INDIAN LABOUR MARKET AND REAL ESTATE SECTOR: A CONCEPTUAL FRAME WORK

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1 International Journal of Civil Engineering and Technology (IJCIET) Volume 9, Issue 5, May 2018, pp , Article ID: IJCIET_09_05_114 Available online at ISSN Print: and ISSN Online: IAEME Publication Scopus Indexed INDIAN LABOUR MARKET AND REAL ESTATE SECTOR: A CONCEPTUAL FRAME WORK Dr. Ipseeta Satpathy Professor, KIIT University, Bhubaneswar, Odisha, India Dr. B.C.M. Patnaik Associate Professor, KIIT University, Bhubaneswar, Odisha, India Sri. Narayan Tripathy Deputy Chief Labour Commissioner, Odisha, Research Scholar School of management, KIIT University, Bhubaneswar, Odisha, India ABSTRACT India is one of the growing economies in the world and the growing population of the country has helped to create adequate source of labours both in the form of formal as well as informal in nature. The growing nature of the population also gives the advantage of demographic dividend which most of the developed countries aspire for. The report of Ministry of Labour and Employment is also mentions about this specific advantage that the country having. The report is estimated that the population will increase to 1.4 billion by 2026 which ultimately will help to create a working population in the age group of years. (1) If this growth continues then the country will have 25% of the world s working population. (2) In a country like India, most of the time this working population is absorbed in agricultural sector and some of them are absorbed in either formal or informal sectors which are spread over in the rural as well as urban areas. The present paper focuses on the laborer market in real estate sector. In this regard secondary source is taken as base. Keywords: labour market, formal sector and Informal sector and real estate. Cite this Article: Dr. Ipseeta Satpathy, Dr. B.C.M. Patnaik and Sri. Narayan Tripathy, Indian labour market and real estate sector: A conceptual frame work, International Journal of Civil Engineering and Technology, 9(5), 2018, pp INTRODUCTION 1.1. An overview After the initial slow down during the 2008 economic downturn the real estate sectors are growing and the incremental growth is expected to reach around 853 bn. by 2028 from the editor@iaeme.com

2 Indian labour market and real estate sector: A conceptual frame work present 121 bn. (3) This is a growth of almost 13% from present 6.3%. (4) The main drivers of growth can be attributed to the growth of the economy that India is witnessing, increased pressure on urban India due to better opportunities, rising level of income of the Indian middle class and most importantly significant rise of nuclear family. Each of the factors has its own reasons. Some of them may be positively associated with the growth of the economy and in some cases the association may be beneficial for the economy. But in all the cases the four sectors, viz. residential real estate, commercial real estate, infrastructure development and industrial real estate have a direct linkage. Today, most of the economic development is happening either in the infrastructure sector or in service sectors. In any developing country contribution of service sectors adds more value and more revenue for government and subsequent incremental demand for office and commercial places. The recent rise of e commerce players like Flipkart, Snap deal, Amazon is pushing them into a buying spree to increase their office accommodation. These new demand drivers obviously increase the demand for infrastructure and along with that it creates a subsequent demand for cement. Just like the growth of economy, rising income level is another area which added value to the industry. As estimated in the KPMG report on real estate sector, the per capita income in urban India will increase from the present $2800 to $8300 by (5) This increased income will create additional demand for housing segment. This demand may rise in all the sectors, viz. low income group, middle income group and high income group. As people s affordability increases, they will try to fulfill the dream of owning their own house in their preferred locations. The third factor that contributes to this growth momentum is the increased pressure of urbanization. It is natural that people will tend to move from backward areas to prosperous areas where sufficient income generating opportunities, sufficient education opportunities and sufficient healthcare facilities are available. A place where standard of living can be improved and people can avail all the civic facilities. Now, there is a debate whether urbanization is good or bad. But, the most important thing is that we can t restrict the flow of people from one place to another as long as there is in equal facilities available in both the places, i.e. place of origin and place of destination. But for a developing country achieving this objective is next to impossible. Thus, the pressure will remain in the urban areas. So, the only way out from this kind of a problem is to diversify the urban areas so that excess people can be absorbed. This surely requires huge investment in infrastructure development. Thus, the above discussion suggests why cement industry can play an influential role in this regard. The fourth and most important factor in this discussion is the inflow of nuclear family. This division of family surely increases the pressure as there is already a house shortage. According to Planning Commission Working Group Report there is already an estimated house shortage of around lakh units and if it is added with previous year s backlogs it is estimated to be around lakhs units. (6) The average household size is expected to fall from the current 4.8 per household to 4.4 per household. This significant drop in household size will generate a demand for another 10 million houses by the next 15 years. Along with that the increased demographic dividend also adds up to this particular issue. Unlike a developed country, where demographic dividend is negative, people s investment opportunities in the real estate sector are also limited Residential Development till 2028 (billion square feet) editor@iaeme.com

