ABSTRACT
In terms of the National Agenda, when the country is traversing into becoming the developed economy, the prominent role is played by the Real Estate sector for the reason that it is 2nd largest employment-driven, which comes after agriculture sector. For the economic growth of the country, there is imperative need for sustained urban development and productivity. The zeal of the sector has been revolutionizing it by bringing significant improvements and changes. But the persistent shortage of labour has so far stalled or minimized development in the sector, as adequate workforce remains foundational to driving progress and sustaining growth, due to which the downward trend is seen in productivity. This blog attempts to unravel and uncover, by discussing factors responsible behind the shortage of the labour, due to which there has been stagnation in the sector, and the policy and reforms needed for way-forward as the country undertakes to be developed by 2047.
Keywords: Real Estate, Labour shortage, Viksit Bharat, Developed Economy.
INTRODUCTION
The prospects of the real estate sector are promising, fueled by changing demographics, policy reforms, and rapid technological advancement. But, however at the same time, the sector is grappled with some significant challenges, more particulary on aspect of the human capital. As a corollary of which there is hampering and stalling of the growth, delays of project and viability being diminshed. The ambitious scheme of the Viksit Bharat by 2047, would mean upgradation of the infrastructure, enhancement of capabilities of manufacturing of raw materials required for constructions, and fostering of the sustainable development.[1]
Surprisingly, the debt of the developers of the real estate has decreased significantly, i.e. the ratio of the debt to the assets stands at 20%. And, on the other hands the cost of the construction has also increased, over last decade, and one of the factor responsible for that is the cost of the labour. And due to the labour shortages, the problem is faced by the small developers as well, which is causing the delay of the projects. Such factor is compounding and aggravating the problem being faced by the sector.
As per the report by the KPMG[2], there is shortage of around 04 million labours in the real estate sector, which leads to the delays of the projects and quality of the construction, which would further deprave the development of projects. Whilst reeling with this grappling issue, and in order to keep pace with the urban growth, an investment of around $1.5 trillion is required in the real estate sector by 2030. While the market of the labour for the workers remains tight, but comparatively there has been some easing too, as the reduction in the labour shortage is also portrayed by the Housing Industry Association Trades Availability Index. The shortage of the labour has also been indicated in the wage growth rate of construction sector, which was 4.3% in September 2023, fallen to 3.5% in the March 2025, but even that is problematic figure.
One of the benefits of the demographic for India is that 63% of the dividend provide itself as the human capital resource, which has potential of reforming the sector. But, despite there being demographic advantage, there is pitfall of the shortage of labourers in the real estate sector. Of the total workforce in the India, the total employment in the real estate is around 18% which makes upto 70 million of the employees. By the year 2030, the expected economy of the country, has been anticipated to reach whooping figure of 07 Trillion[3], and the construction sector which encompasses both the industrial development and real estate, is likely to contribute around 1 trillion to the economy. So, in order to reach such economic growth, some policy reforms are required to deal with pressing issue of the labour shortage. The pre-dominant reliance of the sector is mostly on the minimal skilled or semi-skilled workforce, but with the technological advancement and for enhancement of the productivity, there could be expected demand in the labour market.
LABOUR SHORTAGE IN OECD COUNTRIES
Amongst the OECD countries, certain sectors have witnessed more labour shortage than the others, particularly in food, health, and care industries. Such trend is due to some of the factors, which have been laid down below:
a. There is over-representation of the vulnerable social demographic groups
b. There is poor job quality, in terms of the wages, working hours flexibility and safety at workplace
c. Labour shortages are also due to the technological megatrend and mismatched skills
Hence, policy reforms are needed to address shortages and reduce inequality..
