Financial Times

Construction industry wages seen rising sharply
The construction industry is expecting a sharp increase of over 60 percent in skilled labour wages on the back of an exceptional demand for post-tsunami reconstruction during the next few months.

Industry officials said that last year's daily wage rate which was Rs. 600 for skilled masons has the potential to go up by nearly Rs. 400 by the end of the year.

Kemantha Perera, Marketing Manager, Ambuja Cement (Pvt) Ltd., said that less than five percent of the 100,000 tsunami-damaged houses have been reconstructed and there is immense potential for labour in the future. "Before the end of the year the skilled labour will go up by Rs. 300 a day and unskilled labour, which varies from Rs. 4-500 will also go up by about Rs. 100," he said.

He said the wage hike is prompted by the demand for labour that cannot be matched overnight, much like what Jaffna witnessed two years ago. "In Jaffna the construction industry underwent a similar scenario after the peace process," he added.

Walter Marasinghe, Marketing Manager, Holcim Lanka said that the demand for labour in the construction industry is likely to go up within the next five months. "It will rise to about Rs.700 to Rs.800 for skilled masons within about three months," he said. "The companies are gearing for the tsunami construction and it will add significantly to their bottom line."

Meanwhile, industry officials said a 15 percent growth in the annual demand for cement is projected for this year. "The industry has a seven to eight percent growth, but this year we are forecasting a 15 percent growth in demand for cement," R. Nithianandan, Supply Chain Manager, Mahaweli Marine (Pvt) Ltd., said.

The construction sector grew by 6.6 percent last year, compared to 2003, the Central Bank said. Last year the annual demand for cement amounted to 3.2 million metric tonnes. "Over the next two years, according to the Task Force for Rebuilding the Nation projections the industry will need 450,000 metric tonnes for housing and 350,000 metric tonnes for the buildings damaged due to the tsunami," Perera said.

Nithianandan said the industry's production capacity for this demand is sufficient at the moment and in fact it has been under performing all these years. "The industry as a whole can go up to 4.5 million tonnes annually," he said.

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