3 Dr. Ipseeta Satpathy, Dr. B.C.M. Patnaik and Sri. Narayan Tripathy Source: Indian Real Estate Opening Doors, KPMG Report, 2014 Table 1.1 Projected Infrastructure Investment during 12 th Five Year Plan Source: 12 th Five Year Plan ( ), Vol. 1, Planning Commission 1.3. India s Infrastructure Investment (USD bn.) Source: 12 th Five Year Plan, Planning Commission, GOI 2. CONTRIBUTION OF LABOUR IN REAL ESTATE SECTOR Indian labour market can be categorized into three segments, viz. agricultural segment which contribute less towards GDP but absorb a huge workable population, second, real estate which absorb significantly more number of workforces and one urban informal sector which adopts not only the unemployed population but also less skilled personnel. The labour intensive nature of the real estate sector often attracts a huge number of people from rural to urban areas thus; making it difficult to generate manpower at the place of origin. The economy is also witnessing an increasing nature of in formalization due to massive supply of labours to these real estate sectors. The trend can be witnessed in the other sector as well. The increasing nature of contractual workforce in the formal sector is just an example of this kind of trend. The percentage of contractual workforce in the other sector which was 13% during the year 1995 stands at 34% during the year (7) 3. OBJECTIVES OF THE STUDY To understand the concept of real estate sector To understand the trends of labour market To understand the segmentation of Indian labour market. 4. METHODOLOGY OF THE STUDY For the present study secondary data has been used Recent Trends in Labour Market India s economic growth has seen many changes in the last decade. During the year 2016, India s economy grew by 8% which was fastest since (8) Even if there is a growth in GDP, the country witnessed a sharp fall during the year The uneven growth was mainly witnessed as a result of reduced fiscal deficit, large scale public investment in the editor@iaeme.com

4 Indian labour market and real estate sector: A conceptual frame work infrastructure, providing banking facilities to the groups who are unserved till date. The growth of private investment was slow during the period but it was slowly limping back to normalcy. There was an expectation that the growing nature of the economy would create a positive impact on the employment segment but the actual outcome has not matched the expectation. If we look at the general trend of the employment a significant percentage of total workforce are engaged in informal sector. There is an increasing trend of movement from agricultural sector to other sectors as well. Jobs are created in the formal sector as well but most of the formal jobs are informal in nature as most of the jobs are contractual in nature where workers are not entitled for any kind of social security. Figure 1.1 GDP in terms of the Contribution of Different Sectors to Gross Value Added Source: India Labour Market Update, 2017, ILO Report The figure above shows the contribution of various sectors towards the GDP growth. Out of the three sectors service sector contributes a significant portion of total contribution towards GDP. The year , the growth rate declined as compared to The main reason was decreasing trend of service sector as compared to others. But the same was compensated by the agricultural sector whose productivity increases during the same period. So, the data reveals that service is the main sector which can generate massive workforce and that is exactly what it is doing. India also witnessed a structural transformation in the labour market. Most of the productive resources moved from low productivity to high productivity service sectors. Still a large segment of the workforce is depending on agricultural sector which accounts for almost 50% of the workforce. (9) But it contributes only 1/6 th of the total GDP. (10) A huge presence of workforce in the agricultural sector is creating the problem of underemployment and in terms it is reducing the productivity of the workforce. A number of workforces of this nature thus moved to other nonagricultural sectors where job opportunities are more. It is evident from the fact that nonagricultural sector contributes almost 80% of the GDP but this contribution comes from 10% of the workforce who are working in organized sectors. (11) Rest of the 90% is working in informal sectors where they do not have the job security as well as any kind of social protection. Even in the formal sector, around 60 to 70% of the workforces are from government sector and rests of them are from private sector editor@iaeme.com

