRUCTION IN INDIA:OBSERVATIONS BASED ON FIELD INVESTIGATION
Table of ContentsPage 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 CollectedThrough 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 LaborMarkets 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
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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 expŽcted duration of work on a Dro3ect. If the project work were
expected to continue throughout the construction season, employers preferred
to hire those workers who would be willing to work for the full season.
La-bor hiring involved no written contracts regarding the terms and the
period of employment. Arrangements were made through verbal understanding.
Employers usually indicated to the laborers that if they worked satisfactorily
they would be employed as long as the project work continued in the current
season. However, some or all workers employed on a project could be retrenched
at any time if the employer had to reduce or abandon work for any reason,
In fact, due to shortage of funds sanctioned by the government, work on
several highway projects in various areas of Madhya Pradesh had been stopped,
and workers retired. Moreover, the employer could lay off any worker any time;
this required no additional compensation payments. Such firing was reportedly
rare. Laborers were also not obligated to work on the project during the
entire construction season. Some laborers would leave mainly for agricul-
tural work before the end of the construction season. But practically no
worker was hired for civil construction work unless he or she was expected to
work continuously for at least 4 to 6 weeks.
9. In almost all cases, labor-hiring - especially hiring non-local
workers - was done through labor-gang leaders who were usually already known
to the employers. Employers contacted these gang-leaders who conveyed
information to prospective laborers, enlisted the willing workers, and acted
as brokers between workers and emrployers in settling the terms of
employment, particularly wage rates. However, where the employer was a
goverrnment department there was no scope for negotiating wage rates, which
in a particular project area were uniformly fixed by the government for
the season. Wage rates paid by contractor-employers varied considerably,
and negotiations were sometimes quite important. The gang-leaders themselves
became employees of the contractor or the department as foremen (Mukaddam)
of their respective labor-gangs of 20 to 50 workers at the work sites.
There were some gang-leaders who were instrumental to recruitment of a much
larger number of workers, and hence enjoyed special status and financial
benefits as big IsarAars' (chief) of laborers. For several labor-gangs
there was one supervisor. Some big 'sardars' were given such supervisory
roLe. TArhile small contractors themselves did the supervisory work,
employers of a large labor force had several supervisors under them. These
supervisors had effective powers of firing workers, maintained close contacts
with and relied on gang-leaders (Mukaddam) for disciplining workers and
getting satisfactory work from them. The gang-leaders did not do any manual
work but received higher wages (20-25% more) than laborers. Under contractors,
remuneration of gang-leaders was in some cases based on the number of
laborers under their charge, i.e., a gang-leader received a certain amount
for every worker under him. Whether this amount was paid by the employer
or the workers could not be definitely ascertained.
10. It was possible, however, that supervisors and gang-leaders
between them extracted some money from the workers who were illiterate,
unorganized, and suffered from insecurity of employment. Although every
-8-
ernployer maintained a payroll of workers, wages were not always and
everywhere paid directly to individual workers. Under contractors, wage
payments were often made through supervisors and gang-leaders for ultimate
disbursement among the workers. As a result workers might not always have
received agreed upon wages. Also it was reported from some quarters that
workers under threat of being fired, or not hired for work, hau to pay
something to the supervisors. Such malpractices were not reported at all in
Raipur where civil construction work was carried out by technical depart-
ments of the government, but wages were disbursed directly to individual
workers by officials of the district administration.
llo Two types of labor remuneration were found to be practised: time
rate based on days worked, and piece rate based on some measurement of work
done. Laborers employed directly by a government department were mostly
paid on time rate, while the majority of workers employed by contractors
received wages on piece rate basis. Overall, it appeared that the majority
of construction laborers in Raisen and Rae Bareli districts were employed
on piece rate basis. In Raipur district, only a small proportion of
laborers were working on piece rate. Wage payment by contractors was
usually made weekly. Departmental wage payment, was made fortnightly or
monthly. Generally, departmental laborers got one paid holiday after 6 con-
secutive days worked. But contractors' laborers were paid wages only for days
worked. While the employer supplied the working implements to the time rate
worker, piece rate workers very often had to bring all or part of their work
implements, In some cases, the so-called piece rate wage was a composite
remuneration for the services of human labor, animals, (donkeys, bullocks,
-9-
camels), carts, and other implements, so that pure wage earnings were
difficult to estimate. Contractors preferred piece rates w,ercver
feasible. But piece rates were apparently not popular with workers having
no prior experience in construction work. Some workers (e.g. a group of
laborers belonging to the Bhil tribe, working in Raisen district) said
that piece rate wage and the associated work output measurement were
incomprehensible to them, and hence they worked on time rates. In some other
places in M.P. and U.P? several groups of laborers complained that piece
rates initially agreed upon were not changed as and when working conditions
(e.g. lead and lift of haulage; hardness of soil) changed. In one canal
site, about 20km. from Bari in Raisen district, a group of 100 workers under
a contractor were on strike for two days demanding a rise in piece rate to
compensate for increased lead and lift. In most cases, the contractor paid
some advance to the worker for his and his family's sustenance for the
initial period before the first wage payment was made. There were, however,
considerable bureaucratic difficulties in the way of making such advance
payment by an employing government department.
12. When non-local workers were imported from their native villages,
the employer paid for their transportation costs in addition to some advance
wage payment. If, however, such workers left their work before completion
of a minimum agreed upon period the costs of transportation were deducted
from their wages. While no employer maintained a permanent labor force for
construction work, many non-local migrant laborers had reportedly been
working and moving to different work sites with the same employer for several
- 10 -
years during the construction season. The majority of migrant construction
worke:'.-. were hired from their native villages and then brought to the work
site by gang-leaders. But there were some migrant workers who with their
group leaders had already left home on their own initiative to look for
seasonal employment and managed to get construction jobs. Many contractors
reported that seasonal labor migration on the workers' own initiative was
quite significant. The presence of hundreds of such job-seeking workers
at the railway station in Bhopal (capital of M.P.) corroborated this view.
Sources of Labor Supply for Civil Construction
13. Except in famine works, such as in Raipur, the employer (depart-
ment/contractor) was not required to hire local laborers. Laborers were
hired from places and at terms which seemed most convenient to the employer
in regard to labor productivity, discipline, reliability etc. in the prevailing
conditions of the labor markets A mix of local and non-local laborers
were employed on construction projects in all areas except Raipur. Local
laborers, i.e. those who commuted on foot from home every working day, lived
in villages within about 3 miles from work sites. Non-local laborers came
from different areas. While a few of them came from other parts of the same
district, most of them were from other districts of the same state, or from
other states. Many such migrant workers had to travel hundreds of miles
away from their homes. During the period of their employment all non-local
laborers lived in temporary huts made near construction sites.
14. The number and proportion of local laborers in the total construc-
tion labor force employed varied from area to area. Drought-stricken Raipur
district was a special case in which all laborers were local and practically
the entire work force of local villages were engaged in construction work.
On the other hand, local laborers constituted a small proportion of the
total construction labor force working in Raisen district of MoP; and this
proportion was smaller than that in Rae Bareli district of U.P? Some rough
estimates of the composition of labor force employed on major civil construc-
tion projects in these three districts are shown in Table 1. These estimates,
based on field investigations, refer to the Barna-Bari area construction
complex (dam, road, canals) which was by far the largest combination of
civil construction projects in Raisen district, the large aqueduct-canal
project in Rae Bareli district, and the famine relief works on road construc-
tion within 40 km of Raipur district headquarters. In the Raisen project
complex non-local laborers from M.P. came mostly from the districts of
Bilaspur, Rewa, Jhebuah, Ratlam, Narsingpur etc., and laborers from other
states came mainly from Maharashtra, Gujrat, Rajastan, Andhra, Tamilnadu and
Orissa. Within this project complex local labor participation was higher
in the construction of road and canals which passed through relatively extensive
areas than ini the construct'Ion of the dam which was located in a very small
area. It was also reported that the participation of local labor in these
projects was getting reduced as local pulse harvesting star-bed in mid-February.
