Construction workers constitute a significant part of the informal sector workforce in India. They are predominantly floating migrant workers who constantly move from one construction site to another spanning a number of states.

Even though construction constitutes an important part of the non-manufacturing informal sector and the overall contribution to the nation’s GDP, workers always remain informally hired on short-term contract or on casual basis. They constitute the most vulnerable segments amongst the unorganised workforce in the country, owing to their temporary nature of work and lack of a definite employee-employer relationship.

A majority of the construction workers are migrant labourers and landless labourers from Bihar, Jharkhand, Uttar Pradesh, Orissa, West Bengal, Madhya Pradesh, Chhattisgarh, Rajasthan and other economically backward regions of India. Most of these informal workers are from Scheduled Castes, Scheduled Tribes and Other Backward Castes.

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They usually come to big cities and other urban centres in search of either livelihood or to supplement their earnings during the lean period when their main source of employment, mainly agricultural activities, are not available in.

Within the legislative domain, a fair amount of progress has been achieved.

As construction’s share in national income increased during late 1980s and early 1990s, pressure was built to provide welfare facilities to construction workers from various quarters. As an outcome of such activities, the Building and Other Construction Workers Act 1996 came into being.

The data reveals that most states could register significant number of construction workers as beneficiaries under the welfare scheme. 

Importance of the construction sector

Construction is a very important sector, both in terms of contribution to the GDP as well as employment generation. In 2017-18, construction accounted for 9 percent of the GDP and provided employment to 51 million workers. Additionally, it creates more than 45 million jobs either directly or indirectly.

It is the second largest employer after agriculture and has played an important role in the absorption of labour released from the primary sector. The Indian manufacturing sector didn’t absorb labour released from agriculture in any significant manner. Whatever absorption happened, happened mostly in the construction, the non-manufacturing segment of the secondary sector.

The construction industry is fragmented, with a handful of major companies involved across all segments, medium-sized companies specialising in niche activities, and small and medium contractors who work on a subcontractor basis and carry out the work in the field. 

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Because of lack of an institutional mechanism for skill formation, construction workers in India continue to be trained by the traditional master craftsmen. The traditional system neither utilises new technologies or work methods nor does it emphasize on safety and sustainability, which will assume increasingly greater significance in the coming years.

The work conditions at construction sites are very poor and deplorable. Almost all workers are informal. They are attached to the contractors and sub-contractors over a long period of time, but their status of employment remains informal throughout. This essentially implies that even though these large number of workers keep on working for similar set of contractors and sub-contractors (employers) over the years, their employment conditions don’t change.

The contribution of the workers are part of the formal sector (real estate and infrastructures on which the entire country is built and run), but workers are counted as part of informal sector workforce. This is a very peculiar arrangement.    

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The Act and the Scheme

Construction was an important part of the non-manufacturing segment of the secondary sector since independence, particularly so during the 1980s and 1990s. A large number of informal workforce is attached to this sector.

To protect the welfare and other interests of this vast army of informal footloose construction workers, The Building and other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 1996 was enacted. This is aimed at regulating the employment and conditions of service of building and other construction workers, to provide for their safety, health and welfare measures, and for other related matters.

Under this Act’s Section 18, a provision for the creation of a state level welfare board was created. Under this, every State government is supposed to constitute Building and Other Construction Workers’ Welfare Board. The Board shall be a body corporate having perpetual succession and a common seal. It shall by the said name sue and be sued.

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The Board shall include an equal number of members representing the state government, employers and building workers, and that at least one member of the Board shall be a woman. The Act further provides for registration of construction workers as beneficiaries.

The respective welfare Boards are supposed to formulate welfare schemes for the construction workers as they deem fit. Every construction worker who has registered as a beneficiary under this act shall be entitled to the benefits provided by the Board from its fund under this Act.

A separate fund, known as the Building and Other Construction Workers’ Welfare Cess Act 1996, has been specially created for this purpose under the Act. The Cess Act 1996 provides for a welfare fund for workers, which respective state governments create by levying a cess of 1-2% on construction projects, applicable to any establishment employing 10 or more workers and to projects costing more than Rs 10 lakh sans the land price.

