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Mon December 04 2023

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Most Indian contractors pay below the minimum wage

26 Jan A majority of contractors active in major Indian cities are paying labourers below the minimum wage set by the government.

Delhi is the lowest-paying among all cities, while Hyderabad is the highest, reported the English-language news channel News 18 yesterday (25th January).

Research by Indian online recruitment app Projecthero found that fewer than 10% of construction jobs make contributions to the employee’s pension fund or provide employee state insurance coverage.

The data has been collated from the jobs posted and application patterns on the app, said Projecthero.

Projecthero’s founder and CEO, Satya Vyas, told News 18: “Due to poor technological penetration, the construction market has been operating in an opaque manner. This opacity has allowed people to get away with paying low wages, violating legal provisions, and demonstrating bad behaviour.

“Additionally, more than 50 million workers still have to find work through informal means, and more than one million contractors still rely on references to get business. There is no singular platform where every stakeholder is present and is incentivised to protect their reputation."

The Projecthero data was collected in the cities of Delhi, Mumbai, Bangalore, Hyderabad, Chennai and Pune and found that the majority of construction workers are paid below the minimum wage. The problem is most acute among unskilled labourers.

According to Projecthero, 90.9% of labouring jobs in Delhi pay less than the daily minimum wage of Rs711 (£7.03). In Bangalore, 90.4% are underpaid, in Pune the figure is 88% and in Mumbai it is 87.3%.

Hyderabad has the best record at 78.5% but on average 87% of Indian construction labourers are paid below the minimum wage.

For technician jobs, Delhi also ranks at the bottom, with 66.5% of jobs paying less than the minimum daily wage of Rs788. Bangalore, at 65.8%, is only marginally better.

Chennai comes out on top, under-paying only 44% of technicians. And site supervisors, for whom the minimum wage is Rs866, also do best in Chennai where only 26.7% are paid below the daily wage.

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Conversely, Pune has the highest percentage of underpaid site supervisors, with 42.4% of supervisor jobs not meeting the wage threshold.

The average daily wage across all jobs is highest in Hyderabad and the lowest in Delhi.

The average labourer’s wage in Hyderabad is Rs584, while the same in Delhi is Rs515; technicians are paid an average Rs862 a day in Hyderabad and Rs718 in Delhi.

Average wages are highest in Hyderabad and lowest in Delhi
Average wages are highest in Hyderabad and lowest in Delhi

Supervisors’ wages average Rs1,035 a day in Hyderabad, while Pune is the lowest-paying in this category, at Rs885. Delhi ranks second to bottom for supervisors’ wages with an average wage of Rs925 a day.

Projecthero reported that, out of around 4,500 jobs advertised on its platform, fewer than 10% included employers’ contributions to employees’ provident funds (pensions) and employee state insurance.

Only 8.6% of jobs included employer’s pension fund contributions and only 7.1% included national insurance contributions.

On the plus side, Projecthero reported that digital literacy among construction workers and employers is improving. Contractors are increasingly digitising their processes and payment systems and Projecthero believes this will lead to the decline of the current predominantly cash economy.

Over 122,000 workers have already verified their bank account details on the app, said Projecthero. “With the widespread penetration of smartphones and cheap data and the push from the government towards sector formalisation, we feel that the industry is moving in the right direction. At Projecthero, we are confident that our report for the year 2023 will reveal much better numbers for the industry,” added Vyas.

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