In the Rae Bareli project, non-local workers from other districts of U0 P?
came mainly from Azamgarh, Pratapgarh and Barabanki, and workers from other
states were mostly from Haryana, Rajastan, Madhya Pradesh (M.P.), Bihar and
Orissa. The participation of local labor was much lower in the aqueduct
- 12 -
construction than in the canal excavation. The further was the construction
site from the city of Rae Bareli, the greater was the participation of
local laborers. In certain sections of the canal far into the countryside
local laborers employed by small local contractors constituted up to 70%
of the construction labor force.
Table 1
Composition of Labor Force by Source Area, and Sex,in Major Construction Projects in Three Districts
Wlork Force Enployedfrom local from other from other Total* Females invillages parts of States total
the StateRaisen (M.P.)- Barna-Bari 500 750 3,75o0 5,'0° 2,50Dam, canal and (10%) (15%) (75%) (100%) (50%)road
Raipur (M.P.)- Famine relief 40,000 nil nil 40,000 20,000works on roads in (100%) (100%) (50%)areas near districtheadquarters
Rae Bareli (U.P.)- Aqueduct and 600 800 2,600 4,000 1,400canal (15%) (20%) (65%) (100%) (35%)
Source: Roughly estimated from on-the-spot reports of employersand labor gang-leaders.
* Quite a few children of both sexes were working, particularly inRaipur.
- 13 -
15. Workers employed on civil construction projects were a
heterogeneous mass consisting of landless laborers and small farmers of
both sexes. Construction work is the main occupation of only 1.1% of
Indiats total labor force, while the same in Indonesia is 1.7%, Egypt
2.0%, Mexico 3.6% and U.S. 6e1% (ILO, Yearbook of Labor Statistics, 1971).
According to the statements made by contractors, engineers, labor-gang
leaders and laborers themselves, practically all unskilled construction
workers, whether local or non-local, came from landless or small-farming
families. Agricultural work was reportedly their principal occupation.
Only in drought-stricken Raipur district did construction laborers include
a considerable number from families which operated medium-sized (up to 15
acres) holdings.
16. Female laborers constituted nearly 50% of the total labor force
employed on almost all construction sites in Raisen and Raipur districts;
wives were working along with their husbands. But practically no females
worked on construction unless male members of their fvnailies also worked
there. There was very little differences in this regard between laborers
recruited from local villages and laborers hired from outside. In Raiser female
participation was absent in one or two migrant groups of males from the State of
Kerala specialized in well-sinking. In Rae Bareli district (U.P.) female
participation in construction work was considerably lower (Table 1). This
was partly because one large corporate construction firm which employed
almost 1,000 (mostly migrant) male workers, did not as a matter of policy
hire any female workers in the alleged interest of social harmony at the
- L4-
work site. This apparently had nothing to do with the supply behavior of
female labor. Also, at some other sites in the same district the local
labor force employed on construction had a very small participation of
females. The reason could be that construction work by females, partic-
ularly in their own locality, was considered socially demeaning and hence
those households whichi could avoid it did so.
17. The overall proportion of females observed in the work force
employed on civil construction projects is much higher than the proportion
of females in the total rural/agricultural labor force as enumerated by
Indian census (Table 2). This difference is, however, much less in Raipur than
in either of the other two districts. In addition to economic factors,
some social factors are likely to be responsible for the much higher
female participation in rural labor force in Raipur district. But it is
important to note that in all these districts, agricultural laborers contain
a mugh higher proportion of females: 33.7% in Rae Bareli, 32% in Raisen and
47.9% in Raipur. Since agricultural laborers belong to the relatively
poorer segment of rural popula'-,ion, these statistics suggest that female
participation in labor force iti rural areas is quite high among poor families.
Unskilled laborers employed on civil construction came mostly from the
poorer of such poor families, and therefore, female participation l1as found
to be high in construction work. In fact, two of the more striking aspects
of labor supply for civil construction were: (a) the amazing geographical
mobility of laborers who with their wives and young children travelled up
to several hundreds of miles away from home for employment, and (b) the high
participation rate of females in the construction labor force, husband and
wife working together being the rule rather than the exception amDng both
local and migrant laborers.
Table 2
Proportion of Females in Rural Labor Force byMain Activity, in Three Districts
Agri- Total Civilcultural Other Rural Labor Construction
Cultivators Laborers* Workers Force Workers(1) (2) (3) (4) (5)
Raisen 4.7% 32.0% 15.0% 17.4% 50%
Raipur 34.6% 47.9% 19.4% 37.7% 50%
Rae Bareli 8.1% 33.7% 7.5% 14.0% 35%
* Those whose main activity is agricultural wage employment, althoughthey may have some self-cultivation as well.
Source: Columns (1) through (4) from Govt. of India, Census of India1971. Column (5) from Table 1. See Appendix Table 3 for details.
18. In regard to tribe/caste origin of construction laborers detailed
information could not be obtained. It was clear, however, that in drought-
stricken Raipur district practically all villagers irrespective of tribes
or castes, including many Brahmins, wearing sacred threads, were engaged
in construction work. In Raisen district, amongst the construction laborers
hired from nearby villages there was a fairly high proportion of people from1/
Kori caste, and Bhil and Gond tribes; the important tribe/caste groups among
migrant workers were Kori and Mahar castes, and Gond and Bhil tribes from
1/ The castes and tribes mentioned here are some of the socially lessadvanced groups listed under the Scheduled Castes and ScheduledTribes in Indian Censuses.
- 16 -
other districts of M.P., Bhil/Gond tribes from Rajastan and Gujrat, and
Mahar caste from Maharashtra. In Rae Bareli district, caste/tribe charac-
teristics of migrant laborers could not be well ascertained, but it was
stated that many of the locally recruited construction workb's belonged
to Lunia caste. By and large, the supply of construction laborers did not
come from any special castes or tribes. Employers and some informed local
people also maintained that wage employment in civil construction was
no longer an occupation of any -particular castes or tribes. Pressure
of poverty had largely eliminated earlier social norms in this regard.
Wage Rates of Construction Laborers, and Male-Female Wage Differential
19. The prevailing daily wage rates for unskilled construction laborers
were not identical in all the districts or for all workers in the same
district. Male-female wage differential was universal. But even separately
for male workers and female workers, there was no unique wage rate in construc-
tion work in any district except drought-stricken Raipur where all civil
construction workers were employed by government departments at one fixed
wage rate for males and another for females. In other districts, different
daily wage rates were paid to different groups even within a small geographical
area. It appeared that relatively healthy (and presumably more productive)
and experienced workers were paid higher wage than workers in poor health
or without previous experience. Other factors responsible for this might
be differences in bargaining strength and alternative income-earning
opportunities. In agriculture also, not only wages varied considerably
between seas-ns, but in the same season there were different wage rates for
- 17 -
different activities, such as weeding, sowing, planting, plowing etc.
Perhaps the more productive laborers obtained more remunerative work.
Construction wage rates were not much higher than agricultural wage rates
of the same period. Also, in nearby districts wage rates of construction
workers were similar. In most areas, wage rates of laborers employed by
government departments were at the bottom end of the range, while those
of laborers employed by contractors were at the top end of the range.
