Business, Finance & Economics

Bihar's boom causing labor woes elsewhere in India


In this picture taken 23 July 2007, a migrant labourer from the Indian state of Bihar prepares for the start of a days work at a camp in Chilling some 65kms west of Leh, as they take part in the construction of a section of an all weather road from Leh to Manali. MANPREET ROMANA/AFP/Getty Images

Leave it to industry to complain about higher wages.

Last year, Bihar -- traditionally known as one of India's "most backward" states -- reported booming economic growth thanks to increased state spending and the chief minister's success in lowering the crime rate.  Great news for locals, as I wrote in Newsweek at the time.

But according to the Economic Times, it's not so great for construction firms across the country, which source as much as half their labor from Bihar migrants.  (More great context for my Shiva's Rules story on the possible resurgence of trade union troubles in India's burgeoning manufacturing sector).

Increased government expenditure and private investment has caused rural migration from Bihar to fall by a third in recent years, resulting in labour shortages and 35-50% higher wage bills for real estate firms, the paper said. 

"There is a huge shortage of labor and that is leading to higher cost of construction as well as project delays," the paper quotes Ajay Chandra, managing director of Unitech, one of the country's top three real estate companies, as saying.

Deputy Chief Minister Sushil Modi says Bihar's economy grew by 14% in 2010-11, the fastest among all the states in the country, the Economic Times said.