5 Dr. Ipseeta Satpathy, Dr. B.C.M. Patnaik and Sri. Narayan Tripathy Figure 1.2 Different Aspects of Structural Transformation & Sectoral Employment Shares (%), to Source: India Labour Market Update, 2017, ILO Report The data shows that there has been considerable decrease in agricultural employment over the time period and rural nonfarm employment increased by 12% between to (12) The Indian households whose principal source of income was agriculture declined from 63% in to 58% during the year (13) Construction sector witnessed significant increase in non agricultural employment. The employment status was also changed as the sector witnessed rise of casual wage employment and decline in self - employment. Though the economy has witnessed change in employment pattern from agriculture to non agricultural sector, still adequate employment opportunities and quality of employment still remains a major challenging factor for most of the countries in the world. A developing country like India, where people are moving from agricultural sector to other sectors for better employment opportunities, the quality of employment remains an issue. The continuous rise in vulnerable employment, own account work and family employment is on the rise. The ILO Report on Employment and Social Outlook, Trends 2016, estimated that nearly 70% the workforce of Asia and Sub Saharan Africa are in vulnerable sector where they do not have adequate facilities related to job. The report also suggests that nearly 2.4 million unemployed youth will be added in the existing workforce and in case of India this amount will be 17.6 million by This huge workforce is an issue for the policy makers as they are having difficulty to create enough quality jobs for them. These challenges are needed to be address so as to remove the spatial distribution of the work and workforce. The uneven growth of employment opportunities across sectors and across states is another area of concern. The figure 1.3 is a glipse of the growth of the employment opportunities across various states which highlight this issue. Figure 1.3 State wise Employment Status Source: India Employment Report, 2017, IMA The data suggests that baring a few most of the states have seen increased in employment by the year States like Madhya Pradesh, Punjab Himachal Pradesh and Arunachal Pradesh have seen decrease in employment generation. West Bengal is the state which has seen largest increase in employment from to The graph thus clearly reveals that uneven distribution of workforce among various states of India. Because of this spatial distribution of labour force is also moving from one place to another. One state may be witnessed largest concentration of workforce. This has resulted into too much pressure of workforce in one geographical location. This has further reducing the employment prosperity of the existing workforce as well as new workforce and most importantly unemployed workforce who are added to the existing workforce editor@iaeme.com

6 Indian labour market and real estate sector: A conceptual frame work It can be said conclusively that there is a general shift of the workforce from one sector to another but most of the time this movement is not able to generate significant improvement in the quality of the workforce. As a result of which the overall employment condition is not improved. Moreover, excess supply of labour in the area of prosperity often reduces bargaining power of the existing labour force as supply increases. Since, most of the jobs are informal in nature they do not need adequate skills. This study also focuses on both the sectors to understand the problem areas and to identify the present situation of the labour force in both the sectors. Before going into the details it is important to identify the nature of employment as defined in various survey organizations Segmentation of Indian Labour Market The Indian labour market has a dual characteristic where large number of labour force is in the informal sector amounting to 92% of the total labour force and less than 10% are in formal sector. (14) Thus, Indian economy has two segments where one group comes under the category of formal sector and another group comes under the category of informal sector. But the Indian economy was always like informal in nature. It dates back to the era of colonial rule when the British rulers were more concerned about producing industrial products which had a commercial value. The expansion of the manufacturing sector during various planning periods was witnessed. The Mahalnob is model of industrial growth had left little option for labour intensive growth which was the requirement to absorb a large workforce. The concept of trickledown theory was never successful which believed on the idea that benefits of industrial growth would percolate to lower segment of the society specially the rural economy. But it was never happened and most of the workforce has remained either inactive or engaged in agricultural sectors. Though, government had taken various initiatives for the development of the small enterprises but major labour intensive sectors like agriculture, handloom, textile, handicrafts etc. remained mostly unattained. As a result of which the sectors achieved the desired growth and remained small in nature. Due to lack of profitability and low income opportunity the sector started depending more on informal workforce rather than formal workforce. The data suggests that the share of unorganized sector which was 92.2% during the year was further increased to 92.7% during the year (15) So, even if the economy grows the informal nature of the labour market remained as it is and it is still one of the largest contributors of GDP. The Indian economy which was open up during the year did not see much improvement in terms of workforce benefits and facilities. There are certain government interventions and policy regulations are there but they are not sufficient to change the existing problems that the labour forces are facing. To go into the details there is a need to understand both the sectors. 5. CONCLUSION Formal and informal sector is pre existing in any economy and this is part of the economic development of the nation. Most of the time it can be seen that in developing country the contribution of informal sector is more as compared to their formal counterpart. There is a specific reason for it. Lack of sectoral growth, unequal growth between two sectors, lack of skills of the workforce, lack of government rules and regulations, lack of infrastructure etc. are some of the many factors which contributes to the growth of the informal sector. In countries like India, formal sector means either public sector employment or private sector employment. Most of the time they are coming under the category of formal sector as they are entitled for certain benefits. But this is only one criterion to distinguish between formal and informal sector. In reality the situation may vary and even employment in the formal sector may be termed as informal in nature. Whether a job is formal or informal in nature entirely depends on the employment contract. If employees are entitled for certain benefits then the editor@iaeme.com