Table 3*
Wages in Construction and in Agriculture (in Rupees/day)
A. Construction
Daily Wages of Time Estimated Daily Wage Earn-Rate Workers ings of Piece Rate Workers
Male Female Male Female
Raisen 2.70-4.00 2.35-3.00 3.00-6.00 2.50-4-50
Raipur 1.70 2.25 not applicable
Rae Bareli 3.00-4.00 2.50-3.00 3.00-5.00 2.50-4.0O
B. Agriculture
Daily Wages During1975 Construction
Season
Raisen 2.50-4.00
Raipur 1.50-2.00
Rae Bareli 2.00-4.00
* 1 U.S, dollar roughly equals 8 Indian Rupees.
Sources: A. Field Enquiry; B. Local Agricultural Department.
For details see Appendix Tables 1, 2, and 4.
- 18 -
20. As stated earlier, pure wage earnings of many piece rate workers
could not be estimated because the 'wage' payments were the combined
reward for human labor, animals, carts and other implements. In cases where
only or mostly human labor of piece rate workers was involved, average daily
wage earnings per laborer could not be estimated because data on payroll
and wage bill were not available from the employer. On the basis of observa-
tion of work output of some piece rate workers for 15-20 minutes and reported
daily earnings during the past week, some very crude estimates were made.
These along with daily wage rates in civil construction, and agricultural
wage rates in the construction season are summarily shown in Table 3.
21. Money wages of time rate workers employed on civil construction
were clearly the lowest in Raipur. But they were quite similar in Raisen
and Rae Bareli. In these latter districts the range of construction wage
rates indicate that some laborers were available for civil works at the
prevailing agricultural wage rates, while some others are attracted by a
somewhat higher wage. Piece wag> rates practised mostly by contractors also
varied within a district and among districts. The piece rate (e.g. for earth
excavation, haulage and spreading on road surface) obtained by contractors
from the project auithorities were usually at least 50% higher than the piece
rates paid to workers. The range of roughly estimated daily earnings of
piece rate workers appeared to be wider than those of time rate workers.
While some piece rate workers did not produce enough to earn more than the
average time rate worker in the area, some others earned more than what is
indicated in Table 3. This latter group of workers worked longer hours
- 19
than time rate workers. However, some of these hard working piece rate
laborers (e.g. many stone cutters) worked only for 4 or 5 days a week,
while almost all time rate workers worked 6 days a week. Sometimes, failure
of complementary factors (e.g. breakdown of trucks for carrying stones or
earth) enforced temporary idleness on piece rate workers and reduced their
earnings. Therefore, in many cases average weekly wage earnings of piece
rate workers might not have been greater than those of time rate workers.
22. Disbursement of wages to individual piece rate workers involved
a good deal of complication. Only in a few types of piece work in which
the output of an individual worker could be easily identified and measured,
was wage payment relatively easy; for example, a piece rate worker employed
for carrying earth or stone in a standard head basket from one point to
another was paid for the number of baskets carried. But in most types
of construction work by piece rate workers group work was involved, and
measurement of each individual's output was almost impossible. This was
true for stone drilling, stone cutting, haulage by trucks, earth excavation-
haulage for road surfacing etc. In such cases, wage payment was made on a
group basis for the amount of work done. Workers who formed themselves in
such groups consisted of members of' the same family and/or relatives and
friends, so that the earnings of the group could be amicably distributed
among the participating members. In the distribution of earnings which were
received by one member on behalf of a working group, the output of a day's
work by one man was considered equal to that of another man and the output
of a day's work by a woman was considered equal to that of another woman,
but a man's productivity was thought to be higher than that of a woman.
- 20 -
23. Wherever time wage rates were paid, wages of females were
invariably lower than those of males. Even in a group (employed directly
by the WD at Deori in Raisen district) with a majority of women workers
and having a woman as group-leader (Mukaddam) this wage differential was
found to exist. This wage differential varied from place to place.
Usually the female wage rate was between 75% and 85% of the male wage rate.
In some cases, it was as low as 70% of the male wage rate. Several factors
seem to be responsible for this differential. The most important is the
almost universal belief that productivity of female workers is lower than
that of males. Women are presumed to work for fewer hours every day (about
1 hour less than males) because of the time they spend to cook, and look after
their babies during working hours. Employers accept this as normal. Also,
women are supposed to do lighter jobs than men, e.g. carrying earth in
head baskets rather than excavating earth. Another important factor is
that women rarely enter into employment contracts independently. They mostly
work at the same site and for the same employer along with their husbands.
Wages are, therefore, often considered as remuneration for the joint work
of a couple, with the man as the independent agent and major partner. Finally,
in the slack periods of the dry season when construction work takes place,
alternative employment opportunities of women are even less than those of
men. When men join construction work women may engage themselves in largely
unproductive domestic chores. Women of migrant families have practically
no alternative employment opportunities when men work on construction. In
these circumstances, women of needy families accept construction work at lower
- 21 -
wages. In many areas some children (of laborers) were also employed
on construction work at wage rates 40-50% lower than those of male
workers.
24. The inter-area differences in money wages did not, however,
indicate the differences in real wages. Data on prices of wage goods on
which real wage difference depended could not be obtained systematically.
But a few things were reasonably clear. There were no significant differences
among the areas in regard to prices of manufactured goods (mainly cloth)
consumed by poor households. But in regard to food which, according to
Indian household consumption sur-eys, accounts for well over 50% of the
budget of poor households, prices differed significantly among areas,
especially because of India's foodgrain. zoning system. In foodgrain surplus
Raisen district prices were considerably lower than those in drought-stricken
Raipur where foodgrain had to be brought from other areas partly to meet the
demand of workers employed on famine relief works. Foodgrain prices in
Rae Bareli were also higher than those in Raisen. Therefore, real wages of
construction laborers were somewhat higher in Raisen than in Rae Bareli, and
were the lowest in Raipur. It was learned from field enquiries that between
the construction seasons of 1974 and 1975 money wages in civil construction
in all areas increased by 25 to 30%. Prices, particularly of foodgrains,
also registered similar increases over that period. As a result, real wages
of construction workers remained roughly unchanged.
- 22 -
Determinants of Local Labor Supply for Civil Construction
25. The observed inter-area differences in regard to local labor
supply to civil construction work were associated with considerable inter-
area differences in economic-demographic cobJitions. This strongly suggests
some explanation for inter-area variations in local labor supply for civil
works and also provides some insights into factors determining such local
labor supply. These insights conform to our theoretical expectations. We
would expect that at a given low market wage rate local labor supply for
civil works will be determined mainly by population density, the nurnber of
poor people, their alternative income-employment opportunities, the extent
of female participation, and any social-institutional factors (tenancy
relations, indebtedness etc.) which may af'fect laborers' freedom to choose
employment.
26. For obvious reasons, the size of local population and work force
within the commuting distance (say 3 miles) from a project site sets the
upper limit of the possible availability of local labor for the project
work, Other things equal, more local labor may be expected in a densely
populated area than in a scarcely populated area. But except in a very
abnormal situation of zero income-employment opportunities in the local
economy, such as was prevailing in drought-stricken Raipur, all or nearly
all working age population can not be expected to accept civil construction
work at the going wage rate. In normal conditions, the relatively poorer
households are the potential source of local labor supply to civil construc-
tion. Those who are willing to accept wage employment on civil construction
- 23 -
appear to do so because they are very poor, need current earnings for a
living and have no alternative and/or equally gainful income earning
opportunities during the construction season. Although in the social
value system, a law status is atuached to wage employment on civil works,
poverty compels people to do this work.
27. In a rural locality in which nearly all households derive their
livelihood from agriculture, the proportion of population and the number
of households who are very poor and need current earnings for a living
may be roughly estimated from data on agricultural land-man ratio, size
distribution of agricultural holdings, tenurial status of households,
pattern and intensity of cropping, and crop yields. Detailed household
information on level, and sources of income and pattern of household labor
use will be more valuable, but is not indispensable for a broad understand-
ing of the poverty profile. Some data presented in Table 4 indicate large
inter-district differences in population density, average size of agricultural
holdings, and proportion of very small holdings.
