From the Bottom Up: Micro-contractors are Key to Protecting Migrant Workers in India’s Construction Industry
Ramesh* was 15 when he left his home and family in rural Uttarakhand and migrated to Delhi NCR. He had left in search of work and the opportunity to help his family whose financial situation, already precarious, had grown dire when his father became unwell. As a teenager alone in an unfamiliar city, Ramesh became easy prey for unscrupulous brokers eager to exploit his vulnerability. Deceived by a recruiter, he became trapped in a situation of debt bondage, unable to leave his employer until he managed to escape with the support of a local social worker.
For the next eight years, Ramesh worked as a daily wage laborer on various construction sites. Eventually, he progressed to obtaining work orders for minor components of construction projects and was able to hire a small team of workers. However, despite his near-decade of experience with the work itself, Ramesh was unversed in how to navigate the informal nature of the construction business. He was defrauded on multiple occasions by larger contractors and developers who took advantage of verbal agreements and informal quotations to pay him unfairly, late, or, in some instances, to default on payments entirely. Ramesh faced significant losses, losses that were born not just by Ramesh but by the team that he had hired. He was unable to pay his workers the wages he had promised. Nor could Ramesh raise his grievances with authorities. He relied on word-of-mouth relationships with these larger contractors for references and future work orders. The optimism with which he had viewed the opportunity quickly deflated. Without any real understanding of formal contracting, Ramesh and those whom he employed, were cheated, exploited, and left with no outlet for redress.
Migrant workers are at high risk of exploitation
Ramesh is one of hundreds of thousands of micro-contractors, situated at the very end of the sprawling and fractured supply chain in India’s construction sector. This sector is one of the fastest-growing in the world and accounts for 9% of India’s GDP. It is the country’s second-largest employer, attracting millions of migrant workers to urban centers each year.
The industry is characterized by a complex and multi-layered value chain that relies heavily on a floating workforce of migrant workers to meet labor demands. The majority of these workers are low-skilled rural migrants and members of socially disadvantaged communities.
Commonly, they depend on daily wages for their livelihoods, making them particularly vulnerable to exploitation. In a large-scale worker voice study with over 17,000 migrant construction workers in 2019-2020, the Global Fund found that approximately 30% of respondents experienced some form of forced labor risks, with nearly 5% experiencing critically severe forced labor conditions. More than 20% reported restrictions on their movement after work shifts, and over 10% reported facing threats to themselves and their families at their workplace.
Micro-contractors can improve working conditions but face structural constraints
Micro-contractors like Ramesh are the primary employers of this vulnerable migrant population, employing between 5 and 25 unskilled and semi-skilled workers at a time. They represent the node of the construction supply chain that is most directly connected to migrant workers – they are usually the first point of contact for workers at the end of their migration journey, and are responsible for their recruitment, scope of work, working conditions, working hours, and wages.
Their direct influence over worker well-being makes micro-contractors critical stakeholders that need to be engaged and involved in any programming efforts aimed at worker protections and welfare.
Most micro-contractors spend several years as daily wage workers and often belong to the same communities as the migrants they employ. Rising to the role of micro-contractor may seem a step up, but micro-contractors are at the mercy of structural constraints that often leave them with very few options to improve working conditions. Critically, micro-contractors regularly face irregular and delayed payments from their contractors which often limits their ability to pay timely and full wages to workers. As they are only paid when they complete a particular work order, they absorb the majority of risk as it is passed down the supply chain. Since they typically have no access to affordable financing options and often lack financial safety nets, they often take out high-interest loans through informal channels in order to stay afloat, increasing volatility and potentially trapping them in a cycle of debt bondage.
Further, most micro-contractors operate as unregistered and informally managed businesses and lack the necessary know-how to effectively structure and formalize their practices, leaving them, and consequently the workers they employ, vulnerable to exploitation and without access to channels for redress and remediation. This is the situation that Ramesh confronted. Despite his years of experience in the industry and the seeming opportunity to achieve a better future, Ramesh lacked the necessary support systems and business acumen to succeed in his new role. By extension, so too did the workers he had hired.
Addressing these systemic constraints faced by micro-contractors has the potential to generate very tangible and immediate positive effects on worker welfare.
Given the absence of clear and direct channels between big developers and the workers on construction sites, micro-contractors present a much more relevant and effective intervention point to drive worker benefits than top-down efforts through large industry stakeholders.
