SAFE Accommodation: Worker Housing for Manufacturing Growth Report

• 23 Dec 2024

For Prelims: NITI Aayog, Labor Mobility, Economic Survey, Nominal GVA, Semiconductor, Special Economic Zone, Floor Area Ratios, Minimum Wage, Viability Gap Funding, Labourforce. 

For Mains: Need of accommodation facilities for workers to promote growth in the manufacturing sector. 

Source: PIB 

Why in News?

Recently, NITI Aayog released a report on SAFE Accommodation: Worker Housing for Manufacturing Growth that explores the crucial role of secure, affordable, flexible, and efficient (SAFE) accommodations for industrial workers.  

• It identifies key challenges, offers actionable solutions, and highlights the pivotal interventions required to scale up such housing facilities across the country. 

Note: SAFE accommodation originally stands for Site Adjacent Factory Employee Accommodation. 

What is SAFE Accommodation? 

• About: SAFE Accommodation is a concept aimed at providing housing facilities for employees close to their workplace, typically near industrial or factory sites. 

• Facilities: It includes long term dormitory-style accommodation which is rented directly to workers or their employers. 
  • It includes essential amenities such as water, electricity, sanitation facilities, and other basic services like food, laundry, and dispensary facilities. 
  • It excludes family housing. 
• Objectives:  
  • Facilitate labor mobility and productivity through SAFE accommodations to enhance manufacturing competitiveness. 
  • Designate workers' accommodations as critical infrastructure with tailored regulations for construction and operation. 
  • Develop a market-driven ecosystem for private developers to provide affordable accommodations with attractive returns.  

Note: Dormitory-style accommodation is a large space with many rooms where people sleep. It can also refer to a room with multiple beds for people to stay in. 

What SAFE Accommodation Helps in Manufacturing Growth? 

• Manufacturing Growth: According to the Economic Survey 2023-24, India needs to add 7.85 million jobs every year until 2030 to sustain economic growth. 
  • Formal accommodations near work sites can attract and retain the workforce necessary to support this expansion. 
• Women Empowerment: In China, women contribute 41% to the GDP with a 61% labor participation rate, nearly double India's 18% GDP contribution and lower participation. 
  • SAFE Accommodation can ensure secure housing for women while generating employment and opportunities for them. 
• Sectoral Transition: Manufacturing employs 11% of the workforce but contributes 14% to nominal GVA, while agriculture employs 46% but contributes only 18% to GVA. 
  • SAFE Accommodation can help transfer surplus labourforce from agriculture to industry. 
  • India aims to increase the share of manufacturing in its GDP to 25%. However, it has been hovering around 14-16% since FY12. 
• Supporting Make in India: Specific industrial hubs are emerging, such as the assembly and packaging industry in Sriperumbudur, Tamil Nadu, the Electric Vehicle (EV) hub in Hosur, Tamil Nadu, and the semiconductor hub in Dholera, Gujarat. 
  • SAFE Accommodation can help secure adequate workforce in a single concentrated location which will typically include migrant workers. 
• Rising Accommodation Demand: India needs to grow economically at a Compound Annual Growth Rate (CAGR) of 9.4% per annum to reach its Viksit Bharat goals and create more jobs. 
  • By 2033, ~20% of the workforce may prefer affordable formal housing, requiring 25 million housing units for manufacturing workers. 

• Enhances Productivity and Retention: Proximate and well-designed housing improves workers’ quality of life, reduces commute times, and enhances overall productivity. 
  • This leads to lower attrition rates and recruitment costs, ensuring a stable and skilled workforce for factories. 
• Attracting Global Investments: Multinational corporations prioritise worker welfare and efficiency, with quality accommodations making India a preferred manufacturing hub. 
  • It aligns with global labour standards that prioritise adequate and safe worker housing.  

Global Examples of SAFE Accommodation 

• China: A majority of migrant factory workers were accommodated in workers’ dormitories built by employers, often on land provided for free by local governments.  
  • About 80% of the thirty million assembly-line workers in China’s Special Economic Zones are female recruited from rural areas of interior provinces. 
  • Accommodation is often part of the employment agreement. 
• Japan: Early Japanese industrialisation housed female labour force from faraway villages in dormitory accommodation. 
• Singapore: Singapore has a separate act for migrant housing called the Foreign Employee Dormitories Act, 2015  and differential building regulations for workers’ dormitories. 
• Vietnam: Vietnam had approved a plan to build 1 million social housing units for low- and middle-income households in urban areas and for workers in industrial parks to facilitate recruitment of female labour from rural areas. 