28. As Table 4 shows, the average population density in Raisen is
about ½_ of that in Raipur and only 1/5 of that in Rae Bareli. As a result,
in spite of intra-district variation in population density, the size of local
population around similar construction projects is much smaller in Raisen
than in either Rae Bareli or Raipur. Some construction projects with a fixed
time-schedule for completion, require deployment in a small area of such a large
labor force as may exceed the total working age population of the surrounding
villages even in a densely populated area. This is more ao in a less densely
- 24 -
Table 4
AveragePopulation Size of % of Agr. % of Agr.per Square Agricultural Holding Holdings
Mile Holding Below 0.5 Owner-(Number) (Hectare) Hectare Operated
Raisen (M.P.) 169 6.1 11.3 97.9(a)
Raipur (M.P.) 315 2.4 25.6 97.9(a)
Rae Bareli (U.P.) 840 1.4 48.7 98.7(b)
Yield/HectareCropping of Major
Intensitj Foodgrains
Raisen 100% 800 Kg
Raipur 130% 900 Kg
Rae Bareli 140% 1100 Kg
(a) Average for the State of M.P.
(b) Average for the State of U.P0
Source: Appendix Table 3.
- 25 -
populated area. For example, the large labor force employed on the
Barna-Bari construction project in Raisen district could not be provided
by the local population of the surrounding 25 square mile area, even if
all adults opted for construction work.
29. The carrying capacity of agriculture relative to the size of
population is much higher in Raisen than in any of the other two districts.
The average size of agricultural holding in Raisen is much above the national
average, and is far larger than that in Rae Bareli or Raipur. Even after
adjusting for differences in cropping intensity and crop yields Raisen is
considerably better off than any of the other two districts in terms of
land-man ratio and agricultural output per head of population. As local
people say, Raisen and neighbouring Vidisha never experienced famine. But
although Raipur has better land-man ratio than Rae Bareli, successive
droughts made Raipur a famine area in 1975. Hence it must be considered
a special case. The proportion of very small farm holdings (agricultural
holdings below 0O5 hectares) is also much lower in Raisen. The proportions
of landless labor households are not known. They are probably included in
households operating less than 0.5 hectares. Such small-farm families (or
the so-called marginal farmers) have to supplement their farm income by
some subsidiary income from self-employment in multifarious non-agricultural
activities and/or wage employment for others. At a similar state of
agricultural technology, a relatively higher average size of agri-
cultural holdings and a relatively lower proportion of landless and
marginal farm households imply that not only is the number of potential
wage labor force small but also there are more local employment
- 26 -
opportunities for these people. This position in regard to alternative
employment may be altered if, as is unlikely, non-agricultural activities
e.g. rural industry, as important sources of income and employment offset
the disadvantages of relatively land poor areas. We have no evidence of
such offsetting non-agricultural activities in these districts (see the
activity-wise distribution of rural labor force in Appendix Table 3).
Therefore, population density, agricultural land-man ratio and the proportion
of landless and near landless households appear to be the basic factors
determining local labor supply for civil works. And in most cases, when
men join construction work their women are also expected to work alongside.
30. The prevalence of inferior tenurial status among small farmers,
and indebtedness of the poorer households may significantly affect the total
labor supply for any project work introduced in a locality. The small tenant
farmer, whose farm income is lower than that of the owner farmer by the amount
of rent that has to be paid to the land-owner, is likely to have great need
for supplementing farm income. On the other hand, the tenant farmer may be
under perpetual threat of ejectment from land and may have to borrow occasionally
from his landlord and work for him at low wages. The tenant's freedom to
choose wage employment may, therefore, be effectively limited by his depend-
ence on and deference to his landlord. But, as Table 4 shows, tenancy is
not prevalent in any of the observed areas; over 97% of agricultural holdings
are wholly owner-operated. Although. field investigations indicated the
existence of some share-cropping and fixed rental arrangements, it seems fair
to maintain that tenurial relations do not significantly influence the supply
of local labor to civil construction.
- 27 -
31. Indebtedness of the local poor can also tie them to the
local well-to-do and thus restrict their freedom to accept other work,
such as on civil construction. Data on rural indeb4ness were not
available for the areas visited. But some local laborers and informed
individuals reported that many of the poor borrow from the local well-
to-do farmers, and till the debts are repayed some of these debtors have
to work at low wages for the creditors. Such debt-bondage appeared to be
relatively more prevalent in less labor-abundant areas (such as Raisen) than in
more labor-aburndant areas such as Raipur or Rae Bareli. Because of low
wages in the latter areas such tie-up does not seem to bestow anyr signifi-
cant economic advantage on the creditor, but in the less labor-abundant
areas it apparently does. If such an indebted worker has to be hired by
a prospective new employer (e.g. a construction contractor) the worker
has to be paid some advance to pay off his debt. This has been reported
in some cases. But, overall it seems that in spite of considerable indebt-
edness of the rural poor, it is not an important deterinant of the supply
of local labor to civil construction.
32. Field observation and enquiries indicate that local labor supply
for civil construction does not come from any particular ce-tes or tribes.
The proportions of scheduled tribes and scheduled castes in the total
populations of Raisen and Raipur are very similar (see Table 5). Yet the
supply of local labor to civil construction was much smaller in RaiAen than
in Raipur, both absolutely and as a proportion of the total labor force
employed on civil works. The supply of local labor for civil construction
- 28 -
was considerably higher in Rae Bareli than in Raisen, although there is
no tribal population in Rae Bareli and the proportion of scheduled castes
in the total population of Rae Bareli is about the same as the pro-
portion of scheduled caste 3 and tribes in the population of Raisen.
Table 5
Percentages of Population Belonging toScheduled Castes and Tribes
Scheduled ScheduledCastes Tribes
Raisen 17.1 13.5
Raipur 13.6 14.6
Rae Bareli 30.0 0
Source: Appendix Table 3
33. The supply of local labor to civil construction at any given
wage rate varies from one period to another within the same construction
season. This is due to the variation in agricultural activity level in
the locality. Therefore, the timing of civil construction work and the
seasonal variation in agricultural activity level in different areas are
impcrtant considerations relevant to labor supply for civil works. By and
large, planting and harvesting are periods of peak activity in agriculture,
and the remainder of the year is the slack period. The peak and slack
periods differ from region to region, and depend mainly on the cropping
- 29 -
pattern and intensity. By and large, the agricultural slack period in
the dry construction season is longer in exclusively or mainly Kharif
(summer) crop areas than in mainly Rabi (winter) crop areas. In areas,
such as Raisen and other central parts of M.P., where practically only
winter crops (wheat and pulses) are grown the agricultural slack period
during the construction season is from December through February, and the
month of May. In areas such as Rae Bareli and other irrigated parts of
U.P. where winter crops are more important but summer crops are also grown,
the slack period is from mid-December to mid-March. In areas, such as
Raipur and other southeastern parts of M.P., where mostly Kharif rice is
grown, the dry season slack period extends from mid-December through May
(see Appendix Table 4). In other words, under the major alternative cropping
patterns the dry season slack period in agriculture is shorter than the
usual 7-month construction season.