7 Dr. Ipseeta Satpathy, Dr. B.C.M. Patnaik and Sri. Narayan Tripathy work can be termed as formal else not. This dualistic nature of employment often creates confusion among the labour economics and thus it becomes difficult to measure its impact on the overall contribution towards economy. Given this situation it is important to identify the exact nature of job and the problems that the workforces are facing while working in their respective sectors. It is also important to focus on the perception of the workforce engaged in these sectors. 6. NOTES 1. Annual Report, Ministry of labour and Employment, , pp Annual Report, Ministry of labour and Employment, , pp Indian Real Estate Opening Doors, KPMG Report, Indian Real Estate Opening Doors, KPMG Report, Indian Real Estate Opening Doors, KPMG Report, Report of the Working Group on Cement Industry for XII 5 Year Plan ( ) 7. India Labour & Employment Report, India Labour Market Update, 2017, ILO Report 9. Labour s Landscape in India, Praveen Jha, Yojana, 2017, pp Labour s Landscape in India, Praveen Jha, Yojana, 2017, pp Labour s Landscape in India, Praveen Jha, Yojana, 2017, pp India Labour Market Update, 2017, ILO Report 13. India Labour Market Update, 2017, ILO Report 14. India Labour Market Update, 2017, ILO Report 15. Informal Labour Market, Srija, Yojana, 2017 Issue, pp 16 REFERENCES [1] Ruddar Datt (2007); Unorganised Sector And Informalisation Of The Indian Economy, The Indian Journal of Labour Economics, Vol. 50, No. 4, pp , [2] India Labour and Employment Report (2014), India Labour and Employment Report 2014: Highlights [3] A. Srija & Shrinivas V. Shirke (2014); An Analysis of the Informal Labour Market in India, Special Feature, CII Report, September - October [4] Ram Singh Bora (2014); Migrant Informal Workers: A Study of Delhi and Satellite Towns, Modern Economy, 5, [5] Dr. Muna Kalyani (2015); Unorganised Workers: A Core Strength of Indian Labour Force: An Analysis, International Journal of Research in Business Studies and Management Volume 2, Issue 12, December 2015, PP 44-56, ISSN (Print) & ISSN (Online). [6] Nagendra Pratap Bharati, Dr.Rajesh Kesari (2014); Child Labour in Unorganized sector in India, New Man International Journal Of Multidisciplinary Studies (ISSN: ), Vol. 1 Issue 12, pp , DEC. 2014, [7] Report of the Committee on Unorganised Sector Statistics (2012), National Statistical Commission Government of India, February [8] Ms.N.Chitra (2015); A Descriptive Study on Problems of Women Workers in Construction Industry at Tiruchirappalli, IOSR Journal Of Humanities And Social Science (IOSR-JHSS), e-issn: , p-issn: , PP 46-52, editor@iaeme.com

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