What Challenges are Involved in Scaling Up Worker Accommodation? 

• Restrictive Zoning Laws: Residential developments are often prohibited in industrial zones unless explicitly permitted, forcing workers to live far from their workplaces.  
  • This increases commute times and costs, impacting productivity and retention. 
• Conservative Building Bye-Laws: Low Floor Area Ratios (FAR) and other inefficient land-use regulations limit the potential for high-capacity housing on available land. 
• High Operating Costs: Hostel accommodations in industrial zones are often classified as commercial establishments, leading to higher property taxes and utility rates.  
  • These increased costs discourage private sector participation. 
• Financial Viability: High capital costs and low returns make large-scale worker accommodation projects unattractive to private developers.  
  • Infrastructure investors require a lease rental of Rs. 4,000 per worker for 80 square feet which is about 30% of a minimum-wage worker's salary, making it unaffordable for many. 
• Coordination: Coordination challenges also arise, as industrial hubs require synchronized investments in housing, infrastructure, and industries to succeed. 

What is the Proposed Way Forward? 

• Regulatory Recommendations: 
  • Reclassify Worker Accommodations: Designate SAFE accommodations as a distinct residential category, ensuring residential property tax, electricity, and water tariffs apply, along with GST exemptions for accommodations.  
    • E.g., Rs 20,000 per person for a continuous 90-day stay. 
  • Environmental Clearances: Include SAFE accommodations under the exemptions provided for industrial sheds, schools, colleges, and hostels in the draft notification issued by the Ministry of Environment, Forest, and Climate Change (MoEFCC). 
  • Gender-Inclusive Policies: Encourage the development of accommodations suitable for workers, addressing their specific safety and welfare needs. 
  • Flexible Zoning Laws: Amend zoning regulations to allow mixed-use developments near industrial hubs, facilitating worker housing close to workplaces. 
• Financial Recommendations: 
  • Viability Gap Funding (VGF): Provide up to 30%-40% of project costs (excluding land) through VGF support.  
    • This includes 20% from the Department of Economic Affairs (DEA) and 10% from the sponsoring nodal ministry, with additional contributions from state governments. 
  • Competitive Bidding: Implement transparent bidding processes to determine VGF support, ensuring efficiency and cost-effectiveness. 
  • Retrofitting Existing Facilities: Leverage VGF to upgrade brownfield worker accommodations, enhancing their safety, capacity, and utility. 

Drishti Mains Question: 

Q.How can SAFE accommodations contribute to improving women’s workforce participation in India? Illustrate with global examples 

UPSC Civil Services Examination, Previous Year Question (PYQ) 

Prelims

Q. In the context of the Indian economy, non-financial debt includes which of the following? (2020) 

1. Housing loans owed by households
2. Amounts outstanding on credit cards
3. Treasury bills

Select the correct answer using the code given below: 

(a) 1 only  

(b) 1 and 2 only 

(c) 3 only  

(d) 1, 2 and 3 

Ans: (d)

Q. With reference to the role of UN-Habitat in the United Nations programme working towards a better urban future, which of the statements is/are correct?(2017)

1. UN-Habitat has been mandated by the United Nations General Assembly to promote socially and environmentally sustainable towns and cities to provide adequate shelter for all.
2. Its partners are either governments or local urban authorities only.
3. UN-Habitat contributes to the overall objective of the United Nations system to reduce poverty and to promote access to safe drinking water and basic sanitation.

Select the correct answer using the code given below: 

(a) 1, 2 and 3  

(b) 1 and 3 only 

(c) 2 and 3 only  

(d) 1 only 

Ans: (b)

Mains 

Q. With a brief background of quality of urban life in India, introduce the objectives and strategy of the ‘Smart City Programme.” (2016)

Q. Discuss the various social problems which originated out of the speedy process of urbanization in India. (2013)