34. This seasonality explains why towards the end of February some
local laborers in Raisen were returning to agriculture for harvesting, and
some more said they would do so in March. In Rae Bareli also, some local
workers said they would return to agriculture in April for harvesting. In
drought-stricken Raipur, local laborers had no alternative work to look
forward to till the expected onset of the monsoon in June. The seasonality
of agriculture introduces a shift factor in the supply curve of local labor
for civil construction. Also under normal agricultural conditions, work
force for the entire construction season cannot be drawn from those who are
unemployed/underemployed only in the agricultural slack season
- 30 -
35. If civil construction work is desired to be continued throughout
the dry season,,as is the case for large projects of government departments,
without affecting agricultural operations and output, it is necessary to
have an adequate supply of agricultural surplus labor for construction
work during the entire dry season either from the project area and/or from
other areas. Although detailed information on utilization of labor by
poor rural households in various activities during the different periods of
the year and the associated incomes obtained from them could not be obtained
during the field investigation, there is little doubt that in the slack
agricultural season poor households have considerable unutilized labor time
even in very less densely populated Raisen. The demand for labor in tradi-
tional types of local self- and wage-employment, such as cattle grazing,
wood gathering, fishing, house-building and repairing etc., is not adequate
for fully occupying every potential worker of poor households for six or
seven days a week, during the lean season even though rural/agricultural
wage rates fall during this time. Employment of women falls more than that
of men. Women, it is said, withdraw from the market in the slack agricultural
season to make room for employment of men. Also in spite of controversies
on the existence of surplus labor, several studies indicate that a con-
siderable stock of surplus labor time exists during peak agricultural
seasons in most parts of India.
- 31 -
36. Some sketchy information gathered during field investigation
indicated that not all the local labor force of Rae Bareli, or even of
Raisen, were fully absorbed in the local econonr during the peak agricultural
season. Some local workers, although numerically small, who were promised
continued employment till the end of the construction season on the
Barna-Bari projects in Raisen district were staying on even when local
harvesting started. In Rae Bareli both contractors and laborers said that
some local laborers would continue civil construction work at unchanged wage
rates during the wheat harvest period. (The stock of surplus labor time
seems to be much larger in many poorer a:-as which in spite of considerable
net out-migration of laborers during the local agricultural peak period
showed no evidence of any decline in agricultural output. But the issue of
migrant labor will be discussed later.)7
37. It does not follow, however, that all the unutilized labor time
of every poor household will be supplied for construction work at the going
rural/agricultural wage rates of the locality. This is for several reasons.
Households above survival income levels have choice between income (work)
and leisure, and between different kinds of work. A lower social status is
attached to constrvu- ion work than to other rural work. Construction work
is physically more arduous and requires a different discipline and pace.
It requires more calorie consumption than slack period rural/agricultural
work. Also surplus labor time does not necessarily provide surplus laborers
particularly among males. Some men may be without work for two or three days
in a week; but rarely any construction authority will offer them casual and
- 32 -
irregular employment on. such days, even if the workers are willing to
work. Female laborers even if they are surplus in agriculture usually
do not join construction work except in association with male members of
their families. Furthermore, because there is no certainty that seasonal
civil construction work will be available every year, many local laborers
may prefer to continue established employment relationship with local
employers, even though they may not pirovide work for all days.
38. Some bits of information, collected at Deori in Raisen district
where adequate number of laborers for the experiment sites of the Labor
Substitution Study were not available for continued seasonal employment
at the low wage rates fixed by the Public Works Department of the govern-
ment, seem to be relevant and instructive. More workers were available in
the same area at the same wage rates for year-round employment on such work
as road maintenance. All unskilled labor required for the completion of a
bridge on the Sindhur River near Deori was hired by the contractor from one
local village for 2-3 days at a time and at wage rates not much higher than
those at Deori. More workers for seasonal employment were available also
at Deori when higher wage rates were offered by the government department.
39. How much of the unutilized labor time of the local poor may be
obtained as flow of labor supply to civil construction at different wages
cannot be answered on the basis of this preliminary field investigation.
But observations and enquiries in three districts tended to indicate a certain
behavioral pattern. The supply curve of labor for construction is given by
income levels and substitution possibilities between income (work) and leisure
- 33 -
at levels of work below full utilization of labor time of poor
households. One may expect that for households which have very low incomes
for sustenance - not only incomes obtained in the lean season but also in
the peak season - and a lot of unutilized labor time (leisure), the rate
of marginal substitution between income and leisure would be constant.
In fact, in all these areas some local labor supply to construction work
was available at the existing local rural wage rates. They probably
belonged to the poorest households. Whether the efficiency cost of their
labor was higher than that of others is not known. The extent of availability
of such labor varied from area to area bec-use of the underl]ying differences
irn local economic conditions. Only in the abnormal conditions of drought-
stricken Raipur was local labor supply for civil construction pvrfectly
elastic. In other areas, wage-rates higher than prevailing in local agricul-
ture were needed to attract more local laborers to construction work. These
others were probably not so desperately poor and hence attached increasingly
higher value to leisure in terms of income particularly if it had to be
earned by construction work. They might, however, be willing to supply more
labor for agricultural work at the prevailing wage rates, but not for con-
struction work for reasons stated earlier. In normal conditions of agriculture,
there seems to be an initial flat segment of the local labor supply curve
for civil construction at the prevailing level of agricultural wage rates.
The flat portion is followed by a rising labor supply curve. Both the extent
of the flat segment and the steepness of the rising segment are mainly
determined by local economic-demographic factors which vary considerably
- 34 -
from area to area. Changes in agricultural conditions affecting local
wage rates and income opportunities may cause shifts of a part or the
whole of this supply curve even during the dry construction season.
40. Only some crude guesses about the expected availability of local
labor for civil construction may be made for operational purposes. In
less densely populated areas with a relatively higher agricultural land-
man ratio and better local income-earning opportunities, a smEll proportion -
in the order of 10% - of the labor force of poor households maLy be available
for constructiQn work roughly at the prevailing local wage rates. This
proportion is likely to be higher - even up to 50% - in more densely
populated areas with poorer agricultural endowments per head of population.
After a certain point, a rising supply price is to be expected in both
cases. Further, the more flexible is the organization of construction
employment to allow potential local laborers to work some days on civil works
and some days in local agriculture the greater is likely to be the man-days
available for civil construction. This may be more suitable for small
projects than for large ones which usually require continuous work by a
huge labor force.
The Role of Migrant Labor
41. Migrant labor from other parts of the country is an important
element in the construction labor market in many areas and is a positive
factor helping labor market integration. Why such labor is imported for
civil works located in seemingly labor surplus areas, and what it costs (wages,
transportation, housing accommodation, water supply etc.) - are important
questions for a labor market study. Migrant laborers are employed mostly
by contractors, and mainly because they are cheaper than local laborers
after a point. When employers anticipate or experience rising supply price
of local labor for employment on large projects, they try to avoid it by
importing and employing migrant labor. Thanks to the availability and
mobility of migrant laborers, construction employers can, given sufficient
time, avoid a general labor shortage or a highly inelastic labor supply,
even if local labor supply becomes increasingly inelastic. Migrants from
depressed rural areas are in a back to the wall situation, and compete with
locals for jobs and thus help to stabilize wage rates and flatten the labor
supply curve.
42. Field investigations in Madhya Pradesh and Uttar Pradesh show
that almost all migrant laborers on construction work are landless laborers
or small farmers. Only a very small fraction of them have some non-agricultural
skills, such as masonry, well-sinking etc., and are employed at relatively
higher wages. But they also originally belonged to agriculture till a few
years ago, and only through seasonal migration and construction employment
developed these skills and finally ceased to be part of the agricultural
labor force. Most of these migrants usually leave home in late October (after
the festival of Dewali), and some after the rice harvest in November-December.
They return home in late May or early June, i.e., at the end of the construc-
tion season and the beginning of the monsoon rains. Some return home because
they need to work during the agricultural peak, others because construction
employment is not available during the rainy season. Only a few groups of
- 36 - i
migrants reportedly return home in March-April. for harvesting Rabi
(mainly wheat) crops. But many migrant workers said that they would
stay on during the monsoon if construction or other work were available.