State welfare boards collect the cess and pay social security benefits to workers who register with them. Workers aged between 18 and 60 years who have been engaged in building or construction work for at least 90 days in the preceding 12 months are eligible to register. Benefits include pension, assistance in case of accident, housing loan, education, group insurance premium, medical expenses, maternity benefits, and so on.

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Construction Workers’ Welfare Board 

Following the Cess Act of 1996, state governments over time constituted the constructions workers’ welfare board. Currently, all the states have the board with the aim of providing welfare and other benefits to construction workers. A large number of construction workers have already been registered as beneficiaries.

These state boards have collected cess as per the Cess Act 1996 and have sufficient funds in their kitties to provide holistic benefits to construction workers registered as beneficiaries.

So far, around Rs 52,000 crore has been collected as BOCW Welfare Cess, of which around Rs 31,000 crore remains un-utilised.

As on 30 September 2018, India had around 3.2 crore registered construction workers of which the highest were in Uttar Pradesh at 42 lakh followed by 31 lakh in West Bengal, 30 lakh in Madhya Pradesh, 29 lakh in Tamil Nadu and 22.5 lakh in Odisha.

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Following the outbreak of the COVID-19 pandemic and subsequent lockdown, acting on the advisory issued by the centre, 18 States have transferred money ranging from Rs 1,000 to Rs 5,000 to the bank accounts of registered construction workers from the designated cess funds at their disposal.

In total, Rs. 2,250 crores, as one-time cash benefit, was directly transferred to the accounts of 1.8 crores registered construction workers. The Delhi government has transferred the highest amount of Rs 5,000 each, followed by Punjab and Kerala at Rs 3,000 each.

Some other states like Himachal Pradesh have offered Rs 2,000 each, while Odisha is learnt to have given such one-time benefit of Rs 1,500 each to registered workers. Some states, including Uttar Pradesh and Bihar, have also offered free ration for one to three months in varied quantities to registered construction workers.

Telengana has offered Rs 500 and 12 kg rice to every inter-state migrant worker who had stayed back in the state during the lockdown and are not registered with State Construction Workers’ Welfare Board. 

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Even though a large number of construction workers were registered by the State Welfare Boards, many of those who are actually working at the construction sites have been largely left out. This raises few pertinent questions.

First, the inclusion objective is still to be achieved. Even though very large number of workers are already registered as beneficiaries with the boards, many genuine construction workers are still outside the purview of the board.

Second, registration and benefit disbursement process should be made flexible to make it convenient for informal and mobile construction workers to avail welfare under this scheme. The majority of construction workers are inter-state migrant workers. They move from one construction site to another. As because they do not belong to the states where they actually work, in most cases, they are not registered as beneficiaries in host states.

This became quite evident during the period of the COVID-19 lockdown as interstate migrant workers, majority of them being construction workers, suffered. They lost their livelihood and were not in a position to access welfare facilities. Construction workers who are registered as beneficiaries and based in home states were relatively better-off as they could access few benefits announced by the respective boards.  

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Another issue is that construction workers remain in perennial informality despite working with same employer over a long period of time. Such informality has a huge impact on compensation and social security measures. The question may be asked whether the State is subsidizing the big construction houses.

Employers in the construction sectors usually pay 1 percent cess as mandated in the Cess Act 1996, but barely provide other welfare facilities stipulated in Welfare Act 1996. Employers behave in such a manner that paying 1 percent welfare cess is more than enough on their part and on-site welfare facilities are not their concern.

An already over-burdened labour administration is not in a position to enforce the welfare and safety provisions under the Act. The outcome is that construction workers are made to toil in sub-human and unsafe working and living conditions with no social security worth its name.

This also became very explicit during COVID-19 pandemic as inter-state migrant construction workers did not receive institutional social security. It is doubly ironical that these construction workers significantly contributed nation-building activities during the last few decades, but at the time of crisis, found themselves without a modicum of social support.