Between 2019 and 2021, the Global Fund and our partners worked to test this hypothesis and piloted efforts to train micro-contractors on both ethical labor practices and technical skills for business development (such as digitizing payment transactions, developing accurate quotes for work orders, and formalizing business contracts). The aim was to support the development of non-exploitative employment conditions that were mutually beneficial for workers and contractors. During this period, over 3,000 migrant workers were employed with the 570 micro-contractors trained through the project.
A large-scale quantitative study run simultaneously to this project found that workers who were employed with trained micro-contractors faced lower forced labor risks than those in the larger study pool who did not receive this intervention. Qualitatively, workers employed by trained micro-contractors expressed a desire to stay on with these employers as they had taken steps to create safe and equitable work environments, including ensuring on-time wage payments, providing safety equipment for risky jobs, and helping meet essential needs such as food, accommodation, and childcare at construction sites. Notably, women working for trained micro-contractors highlighted the non-discriminatory practices employed in the workplace. Unlike their previous experiences in the construction industry, they were now paid separately from their spouses and at an equal rate. The trained micro-contractors internalized the concept that fostering ethical relationships with workers contributes greater value on both sides. They further confirmed that technical and business practice training allowed them to formalize their work agreements and develop more secure contracts with clients to avoid payment defaults, enabling them to pay their workers on time and yielding positive outcomes with worker retention and productivity.
Buoyed by these initial learnings, GFEMS is currently investing in expanded programming in India through our partners Sattva, Labournet, and Kois Invest.
This programming is focused on providing additional cohorts of micro-contractors with access to low-cost working capital loans, channels for stable work orders, and training on ethical labor and business practices. The Global Fund views engagement with micro-contractors as a cornerstone of our approach to eliminating forced labor in the construction industry. We continue to generate evidence to build the “business case” for investing at the micro-contractor level. Trained in business and ethical practices, micro-contractors can better protect themselves and the men and women they hire. They can transform systems of exploitation.
If you are interested in partnering with the Global Fund, please contact firstname.lastname@example.org.
*Ramesh is a composite character based on research findings and discussions with implementing partners. Uttarakhand is a state in Northern India.
Financial Security Means Safer Migration: Reducing Vulnerabilities Among Migrant Workers in India’s Construction Industry
In December 2020, an operator for the Jan Sahas helpline answered a call from a man claiming that his brother and six other workers were being held in inhumane conditions and against their will at a construction site in Faribadad. The man reported what his brother had told him- that since arriving, the migrants had received no pay for their work.
The Jan Sahas team responded immediately. They reached out to the local police and District Collector (DC) of Faridabad and an investigation was launched. Quickly after arriving at the site, the inspector was able to confirm the veracity of the claim: the workers had indeed been denied wages; none had even enough money to leave the site. An application to the DC filed on behalf of the migrants resulted in an order for restitution against the employers. They were forced to pay Rs. 1,16,340 (about $1,600 USD) in back wages to the workers they had defrauded and another Rs. 9000 (about $125 USD) to cover their transportation home. The network that Jan Sahas, together with GFEMS, set up to monitor and respond to cases of forced labor had worked. The man who had made that initial call to the helpline was reunited with his brother and the other migrants recovered what they had earned.
The network that Jan Sahas, together with GFEMS, set up to monitor and respond to cases of forced labor had worked. The man who had made that initial call to the helpline was reunited with his brother and the other migrants recovered what they had earned.
The helpline is an essential component of Jan Sahas’ strategy to reduce forced labor in India’s construction industry, but it is only one part of more comprehensive programming. While providing support to those encountering situations of forced labor, Jan Sahas is committed to changing the systems that create vulnerabilities in the first place. In partnership with GFEMS, Jan Sahas developed programming to assess risk factors for forced labor among India’s migrant workers to better mitigate those risks; to raise awareness and ensure access to government entitlements to help migrants build a stronger safety net; and, in partnership with Pratham and Sambhav Foundation, to train employers on ethical labor practices to create safer and better work experiences. These collective efforts have made a difference in the lives of tens of thousands of migrants and their families. Many thousands more are less likely to experience forced labor or exploitation because of the efforts of Jan Sahas and our partners on the ground.
India’s construction sector
Nearly 40% of India’s population or 450 million people are internal migrants. (This reality was made clear to the world last year when news outlets broadcast the mass exodus that followed the state-issued lockdown.) India’s construction industry is the country’s second largest employer and attracts a large number of migrant workers each year. Approximately thirty to fifty million of India’s construction workers are internal migrants.