Either they had no land or their small holdings could be cultivated by
members of the extended family, or friends, without any loss of production.
43. The migration of thousands of laborers, mostly with their wives
and young children, from more impoverished rural areas to other rural
areas in search of seasonal work is an annual spectacle in India, even in
normal times' Also, almost in every year some parts of the country are
adversely affected by drought, flood or pest. Anid unless adequate relief
works are introduced in time to provide employment nearer home, people
hurt by such calamity swell the ranks of potential migrants. Not all
impoverished areas are equally important sources of migrant laborers.
Historical factors including established contacts of construction employers
with some areas, and unevenness and imperfection in the dissemination of
information on employment opportunities partly explain these differences.
Also the propensity to seasonal migration is higher in areas which have
continued to 'be relatively impoverished for decades than in areas which are
periodically affected by calamity or have been experiencing impoverishment
only in recent years as growth of local economic opportunities lagged behind
population growth. For obvious reasons, it takes time to adapt, and adjust
to, a style of life which seasonal migration involves. Particularly for the
newly impoverished there is a psychic cost of migration which needs to be
overcome. But in the face of evidence of the large number of migrants from
- 37 -
many areas it is grossly erroneous to think that the sources of migrants
are a few villages in contact with a few contractors. This might have been
the situation a few decades ago, but that situation has substantially
changed. Project authorities and contractors emphatically asserted, and
many migrant laborers corroborated that if required for civil construction
many more migrant laborers can be obtained from different areas at the
prevailing wage rates. There is no good reason to contest this view on
availability of migrant laborers. But how much time is needed to obtain
this labor supply, and what it costs are important considerations. Let us
consider costs first.
44. The experience of Raipur and the statements of many migrant
laborers suggest that in normally impoverished or periodically calamity
affected areas from where migrants mostly come, villagers will be willing
to dig, carry or break stones for minimum subsistence wages, if employment
is provided nearer home. (At 1975 prices, in Raisen this was about Rs 4.00
per couple, or Rs 2.25 per man/day). If they have to move away from home
for employment the additional costs of movement will be included in the
supply price of labor. These additional costs are mainly transportation
and housing accommodation at site. The question of foregone opportunities
of children's schooling at home does not arise because such poor children
do not attend school. Also the seasonal migration of a man and his wife
and children brings considerable net benefit, and certainly no net cost,
to the other members of the joint family, who remain behind.
- 38 -
45. One way fare of the worker and his family is usually paid by
the employer to those migrants who are recruited from their villages and
who work for at least 3 months but less than 6 months; return fare is paid
if they work for 6 months or more. A migrant family normally supplies at
least two workers - man and wife. The longer the distance involved the
higher is the transportation cost. Dividing railway fares of migrant
families from nearest and farthest areas by the number of person days worked
during the season, it is possible to make rough estimates of transportation
cost per migrant worker per day. At 1975 prices it is between Rs 0.10 to
Rs 0.40. In almost all cases housing accommodation provided to workers by
the employer on the construction site is nil or scanty. Workers during their
spare time gather leaves and twigs from the surroundings and make very
fragile hutments near work sites. Some employers provide some materials
for housing, while others do not have to bother at all. Only in places where
no surface water source is available nearby, employers install a hand pump
to provide water supply to a fairly large group of workers. The hand pumps
and house-building materials supplied by employers can be used for at least
two construction seasons. The estimated costs are small, and are unlikely
to exceed Rs 0.15 per worker per day. Thus, costs of transportation, housing,
and water supply for employing migrant labor range from an estimated Rs 0.25
to Rs 0.45 per worker per day, or around 10% of wage cost in 1975.
46. Wages of migrant workers were found to vary between areas, and also
in the same area, On the higher side, the modal wage rate was Rs 4.00 per day
for males and Rs 3.00 per day for females. Because of inter-area price
- 39 -
differences, real wages were different in different areas. (Field
investigations suggest that a part of the wage payable to the migrant
laborer is appropriated by the gang leader/agent of the contractor. Thus,
the actual supply price of migrant labor is somewhat less than the cost
incurred by the employer.) At the above modal wages plus 10% other costs
contractors apparently coulSd get as many laborers as they required in 1975.
Except for a very few corporate construction firms which use fairly mechanized
methods, technology used by employers being similar and labor intensive in
all cases, labor requirement is determined by the Government's budgetary
allocation for civil construction. Additional labor requirement created by
a quantum increase, say by 50%, in civil construction outlay can be met by
additional migrant laborers at this modal cost adjusted for price changes,
if any. Whether at this cost labor supply would be elastic enough to meet
the requirements of a several fold increase in constr-dction activity through-
out the country is an open question, but is not relevant for operational
purposes.
47. But an elastic supply of migrants cannot be obtained instantly.
Time element is very important in the flow of migrant labor. If employers
have a fixed time-schedule for completing large projects and want to employ
quickly a large number of workers, wages have to be raised very much to
obtain the required number. This is because under-employed or surplus labor
do not make quick decisions to migrate to distant areas especially if employ-
ment is offered only for a short duration. A single year's famine in an area
is unlikely to result in large-scale migration for short-period employment.
- 40 -
Nor will uncertain prospects of employment or short-period employment
opportunities induce massive migration from perennially depressed areas.
They would try to eke out a living in their own areas in the hope.of a better
future. This explains the apparent paradox of rising wages in some large
construction project areas and the existence of under-employed/surplus
labor in other areas, who are willing to work at low wages. Given the
necessary time to disseminate information, and assurance of regular employ-
ment for the full season many such workers would be available for civil
construction. Improvement of dissemination of information about employment
opportunities, and establishment of timely contact with source areas of
migrant labor in anticipation of large labor requirement can substantially
reduce the problem of rising wages associated with peak demand for labor
for major construction works.
48. Apart from relative cost and availability, there are also same
other reasons tor using migrant labor. Contractors, particularly large
ones, have strong preference for migrant workers whom they consider more
reliable, disciplined and hard-working. Even under the much practised piece
wage system which equalizes wage-output ratio, they would prefer migrants
to locals. These contractors maintain that even in areas where local labor
supply is adequate, they very much like to employ some migrant laborers
because local laborers are irregular in attendance, lazy, indisciplined,
undependable, and they, often create 'trouble' including unreasonable wage
bargain and occasional stoppage of work under instigation of local leaders.
Contractors dislike the 'monopoly' of local workers. Migrant workers live
- 41 -
close to the construction site, have no local connections, do not have
to attend to any local agricultural or other activities and, therefore, can
be relied upon to do full time work regularly, and also to look after the
construction materials even at night. They are more amenable to work
discipline imposed by contractors, supervisors and gang leaders. Small local
contractors who employ small numbar of workers and who have no established
connections with migrant laborers usually depend on local labor for construc-
tion work, and get along with their real or imagined deficiencies.
Summary, and Concluding Remarks on Possible Future Research
49. Conditions of labor markets for civil construction in India differ
considerably among regions and among different periods of the dry construction
season. Construction labor markets are, however, not completely segmented
and localized. They are integrated to some extent by considerable inter-
area migration of labor in response to differences in wage rates and employment
opportunities which are generally lower in labor 'exporting' areas than in
labor 'importing' areas. Civil construction work 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
employment is, therefore, seasonal. Construction work is not the principal
occupation of these seasonally employed unskilled laborers. As the Indian
Census shows, construction is the main activity of only 1.1% of the country's
labor force. Both local and migrant labor supply for civil works come from
landless or small farming households with very low annual incomes and scanty
alternative income-earninig opportunities in the construction season.
- 42 -
50. Female laborers constitute nearly 50% of the total labor force
employed on civil construction. Husband and wife working together is the
rule rather than the exception among both local and migrant laborers.
