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Tue 12 Feb 2008 12:50 PM

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India minimum wage to hit construction sector

Operating budgets will be cut and projects at risk of being delayed, top executives warn.

India’s decision to impose a minimum wage for its unskilled workers in the GCC will have a serious impact on the construction industry as developers feel the budget crunch, top executives said on Monday.

India, the predominant labour exporter to the Gulf region, is in the process of rolling out separate wages laws for each country in the GCC in a bid to tackle exploitation.

The country's government on Wednesday banned its unskilled workers from migrating to Bahrain, unless they are paid a minimum wage of 100 Bahraini dinars ($265) a month from March 1.

The move will cut into operating budgets, which have been projected at current wage rates, and could even delay the completion of projects, executives said.

“The decision to fix minimum wages will definitely affect the budget of many companies,” Bill Ninan, chief executive of Grey Matter Construction Company, told UAE daily Khaleej Times on Monday.

“Now, companies are forced to revise their provisions for wages in their budget. It will impact the cost factors of construction."

Ninan said it would be difficult for companies to source cheap labour from other place such as China, Vietnam and African because of a lack of available manpower and linguistic barriers.

Gulf states rely heavily on the cheap labour from countries such as India and the Philippines to work on construction projects.

Abdul Majeed, manager of Power Construct, told Khaleej Times that although he appreciated the need to ensure some standards of living for foreign workers "the minimum wage system will have its ripples in the market and the cost of construction will shoot up".

“This will affect the real estate market also,” he said.

Gulf nations, including Bahrain and Qatar, are reportedly in negotiations with Vietnam to source unskilled labourers in the fields of mechanical engineering, construction and food processing in an effort to reduce their reliance on traditional labour markets such as India.

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