It is like you build houses for others, but don’t have a shelter of your own at the crunch time, and left with no options but to walk back thousands of kilometers to reach to their native places. Both the State and employers have failed them in the time of an unprecedented crisis.   

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Un-utilised Funds with Welfare Boards

The Union Labour ministry has estimated that around Rs 31,000 crore was lying unspent with the building and other construction workers’ welfare boards across all states. Few NGOs have raised a stink about these un-utilised funds during the last few years. The matter has been brought to the notice of the Supreme Court too.

However, there is little recognition of the real problem underlying the accumulation of money in the Welfare Fund. Building workers are usually migrant workers from rural areas of the same state or other states. Host states do not usually register inter-state migrant workers as beneficiaries.

There is a fair possibility that they get themselves registered at home state, but it would be improbable that they return to home states and seek benefit under the welfare schemes. Thus, there is a mismatch in the sense that it would be difficult for the inter-state migrant workers to seek benefits in states where they usually work.

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These days, certain states like West Bengal have introduced online disbursement of benefits under the welfare scheme. Technically, those workers who are residing and working at places outside the state can now apply to avail benefits under the scheme. 

Cess funds are utilised for providing benefits to registered beneficiaries only. Even though there are un-utilised funds, the trend is that disbursal of benefits both in numbers and in amounts are showing an increasing trend. There still are problems of awareness at the grassroots level. That is also reflected in low registration in certain cases as well as actual construction workers not getting registered as beneficiaries.

Most of the state welfare boards really came into being only in the beginning of last decade. It will take some time before demand for benefits goes up. There are also qualifying periods before certain benefits could be sought. As the trends show, in many states, demand for benefits is showing an increase over the years.

Further, there should be an arrangement for perspective portfolio planning for funds available with state boards. Pension constitutes a benefit, which has huge future liability attached to it and financial planning is required to account for that. Otherwise, the fund that apparently seems plenty now would exhaust itself in the near future.   

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Problems of registration 

As mentioned earlier, there is little awareness at the grassroots level about the existence of welfare schemes. A significant number of construction workers do not know about the schemes. Those who know, find it difficult to register with the welfare boards since they need to produce certain documentations which they lack.

They need to get their employment status and number of working days documents (part of the eligibility condition stipulated in the Act) attested by public representatives or employers. As the nature of employment is predominantly informal, getting such documentation is very difficult for a sizable section of construction workers.

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Moreover, there are issues of digital divides, as the registration process is increasingly becoming online. Many construction workers find it difficult to cope with the digital requirements.     

It is further observed that usually, a worker works in different sites and is expected to provide full details and affidavits mentioning their previous work experiences. They find it difficult to corroborate these facts and thus, prefer to remain undocumented.

According to one estimate, not even 40% of the actual construction workers have been registered under the Act. There is a dire need to revise existing registration structures to ensure greater coverage and effective implementation of the scheme. 

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Broadening the protection regime

Building and construction workers are integral part of the unorganised workers’ milieu. Their work is counted as part of the formal sector, but they themselves remain informal. Work and living conditions are deplorable and safety norms are often flouted.

As informal and predominantly inter-state migrant workers, they do not have access to institutional social security. The State has come up with pieces of protective legislations, and introduced boards and funds. In such a set-up, construction workers are seen as citizen-clients and as beneficiaries of the State’s redistributive programme.

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Employers’ benefit from workers’ productivity, but do not contribute towards their social security instruments. That responsibility fundamentally lies with the State.

Unforeseen events like the COVID-19 pandemic have the potential to play havoc with the welfare and livelihood of footloose migrant construction workers, as evident from the recent happenings. The State needs to take into account the grassroots realities of the construction industry and its workers.

The redistributive role of the State is welcome, but at the same time, employers should be made to contribute towards building a more decent work environment with minimum social security provisions. That will also help in de-mystifying the employer-employee relationship to a certain extent.  

Views expressed here belong to that of the author and not necessarily that of the organisation he belongs to.