Only a few large construction contractors do not as a matter of policy
hire any female workers. But females rarely work on construction unless
male members of their families also work there. This high female participa-
tion in construction work is in contrast to the reported low participation
rate of females in the rural/agriaultural labor force. But there again
proportion of female workers is much higher among agricultural laborers, or
poorer people, than among other groups. Female construction workers are
paid lower wages than males, although the differential is not the same in'
all areas. Several factors seem to be responsible for this differential
which is usually 15-25%. The most important is the almost universal belief
that productivity of female workers is lower than that of males. Some
children of laborers also work on construction at much lower wages than
females.
51. Except in relief works introduced to provide employment and income
to local people, hiring of local labor for civil construction is not com-
pulsory. Normally a mix of local and non-local laborers are employed on
all large construction projects. Local laborers come from villages within
commuting distance (about 3 miles) from work sites. Non-local laborers come
from different areas, some of which are hundreds of miles away. During
the period of their employment all non-local laborers live in temporary huts
made near construction sites. The number and proportion of local laborers
it
- 43 -
in the total construction labor force employed vary from area to area.
Local laborers do not constitute 100% of the work force engaged in any
major construction projects, except possibly in calamity-affected areas.
The availability of local labor for civil construction at the prevailing
low wage rates ls found to be higher in areas with low land-man ratio
than in areas with high land-man ratio. The size of the landless and small
farming populationa t he agricultural land-man ratio, the cropping intensity
and yields, and the dry season income earning opportmnitie-s in the local economy
appear to be the main determinants of labor supply to civil construction.
Tenurial conditions and debt-bondage of poor households are not, at least
in the areas observed, important constraints on labor supply to civil con-
struction.
52. In all these areas some local labor supply to construction work
is available at the existing rural wage rates. The supply curve of local
labor for civil construction rises upwards after a point. The initial
flat segment of the supply curve is very short or reasonably long depending
on differences in local economic-demographic factors mentioned above. But
nowhere, except in abnormal disaster-situations, is the labor supply curve
for civil constraction infinitely elastic at the prevailing wage rate in
local agriculture. Labor-leisure trade-offs are not the same for different
groups of workers at different income levels. Once the available supply
of desperately poor local laborers is exhausted, higher wage rates are
needed to attract more local laborers to construction work. But employers
need not operate all along the rising local labor supply curve, because a
fairly elastic supply of migrant labor is available at a relatively low cost
to meet the requirements of civil construction activity as determined by
the government's investment allocation. Field observations indicate
an S-shaped labor supply curve for civil construction. The initial portion
is fairly horizontal, then a rising segment is followed by a fairly
elastic range of the curve, due to the a-ailability of migrant labor. The
often encountered paradoxical situation of rising wages at peak demand
for labor in large construction areas and existence of underemployed labor
elsewhere might be eased through proper time-scheduling of projects and
adequate and timely information dissemination to potential laborers.
53. Whatever is the nature of the supply curve of labor, one is
ultimately interested in assessing the social cost of additional employ-
ment in civil construction. However, 'he tentative observations on the
supply price of labor are not &dequate for such an assessment. The social
cost of employment may be and is likely to be lower than this supply price
which is quite low in the lean periods of the dry season. Like the supply
price, the soqial cost will also be different in different areas and in
different periods of the construction season. In theory, the social cost
of labor is given by (a) labor's foregone marginal product plus (b) social
cost of additional consumption associated with employment plus (c) any marginal
disutility of effort (work) minus (d) social benefit of additional consumption
associated with work. What weights to give to benefit and cost of additional
consumption will depend on value judgements. If its net social benefit/cost
is assumed to be nil, then marginal product foregone and marginal disutility
of work will add up to the social cost or shadow wage rate of construction
labo.^. Because of lack of detailed data on farm income levels, alternative
agricultural and non-agricultural employment opportunities during the
various weeks of the construction season, and the labor force profile, any
precise evaluation of the opportunity cost of construction labor in different
periods and areas is extremely difficult. Attempts at estimation are often
made with reference to a simplified framework involving a high level of
abstraction.
54. The marginal opportunity cost may be viewed as a function of the
proportion of available labor time of poor households utilized in different
periods. In a very lean period the value of foregone opportunities such as
wood-gathering or fishing is at 1975 prices at most Rs 1.00 to Rs 1.50 per
day, which is lower than the market wage rate. At other times it may be
near or equal to the market wage. Marginal disutility of effort is likely
to vary between types of work, and between more needy and less needy house-
holds. The very hard-pressed workers with little alternative employment
opportunities accept construction work at wage rates prevailing in agriculture,
while those who are a little better-off want somewhat higher wages. Thus in
one case, the social cost of labor may be considered just equal to the
marginal opportunity cost, and in the other case the marginal opportunity cost
plus the difference between the agricultural wage, and the acceptable con-
struction wage.
55. It seems, therefore, that efforts for estimating shadow wage rate
of labor in civil construction, which would vary from area to area, among
periodb of the construction season and also among different groups of laborers,
- 46 -
may not be promising of results usable by project authorities. Also the
application of such shadow wage rates, even if possible, would not change
labor-capital mix in construction industry which already uses highly
labor-intensive techniques involving in most cases only human labor and hand
tools.
56. More useful purpose will be served if future research is diracted
to a better understanding of how construction labor market operates and how
it inter-acts with rural labor markets for other activities. It should
include a study of sources and supply price of construction laborers and
their occupations during the rest of the year. Systematic data collection
and analysis of labor utilization by households (of different asset and
income levels) and associated income-earnings in some small sample areas
around construction projects would provide more useful insights into the
opportunity costs of construction labor and the main determinants of local
labor supply. This will also help *to understand how and whether the supply
of labor to civil construction affects labor availability and wages in other
rural activities. Migrant labor, which is more numerous in large construc-
tion projects, should be more intensively studied - in regard to number,
source area, usual occupation and source of income, asset-income level, family
size and structure, wages, other costs, time pattern of migration, methods
of recruitment etc. Inter-area wage differential and movement of labor is
an important area of investigation. Are all migrant laborers seasonal, or
is there a permanent migratory labor force without any base in any source
area? How does seasonal migration affect agricultural and rural development,
in source areas? These questions may be explored by surveying groups of migrant
- 47 -
laborers, and a sample of households in the source areas. The seasonal
patterns of agricultural activity in major regions of India deserve
further investigation. Also whether the civil construction season is
the same throughout the country. Another interesting question is wage-
output ratio of different workers. This may explain whether wage differential
is based on efficiency cost considerations. It will be useful to examine
the implications for technology and organization of civil construction of
re:Liance on seasonal and part-year workers, as well as the relative costs
of alternative methods. Future prospects of low wage labor availability
should be assessed. Are there likely to be an increasing number of rootless
lowf income workers?
Appendix Table 1
Daily dare Rates for Unskilled Construction Workers in India
(Data Collected Through Field Survey During February-March 1975)
EmployingLocation Wa Age Source of Labor
BhoEal City, N.P. *Rs 40OO/Male (M) Contractor Gujrat, Madhya Pradesh
*Rs 3.00/Female (F) Maharashtra
Rs 2.85/M PWD Madhya Pradesh (Bhil tribe)
Rs 2.50/F "
Raisen bistrict, M,P.
Bama Dam area.Diversion Road Rs 3.25/M PWD ,ocal. M.P., Gujrat
Rs 2.75/F "t
Rs 3.50/M PWD
Rs 3.00/F i t
Barna Dam *Rs 4.00/M Contractor;PWD M.P., Maharashtra
*Rs 3 . 00/F " "
Barna Dam, andnearby bridge(skilled) Rs 5.00/1 Contractor Andhra, Karnatak (Mysore)
Rs 3.50/F " Maharashtra
Barna-Bari Canal *Rs 40oo/M Contractor M.P., Andhra.