GENESIS OF THE PROBLEM
There is no gainsaying that major influx of the labourers, more often than not, come from the rural areas, as migrant labourers. But, recent times have witnessed the shortage in the labourers, which had been causing the delays in the completion of projects and timely execution. It is trite that the labourers are hired on the contractual basis, and there is no permanent labour force, due to which they are at whims and fancies of the contractor, and often being paid less wages as a corollary of which they migrate to other sectors. Albeit, the government has worked in policy area for mitigating and prevention of exodus of labourers to their home towns, which is root cause of the shortage of labourers, via scheme of One Nation One Ration Card (ONORC), whereunder there is guarantee of the PDS supply even at the urban area locations.
As per the Director of the AM Project Consultants, the major cause behind the shortages of labour is due to the social security, lack of the housing and other amenities to the workforce, as comapred to the skilled workforce.[4] The CEO of the Axis Corp points out that there has been recent evidences of the shortage of labour force on the building sites, and which more often than not, are working on less operational workforce, thereby increasing the cost of the construction, and delay in the projects.
WAY AHEAD AND SOLUTION TO THE PROBLEM OF SHORTAGE OF LABOUR
1. Right to Minimum Wages
The legislature has recently amalgamated the four labour laws into the Minimum Wages Act, due to which there is guarantee of Right to Minimum Wages to the labourers, who had migrated due to the wage issue. The impact of such guaranteed right would provide social security benefits, wage security and health benefits to the workforce. This would ensure timely payment of the wages to the labourers. In order to address the issue of the disparity between states in terms of the wages, the provision of the floor wage has been introduced.
When the India was facing the large-scale unemployment, during that time the Minimum Wages Act of 1948 was proposed. The situation was so worsened that labourers had agreed to work, even sans the wages.[5] Thus, in order to curb and alleviate such a situation, at the hands of the capitalist class, and for deviating from the concept of the absolute freedom and the Doctrine of the Laissez-Faire, the enactment has been brought by the State, for imbibing the life into the social welfare principles, an idea which has been envisaged by the Constitution.[6] This scope of the enactment has been widened and broadened by the Code on Wages, 2019, as juxtaposed with the erstwhile statute.
The main idea and rationale behind the concept of the ‘Floor Wages’, found its place in the case of Hydro (Engineers) Pvt. Ltd v. Workmen, wherein it has been held that-
“Minimum wages rate must ensure not only the mere physical needs of the worker which would keep him just above starvation but must ensure for him not only his subsistence and that of his family but also preserve his efficiency as a workman. It should, therefore, provide for some measures of educational, medical requirements and amenities.”[7]
The raison d’etre for conferring the power of the minimum wages at the behest of the Central Government, could be justified on following grounds:
a. Authority for improvisation of the conditions of the labour, in the industrial or non-industrial domain, falls under the Concurrent List, which implies, power to make the laws is in the realm of the State and Centre both
b. There is quasi-federal type of the government in India, with the unitary bias, which forms the part of the federalism.
2. Social Security for everyone
In order for ensuring the social security for the workers, like insurance, pension, gratuity and maternity benefits, the Central Government has merged the labour laws into the social code. Thereby, making and ensuring the social security for the people.[8] Under the Social Code of the 2020, where workers would make small contributions, there is benefit of the free treatment at the hospitals being run under the ESIC. Further, there is benefit of the pension scheme (EPFO), and for the fixed term employees there is removal of the fixed term for the payment of gratuity.[9]
3. Right to Security
In order to provide better and safe environment for the labourers and workforce, there has been subsuming of the various labour laws into the Occupational, Safety, Health and Working Conditions Code, 2020. The Code comprehensively deals and addresses the issue of inter-state migrant workers. In the earlier situation, only the labourers which are appointed through the contractors, were classified as the inter-state migrant workers, but the new provision provides for the self-registration by the migrant workers on the portal. As a result of which a legal identity would be created of the workers, which would enable them in availing of the various social benefits.[10]
4. Provisions for the women labourers
The social code also takes into consideration by broadening its sweep so as to include the women migrant worker within its domain. It confers the right on the women to work in all types of the establishments, while also taking care of their social security. Even, there is provision conferring Right to work at night, indubitably with their consent.[11] For which it is mandatory obligation on the employer to make arrangement and facilities catering to the security of the women.