While construction work offers an opportunity to earn additional income, especially during the agricultural off-season, evidence indicates that 10 percent or more of migrant construction workers – potentially five million people- could be in forced labor. Various factors are contributing to this high rate.
Despite an unprecedented contraction of India’s construction industry in the first half of 2020 in response to COVID-19, the sector has made a strong recovery (despite another recent outbreak), and remains one of the fastest growing construction markets in the world. This, combined with a severe shortage of skilled labor and an abundance of informal recruitment brokers and middlemen eager to fill this labor gap, has significantly enhanced migrant workers’ vulnerability to exploitation.
Jan Sahas: Promoting safe migration and worker protection
Jan Sahas targeted the 450 kilometer migration corridor stretching from Bundelkhand to Delhi. Of the estimated two million migrants who travel this route annually, early prevalence estimations show a rate of forced labor between 7.5 and 10%.
Building a safety net to reduce forced labor risks
For many migrant workers who live in a perpetual state of transit, it is difficult to access government entitlements. Though many are simply unaware of what benefits they are entitled to, others lack the formal documents needed to access these benefits. To overcome both of these challenges, Jan Sahas implemented programming to raise awareness of social welfare entitlements among migrant workers and to help migrants navigate complex government structures and processes.
Before pursuing entitlements, Jan Sahas organized a series of awareness-raising community meetings to educate workers on existing benefit schemes and criteria for enrollment. Despite early skepticism from workers who had participated in surveys before but never received promised benefits, the Jan Sahas team worked to gain worker trust and helped thousands register for entitlements including food rations, pensions, and those offered specifically to construction workers under India’s Building and Other Construction Workers (BOCW).
Registering for entitlements can be cumbersome. In some localities, workers must present in-person at labor department offices to access benefits, which often means taking off work. BOCW cards require proof of work in the same location for 90 days, a requirement that many migrant workers are unable to meet. Others simply do not have the formal documentation needed for a successful application.
To help overcome some of these obstacles, Jan Sahas guided migrant workers through the application process, clarifying more technical language and assisting in the preparation or collection of required documents. During the project period, Jan Sahas helped over 27,000 workers and their families access direct cash or cash-equivalent benefits. While follow-up interviews with workers revealed that most would not have known about entitlements or how to access them without Jan Sahas’ intervention, these entitlements provide a safety net for workers, allowing them greater agency to choose when and where they will work.
Jan Sahas helped over 27,000 workers and their families access direct cash or cash-equivalent benefits. Follow-up interviews with migrant workers revealed that most would not have known about entitlements or how to access them without Jan Sahas’ intervention.
Beyond entitlements, awareness-raising campaigns introduced migrant workers to Jan Sahas’ toll-free helpline. The helpline is an outlet for workers to file grievances, report instances of forced labor or inhumane treatment, seek redress for lost wages, and access legal support services. In an expression of gratitude for the establishment of a helpline, a worker in Delhi reported that he “lost between INR 10,000-15,000 ($134-200 USD) of wage payments before a helpline was operational.”
Supporting Migrant Workers during COVID-19
When COVID-19 struck in spring 2020 and India entered lockdown, the response from Jan Sahas and other implementing partners was immediate. As the true impact of the pandemic began to show in job losses and rising unemployment, the Indian government increased entitlement allotments and issued new benefits to help mitigate the worst effects. Jan Sahas, with a tracking and communication system already in place, intensified its outreach efforts to ensure migrant workers, a group left even more vulnerable by the pandemic and subsequent shutdowns, could access needed support. A migrant from Faridabad whom Jan Sahas had helped register for government entitlements captured the dire reality for many migrant workers during COVID: “Without ration or cash transfers, we would not have survived the challenges of COVID-19.”
In addition, Jan Sahas was able to utilize the existing programmatic framework to identify and provide food relief to over 1,000 of the most vulnerable migrant households.
Gathering data to assess risk factors and improve programming
Foundational to Jan Sahas’ programming was the development and implementation of a longitudinal migration tracking (LMT) system. This system is designed to capture data on migrant workers to better understand risk factors for forced labor, paying particular attention to whether program interventions decreased the likelihood of exploitation.
