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4 Jul, 2007 03:05

Unqualified workers stain Russian construction industry

Russia has the fastest growing construction market in Europe and is investing the profits in the latest Western equipment. But the workers behind the boom remain unqualified, without contracts and are often illegal.

In the one thousand dollar a night Ritz-Carlton Hotel, which opened its doors opposite Moscow's Red Square on Sunday, Russia's construction industry held its second annual awards. Construction nationwide is up 26% year on year, symbolised by the massive Moscow City Financial District springing up in the heart of the capital.

“Our market is unquestionably more profitable than in the West. On the biggest plot in Moscow City we are building a 250m skyscraper, with top British architects RMJM,” Aleskey Marinchev, CEO of City Palace, says.

However, the awards have been overshadowed by several ground-level scandals. Last week hundreds of migrants building Sheremetyevo Airport Terminal 3 were hospitalised with suspected poisoning from the canteen of Turkish construction company Enka.

The government has just brought in laws limiting foreign workers to 40 % of all jobs. Despite this, the industry remains filled with unqualified, illegal workers.

Every morning foreign workers keep gathering at the spot on Moscow outskirts where they get hired by gangmasters.

“Construction firms come up to us and promise mountains of gold, food. Then at the end of the month they say 'sorry guys there's a delay we'll pay you later' and we end up working for nothing,” Azam, who arrived from Uzbekistan two years ago, complains.

Many of the workers have no protective equipment and can not understand Russian.

“I earn little, seriously little. $ US 200 a month for 12 hours work a day,” one of them says.

London Stock Exchange-listed AFI Development is in charge of building the Moscow City Mall. The chairman laughed off any responsibility for the plight of its workers.

“We are a development company; we just own and finance the work. We have nothing to do with construction. Everything related to construction is outsourced to Enka, which hires its own builders,” Aleksandr Khaldey, the Chairman of AFI Developments, commented.

Experts say government and market forces in Russia are not mature enough to force developers to invest in their workforce.

“The numbers of illegal construction workers in Russia would shock any Western investor.Only a combination of tougher penalties and simplified migrant registration procedures will lead to a point when it is more profitable to legalise the workforce than pay the official fines or bribe the immigration service,” an expert highlights.

Until that point, investment in the next generation of Russian builders will continue to suffer. Property developers in Moscow's new financial district can make a 100% return on their investment. But foreign builders can be hired and fired at will, and not even the most basic training is provided, leaving thousands of unqualified workers when the construction boom ends.