In addition to that, the Maternity Act of 2017 adds in confluence of the Social Code, to provide the facility and benefit of maternity leaves, which have been extended from 12 to 26 weeks, thereby also ensuring that each of the establishments to have the facility of creche.[12]
CONCLUSION
We need to come out of the mindset that industry and labour are always in conflict with each other. Why not have a mechanism where both benefit equally? Since labour is a concurrent subject, the law gives flexibility to state governments to modify the codes further as per their unique situation and requirements. The right to strike has not been curtailed at all. In fact, trade unions have been conferred with a new right, enabling them to get statutory recognition. New statutes have made the employer-employee relation more systematic and symmetrical. The provision of notice period gives an opportunity for amicable settlement of any grievance between employees and employers.[13] By addressing the structural causes of labour shortages through fair wages, social security, skill development, and legal safeguards, the real estate sector can ensure both economic efficiency and human dignity. A collaborative framework between industry, labour, and the state can transform these challenges into opportunities. Ultimately, strengthening the labour ecosystem is not merely a welfare measure, but a strategic imperative to realise India’s developmental vision of Viksit Bharat 2047.
References:
[1] Changing Dynamics of Real Estate for Viksit Bharat, (July 2024), Available at www.assocham.org/uploads/files/Real%20Estate%20Report%202024.pdf
[2] Labor market stalled in July, (Aug. 1, 2025), https://kpmg.com/us/en/articles/2025/july-2025-jobs-report.html
[3] India needs $2.2 trn investment to be $7 trn economy by 2030: Knight Frank, (Dec 12 2024), https://www.business-standard.com/economy/news/india-needs-2-2-trn-investment-to-be-7-trn-economy-by2030-knight-frank-124121200422_1.html
[4] Causes for and potential solutions to the labour crisis in Indian real estate, (August 22, 2022), propertypistol.com/blog/causes-for-and-potential-solutions-to-the-labour-crisis-in-indian-real-estate/.
[5] S.N. MISHRA, LABOUR & INDUSTRIAL LAWS, (29th ed. 2019).
[6] Y.A. Mamarde v. Authority, AIR 1972 SC 1721.
[7] Hydro (Engineers) P Ltd. v. Workmen, AIR 1969 SC 182.
[8] Priyansh Verma, Social security net for gig workers by early next fiscal, (January 4, 2025 05:45), https://www.financialexpress.com/jobs-career/social-security-net-for-gig-workers-by-early-next-fiscal-3706931/
[9] Zia Haq, Social security plan for gig workers firmed up, (Apr 08, 2025 05:50), https://www.hindustantimes.com/india-news/social-security-plan-for-gig-workers-firmed-up 101744051939974.html
[10] S. Vijay Kumar, Make biometric registration mandatory for migrant workers: Police Commission, (Feb. 27, 2025 10:52), https://www.thehindu.com/news/cities/chennai/make-biometric-registration-mandatory-for-migrant-workers-police-commission/article69266166.ece
[11] Consent of women employees willing to work at night compulsory in Odisha, (Aug. 05, 2025 12:56), https://www.thehindu.com/news/national/odisha/consent-of-women-employees-willing-to-work-at-night-compulsory-in-odisha/article69894201.ece
[12] Prof (Dr) Shaveta Gagneja, Women workers in unorganised sector under new labour codes, (Aug 29, 2025, 3:51), https://timesofindia.indiatimes.com/blogs/legal-brief/women-workers-in-unorganised-sector-under-new-labour-codes/
[13] ‘Need to come out of mindset that industry, labour always in conflict’, says PM Modi, (Oct 29, 2020), https://www.businesstoday.in/latest/economy-politics/story/need-to-come-out-of-mindset-that-industry-labour-always-in-conflict-says-pm-modi-277112-2020-10-29
*****
Author: Akhand Kuldeep Singh| Shashwat Shah 4th Year B.A., LL.B. (Hons.) | Institute of Law, Nirma University
Author Bio