*Rs 3.00/F i
Deori (NationalHighway; experimentarea.) +Rs 2.70/M PWD Local; Maharashtra
+Rs 2.35/F Ii it
it Rs 4.00/M " Local
Bridge on River Sindhur(8km from Deori) *Rs 4h.O/M Contractor Local (casual)
*Rs 3.OO/F if Local ( " 3
Appendix Table 1 (Continued)
EmployingLocation Wage Rate Source of Labor
Narsinpj2r District, M.P.
Highway *Rs 2.50/M Contractor Drought affected areaof sam district
*Rs 2.25/F
Mandla District, M.P.
Highway *Rs 2.4o0/ PWD Local ( drought affectedarea)
*Rs 24 05/F
RaprDistrict, M.P.
Road and quarry *Rs 2.25/M PWD Local (Severely affectedby drought)
*Rs 1.70/F
Lucknow District, U.Po
Gomti Bridge *Rs 3.50-4.00/m Contractor Local and nigrants
Rae Bareli District UOP.
Canal *Rs 4.00/M Contractor Local, M.P., U.P0 Orissa
*Rs 3.50/F it
* indicates that according to statements of laborers andemoloyers, abundant labor would be available at the goingwage rate.
+ indicates inadequate labor availability at the goingwage rate.
1 U.S. dollar is approximately equal to 8 Rupees.
Appendix Table 2
Piece Wae Rates for Construction Work in India
(Data Collected Through Field Survey During FebruaryT-March 1975)
RoughlyEstimated
Piece Type Daily Earning Enplvying Source ofLocation Wage Rate of Work Per Worker Labor
Raisen - M.P. Rs 2.70 earth exca- Rs 2.70-3.00 Agr. Deapt Rajata"n, local(near district per 100 ou.ft. vation and and other partsheadquarters) haulage of M.P.
Bari, Raisen-M.P. Rs 4.00 earth exca- Rs 3.00-4.00 Contractor MP.per' 100 cu.ft. vation and
haulage for -
road
Barna Dam, Rs 1.50-1.75 carrying loads Rs 4.00-5.00 Contractor Andhra, &Raisen-M.P. per l00pans of for dam Maharashtra
mortar
Rs 15.00-25.00 carrying loads Rs 6.00-9.00 Contractor Andhra, &per 100 stones for dam Maharashtra
Barna Quarry Rs 1.25 per 1 stone drilling Rs 5.00-8.00 Contractor TamilnaduRaisen-M.P. ft of drilling
Bari, Raisen-M.P. Rs 4.00-5.00 ,Iarth exca- Rs 3.00-4.50 Contractor M.P. andper 100 cu.ft. vation and Rajastan
haulage forcanal
Rae Bareli-U.P. Rs 5.00 per earth exca- Rs 6.00-8.00 Contractor Local & othertruck load vation and parts of U.P.
haulage forcanal
Rae Bareli-U.P. Rs 9.50 per earth exca- pure labor - Contractor Haryana, &100 cu.ft. vation and earning could Rajastan
haulage for not be estimatedcanal - withmules anddonkeys
Rae Bareli-U,P. Re 11.50 Same with Pure labor Contractor U.P.per 100 cu.ft. camels (involv- earning could
ing longer not be estimatedlead)
Rae Bareli-U.P. Rs 5.00 earth exca- Rs 4.00-5.00 Contractor Local and Orissaper 100 cu.ft vation and
haulage forcanal - on headloads
Rae Bareli-U,P. Rs 4.00-4.50 earth exca- Rs 3.00-4.50 Contractor Local, MOLaua,per 100 cu.ft. vation and M.P.
haulage forcanal - on headloads
Atpendix Table 3
Some Data on Populatior. and Agriculturein Three Districts
A. Population Density, and Importance of ScheduledTribes and Castes
% of Sch. % of Sch.Population Tribes in Castes in
District Density Total Population Total P2pU,lhtin
Raisen (M.P.) 169/Sq.mi 13.5 17.1
Raipur (M.P.) 315/Sq.mi 14.6 13.6
Rae Bareli (U.P.) 840/Sq.mi 0 30.0
', . Holding Size,2 Cropping Intensit n Yields
%Of %ofAverage Size Holding Holding Yield/Hectare
of Agr. below 0.5 below 1 CroppingDistrict Hectare Hectare n Wheat Rice
Raisen (M.P.) 6.1 hectare 11.3 14.1 100 820Kg
Raipur (M.P.) 2.4 hectare 25.6 43.8 130% 910Kg
Rae Bareli (M.P.) 1. hectare 48.7 72.3 14O% 110OKg 755Kg
C. Ag-ricultural Holdingsand Area by Types of Tenure
l4adhya Pradesh Uttar Prade-h
% of holding % of area % of holding % of area
1. Wholly owned andself -operated 97.9 97.5 98.7 96.3
2. Partly owned andpartly rented 1.2 2.1 n.a. n.a.
3. Wholly taken onrent 0.9 0.4 1.1 o.6
(Cont 'd)
4ppendix Table 3 (Continued)
D. Distribution of Rural Labor Force byMain Activity, and Sex
Forestry,Agri- Fishery &
cultural Allied Other Total RuralCultivators Laborers Workers Workers Labor Force
Raisen Number in '000 76 73 3 28 180District (% of total) (42.3) (40.6) (1-7) (15.4) (100)
% of femalesin each category 4.7 32.0 6.5 15.9 17.4
Raip Number in 1000 564 343 15 79 1001District (% of total) (56.4) (34.3) (1.5) (7.9) (100)
% of femalesin each category 34.6 47.9 10.2 21.1 37.7
Rae Bareli Number in '000 317 108 2 45 472District (% of total) (67.2) (22.9) (0.4) (9.5) (100)
% of femalesin each category 8.1 33.7 12.5 7.3 14.0
Female Labor Force Male Labor ForceFemale Population Male Population
Rural Raisen 12.6% 54.2%
Rural Raipur 32.6% 55.2%
Rural Rae Bareli 9.3% 54.2%
Sources:
A and D. Government of India, Population Census of India 1971, Vol I (UnionPT imary Census Abstract).
B. For Raisen and Raipur, Govt. of M.P.,, Agricultural Statistics 1972(based on Agricultural Census of India 1970-71). For Rae Barelimfromthe District Collectorate based on unpublished data of Agr. Census ofIndia 1970-71.
C. Unpublished data on Agricultural Census of India 1970-71.
ndix Table
Seasonality of Agriculture and
Rae Bareli (U.P.)
Main crops - wheat and rice
Sowing/Planting Period Harvesting Period
Wheat October - December March - May
Rice July - August October - November
Agriculture Wage Rate:
March - ay 1974 Rs 3.00 - 5.50
June - September 1974 Rs 2.00 - 3.00
October - December 1974 Rs 3.00 - 3.50
January - February 1975 Rs 2.00 - 3.00
March 1975 Rs 3.00 - 4.00
Raipur (M.P.)
Main crop - rice
Planted: July August; Harvested: November - December
Agriculture Wage Rate:
July, August, November,December 1974 - Rs 2.00/day
Remaining months of 1974 - Rs 1.50/day
Raisen (M.P.)
Main crops - wheat and pulses
Sown: October - November; Harvested: mid-February - April
Agriculture Wage Rate:
March April 1974 Rs 4.00 - 6.00/day
October - November 1974 Rs 3$50 - 4.00/day
Other months of 1974 Rs 2.50 - 3.00/day
February, 1975 Rs 2.50 - 4.00/day
Sources: Rae Bareli - District Agricultural OfficerRaisen - Deputy Director of AgricultureRaipur - District Agricultural Officer
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