India Biannual Construction Market Report 1Q/2Q FY2025
Labour rate trends
Labour rates
Note: All the rates represent basic rates in INR/day and don’t include any dearness allowances, uplifts for abnormal working conditions, contractor margins or taxes. Rates have been collated by Gleeds.
Note: All the rates represent basic rates in INR/day and don’t include any dearness allowances, uplifts for abnormal working conditions, contractor margins or taxes. Rates have been collated by Gleeds.
Note: All the rates represent basic rates in INR/day and don’t include any dearness allowances, uplifts for abnormal working conditions, contractor margins or taxes. Rates have been collated by Gleeds.
Note: All the rates represent basic rates in INR/day and don’t include any dearness allowances, uplifts for abnormal working conditions, contractor margins or taxes. Rates have been collated by Gleeds.
Note: All the rates represent basic rates in INR/day and don’t include any dearness allowances, uplifts for abnormal working conditions, contractor margins or taxes. Rates have been collated by Gleeds.
Note: All the rates represent basic rates in INR/day and don’t include any dearness allowances, uplifts for abnormal working conditions, contractor margins or taxes. Rates have been collated by Gleeds.
The upward trajectory of labour rates persists, propelled by escalating demand, mounting inflation, and an impending shortage of skilled workers. The year-on-year labour costs across all cities are averaging a 7% increase during the 3Q/4Q FY2024 period.
Among the six cities discussed in this report, Mumbai and Pune have recorded the most substantial surge, a 15% average across the labour categories, with skilled labour rates escalating by up to 19% during the past two quarters. Meanwhile, Chennai and Hyderabad have experienced a more moderate 5% increase, and Bangalore's rates remained the same.
The construction sector is pivotal in India's economic landscape, with its workforce as its cornerstone. It employs approximately 13% of the country's labour pool and is the second-largest employer after agriculture. However, akin to global trends, significant shortages persist, particularly in specialised trades such as carpentry, electrical work, welding and masonry.
Over 90% of survey respondents said their organisation is impacted by the labour shortages, with nearly 40% facing severe issues that limit their operations.
Between 2000 and 2019, the compound annual growth rate (CAGR) for site preparation in construction surged by 17.58%, while building construction grew at a slower pace of 8.79%, creating workforce demand with a defined skill gap.
Although rural participation in informal occupations has somewhat bridged the gap between the labour force and workforce, migration patterns lead to fluctuations in availability, creating disparities in wages and job quality for skilled and semi-skilled workers. Notably, our recent Gleeds market survey highlighted that 86% of respondents faced difficulty sourcing skilled labourers, similar to findings from our last report, indicating no change in labour market dynamics.
The burgeoning demand for residential properties in Tier 2 and 3 cities underscores the need for a revitalised construction workforce. To address this, the government has launched various skill development programmes to cultivate a competent labour force aligned with industry requirements.
Moreover, the government has adopted a multifaceted approach to bolster the construction labour market, including subsidies for raw materials, improved access to credit, and incentivising private sector investment in infrastructure projects. These efforts aim to sustain industry growth while tackling labour force challenges.
Another pressing challenge in the labour market is the rapid evolution of technologies, particularly post-COVID-19. The increased demand, connectivity and adoption of emerging technologies have led to a gradual transition of skilled workers to the gig economy, creating skill gaps yet to be filled by generative/automation technologies in emerging markets like India.
In terms of remuneration and welfare, the Mumbai and Pune regions experienced a 15% average wage increase between FY2023 and FY2024 due to heightened construction activity. Similarly, other major hubs like NCR, Hyderabad, Bengaluru and Chennai saw a 5% annual wage rise across skill levels. Wages are expected to increase due to severe shortages, as reported through the Gleeds' market survey.
The push towards mechanical and automated construction, lean construction methods, modular construction, robotics, and 3D printing in the short to long term will help reduce labour cost pressures.
