This timer figure is based on research undertaken by Vic Jennings (University of Melbourne), Bill Lloyd-Smith (Royal Melbourne Institute of Technology) and Duncan Ironmonger (University of Melbourne) using United Nations statistics which pointed to the number of households (using medium fertility rates) being at 1,908,854,742 in 2010 and estimated to grow to 2,794,601,318 by 2030. Using World Bank estimates of 80 percent of the global population living on under US$ 10 per day, we have broadly deducted 20 percent of housing allocation from this estimate producing a total BoP requirement of 708,597,261 units or 35,429,863 per year / 2,952,489 per month / 97,068 per day / 4,045 per hour / 67.41 per minute.
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POSTED BY Ruban Selvanayagam, August 21st 2012
A post written for the Next Billion Brazil blog exploring the reality behind one of the prominent bottlenecks in achieving the sustainable growth of the country´s base of the pyramid housing sector – the original (in Portuguese) can be read by clicking here.
In a real estate market increasingly recognised with pressurised margins, amongst other complications, one of the major headaches being faced by constructors relates to the supply of labour – principally in the low income housing sector.
It is indeed a question frequently made by the growing breed of impact investors when examining project viability focused on alleviating the Brazilian housing deficit, estimated at approximately 30 million units (and rising).
To add fuel to the fire, investing in the sector has become even more unethical as a result of the blatant disregard for workers on Brazilian building sites who remain continually badly treated and exploited – a phenomenon commonly found in projects formed under the Minha Casa, Minha Vida (“My House, My Life”) programme.
Indeed, the Brazilian media is regularly reporting of the low salaries and delayed payments on building sites across the country. In addition to conditions described in June by the Ministry of Work and Employment (Ministério do Trabalho e Emprego, MPT) as “equal to slavery” (a crime defined under article 149 of the Penal Code), a number of other denouncements have appeared – demonstrating, for example, the informal contraction of employees, the lack of adherence to health & safety regulations and even failure to provide safe drinking water.
Lawyer at the Brazilian Coordinate of the Eradication of Slave Labour (tied to the Public Employment Ministry) (Coordenadoria Nacional de Erradicação de Trabalho Escravo do MPT), Rafael de Araújo Gomes indicated in May 2012 (via the Agência Brasil news site) that: “without a doubt, the situation is getting worse every year. Cases like these never existed in the past, when they were almost unimaginable, but now have become more permanent and commonly witnessed – this is of great concern to us.”
According to the MPT´s most recent report, almost 340 people were found in exploitative working conditions in the first three months of this year. Approximately 40 percent were employed in such circumstances in the state of São Paulo where there is widespread evidence of companies deploying cheaply sourced labour from the north and central west regions of the country (to take advantage of reduced overheads). As an example, in April the “Croma” developer was penalised due to contracting 50 employees who were subsequently found in “slave like conditions.” However, the only punishment imposed was a fine of R$ 500 (US$ 248) per worker in addition to the delayed payments owed.
More worrying is that the MPT has also pointed out that 50,000 workers can be found in similar conditions on building sites across the country. Furthermore, in line with the rapid growth of the property construction sector in recent years, the number of deaths has grown worryingly (in 2011 there were 221 incidents throughout the country). See a video on YouTube of an incident in Belém at the start of the year.
Despite all this negative evidence, a notable recent case has demonstrated that certain steps are being taken in terms of confronting the problem. Caixa Econômica Federal – Brazil´s largest banking institution and financial administrators of the Minha Casa, Minha Vida (“My House, My Life”) programme – confirmed that, as a result of signing to the National Pact for the Eradication of Brazilian Slave Labour, a decision was taken to suspend the concession of credit for Latin America´s highest profiting construction company in 2011, MRV. In March of this year, the MPT presented to the Economics Rights Secretariat at the Brazilian Ministry of Justice a range of evidence of “wide scale suppression of worker´s rights by the construction company” – undertaken systematically over the last several years.
One of the strategies made by the large real estate companies in Brazil, such as MRV, is to contract labour to third party companies in order to be able to avoid legal responsibility when problems and other liabilities occur. However, such decisions frequently place construction site workers in a worse position due to the fact that there are very few companies in this sub-sector that operate professionally and honestly.
Lack of solutions
It is very clear that such practices simply cannot continue. However it is important to underline that, from a business perspective, the large majority of real estate development companies (particularly those that cater to the affordable market) are not in a position to increase salaries and improve working environments due to the fact that this places risk on project viability (and achieving a healthy profit).
The source of the problem is fundamentally rooted in the archaic building systems that simply do not have the ability to produce in a streamlined, efficient and considerately ethical manner. It is indeed for this reason that in 2011 and 2012 alone we have seen strikes of notable sizes in the states of Piauí, Ceará, Bahia, São Paulo, Espírito Santo, Pernambuco and Mato Grosso.
Everyone here is losing within this vicious circle when the situation does not need to be as such…
Fez Tá Pronto – genuine benefits for all in the contraction of Brazilian construction labour
The Fez Tá Pronto Construction System© presents a revolutionary and financially viable methodology, 100% focused on the base of the pyramid (in Brazil and throughout the emerging / developing world).
In addition to a number of socio-economic and environmental benefits, we create employment and income at grand scale throughout the production chain – all whilst using disqualified labour sources, young people and women. Our building sites operate to the highest standards of health and safety, ensuring that working conditions are well above Brazilian minimum requirements. Furthermore our salary levels reach up to three times the norm paid by the mainstream real estate developers in Brazil.
To demonstrate, if we look at the state of Rio de Janeiro (the location of our headquarters and the region with the highest affordable housing deficit in the country), it can be seen that law nº 5.950 (enacted on 13th April 2011) stipulates a minimum salary for construction workers at R$ 686.34. In truth, the salaries for qualified bricklayers within the majority of Rio de Janeiro cities, ranges from R$ 1,000 and R$ 1,200 – Fez Tá Pronto block layers earn at least double this amount.