To build a strong evidence base, Jan Sahas conducted extensive outreach at various departure points, including home villages and transit hubs, to register workers. Successfully registering over 89,000 migrant workers, surveyors then followed up at destination sites to assess the effectiveness of program interventions- specifically, access to entitlements and operation of a helpline- on reducing the incidence of forced labor. Follow-up communication with registered workers, combined with worker interviews, revealed that Jan Sahas’ programming was making a difference. Workers who were helped to access social protection benefits reported additional income and savings while those accessing the helpline were able to recover unpaid wages, escape forced labor conditions, and generally, feel safer. Jan Sahas hopes this data will encourage greater investment in similar prevention efforts. When more is known about migrant workers and experiences and what factors increase risks of exploitation, targeted action can be taken to reduce and ultimately eradicate forced labor.
Engaging employers to reduce the risk of forced labor
While Jan Sahas supported migrants to build greater financial security and provided them an outlet to air grievances and pursue justice, other implementing partners focused on developing the capacity of micro-contractors. Micro-contractors are the primary employers of unskilled and semi-skilled construction workers, employing between 5 and 25 persons at a time. Pratham and Sambhav led an effort to train micro-contractors on ethical labor practices to reduce the risk of forced labor among vulnerable migrants. Workers employed by trained micro-contractors expressed a desire to stay on with these employers as they had taken steps to create safe and equitable work environments, including ensuring on-time wage payments, providing safety equipment for risky jobs, and helping meet essential needs such as food and accommodation at destination sites. Women working for trained micro-contractors noted especially the attention these employers paid to eliminating discriminatory gender practices in the workplace. Unlike other employers, program-trained micro-contractors paid women separately from their spouses, ensuring greater female economic agency.
Building local capacity to effect sustainable change
Jan Sahas’ programming to address forced labor in India’s construction industry has reached tens of thousands of workers. Some have received support to exit forced labor conditions, others have registered successfully for entitlements to reduce risks of exploitation, and still others have filed grievances to recoup lost wages. Though this program may have formally concluded, Jan Sahas set up people and systems to carry its benefits forward. They successfully trained hundreds of social advocates or “barefoot lawyers” who will continue to share information on labor laws, rights, and entitlements with migrant workers and aid in benefit enrollments. Moreover, Jan Sahas continues to collaborate with key government actors at each stage of program implementation, including India’s Department of Labor, and other stakeholder groups across civil society, philanthropy, and the private sector to sustainably end forced labor. We are proud to be a part of this collaboration.
Jan Sahas is a community and survivor-centric nonprofit organization committed to ending sexual violence and forced labor. To learn more, please visit Jan Sahas.
This article and the project it references were funded by a grant from the U.S. Department of State. The opinions, findings and conclusions stated herein are those of the author and do not necessarily reflect those of the U.S. Department of State.
Update: TERA is creating demand for ethical recruitment in India
GFEMS provides seed funding for ethical businesses to grow their market share, shifting demand away from exploitative recruitment to more ethical practices. Working with Seefar, we have created TERA (The Ethical Recruitment Agency), India’s first ethical recruitment agency.
TERA aims to reduce forced labor by pioneering research, making a business case on profitability of ethical recruitment, and piloting an ethical recruitment agency. Based in in Lucknow, Uttar Pradesh, India, the pilot agency offers exploitation-free work opportunities to vulnerable communities. To date, Seefar has signed contracts with several large employers, published a guide for profitable ethical recruitment, and stress tested pre-departure trainings and worker welfare protocols.
Seefar is identifying large gaps in existing research including lack of:
- A consensus on the definition and theory of ethical recruitment
- Quantifiable impact
- Understanding around unintended consequence.
Seefar’s research focuses on the effectiveness of ethical recruitment in reducing forced labor and the economic, social, physical, and mental effects of ethical recruitment on workers and their families. Preliminary findings from key informant interviews and case studies show overwhelming positive effects on workers and their families in the following dimensions: economic, social, physical and mental health, and human rights. Specifically, there is a direct relationship between lower recruitment fees, lower debt, and higher remittances to families and communities. Ethical recruitment can help migrant workers achieve upward social mobility in the long term and enhance their social status in their communities. Better customer service offered by ethical recruitment is a reliever of stress and concern at the individual and family levels. It also has important implications on mortality and morbidity of migrant workers abroad. Finally, ethical recruitment enhances knowledge of workers’ rights and safeguards those rights during, and often after, recruitment.
Seefar will continue The Ethical Recruitment Agency and accompanying research and offer evidence based and practical research to donors, governments, commercial actors and civil society members.
This project, and others in our portfolio like it, are working to show that ethical recruitment practices are better for everyone, including recruiters themselves. This shifts market demand for ethical recruitment agencies and ensures the long-term sustainability of ethical recruitment solutions.
TERA Project Launches ‘Profitable Ethical Recruitment’ and ‘Be Compliant’ Toolkit
Between a global pandemic and fierce industry competition, engineering and construction businesses are facing critical challenges that threaten their futures. A new research study from The Ethical Recruitment Agency (TERA), funded by GFEMS, offers solutions. By embracing disruptive technologies, building strong relationships with prime contractors, and adopting modern labor policies, companies can win new business and strengthen their workforce.
Accompanying the report, TERA has also launched it’s “Be Compliant” package. It includes:
- A pull-out that review the practical steps companies can take, such as ethical recruitment services and innovative management techniques
- An online calculator that models corporate investments and gains from adopting ethical business practices.
The report is available in English and in Arabic.
The TERA project, part of the Fund’s ethical recruitment portfolio, launched in summer 2020. It aims to provide safe work opportunities abroad to vulnerable communities in Uttar Pradesh, India. TERA India will operationalize systems for monitoring worker welfare, test the viability of an ethical recruitment agency in UP, and provide targeted support to low-skilled workers across multiple industries, including domestic workers, cleaners, and construction workers. In addition, TERA India will engage with the broader community of people vulnerable to modern slavery, including aspiring migrants who are unskilled, poor, and new to the migration process, to enhance understanding of and access to ethical recruitment opportunities.
Learn more about the Fund’s support for TERA and why we invest in ethical recruitment.
Investing in ethical recruitment: Seefar partnership testing ethical recruitment agency in India
In collaboration with the Norwegian Agency for Development Cooperation (Norad), GFEMS is working with Seefar to launch and pilot The Ethical Recruitment Agency (TERA) India. From its headquarters in Lucknow, TERA India will provide safe work opportunities abroad to vulnerable communities in Uttar Pradesh (UP).
Seefar, a social enterprise with a vision for a world where vulnerable people have more opportunities to advance themselves, will contribute its valuable experience as implementer with comprehensive contextual knowledge of forced labor, modern slavery, and ethical recruitment to the delivery of this project. Seefar launched TERA in 2018 with the mission of helping workers benefit from migration while staying safe from exploitation.
The Fund’s scoping research indicated that UP and Bihar are two of India’s top migrant sending states to Gulf Cooperation Council (GCC) countries. Community vulnerabilities and an unregulated recruitment system permits exploitation throughout the recruitment process. Vulnerable migrants are charged prohibitively high fees by recruitment agents, leading them to take out loans which may be nearly impossible to pay back and sinking them into a cycle of debt bondage. Beyond financial exploitation, recruiters and their sub-agents often provide false or insufficient information to migrants regarding working and living conditions, salary, and the nature of work to be carried out.
In this project, TERA India will operationalize systems for monitoring worker welfare, test the viability of an ethical recruitment agency in UP, and provide targeted support to low-skilled workers across multiple industries, including domestic workers, cleaners, and construction workers. In addition, TERA India will engage with the broader community of people vulnerable to modern slavery, including aspiring migrants who are unskilled, poor, and new to the migration process, to enhance understanding of and access to ethical recruitment opportunities.
This project will provide ethical recruitment service to vulnerable people by supporting debt-free recruitment and adherence to best-practice worker welfare standards. To achieve these goals, Seefar will help migrant workers secure safe employment and work abroad with no recruitment debt, fees, deception, or abusive living and working conditions. Testing TERA’s success will generate learnings on the viability and sustainability of an ethical recruitment agency, with the ultimate goal of shifting the market toward ethical recruitment. A key component of Seefar’s work will be filling the evidence gap to support TERA’s scalability and replication. The project will generate key research products establishing the business case for ethical recruitment, document beneficiary case studies and collect welfare data, and share lessons learned on establishing an ethical recruitment agency.
GFEMS aims to cultivate increased demand for ethical recruitment services among key stakeholders, including workers. In the longer-term, this demand will reduce prevalence of forced labor among vulnerable communities in UP. GFEMS will share learnings on the demand for ethical recruitment and its impact on the recruitment industry.
GFEMS looks forward to sharing the successes and lessons learned from the TERA India project and working successfully with Seefar towards our mission of ending modern slavery by making it economically unprofitable. Learn more about the Norad partnership and the GFEMS portfolio.