by Yee Jenn Jong
Last week, Trade and Industry Minister Chan Chun Sing asked if Singapore was prepared to have 2,500 babies born here every year grow up to be construction workers?
He explained his calculations as follow: Singapore now has 300,000 construction workers. IF a Singaporean is three times as productive, then we will need 100,000 Singaporean workers. And over a 40-year period with Singaporeans replacing the foreign workers, we will need 2,500 a year, or about 8% of our babies each year.
He argued that therefore Singapore cannot cut down on foreign workers as other countries had because of our small size and lack of natural resources. The Minister seems to suggest that this high reliance on foreign workers situation is inevitable.
A few weeks ago, I wrote about Singapore’s journey to nearly 1.5 million migrant workers detailing the 30 years journey we took that saw this rapid explosion in number of foreign workers, especially the low wage workers. I will leave you to read that and will focus on looking at the construction sector in response to the Minister’s statement.
Let’s look at the Minister’s reasoning.
(1) The Minister has a way of exaggerating. His mathematics is based on 100% replacement of all workers in the construction sector by locals. Singaporeans are practical people. We are not calling for total replacement. We are calling a stop to this over reliance and ever-increasing number of migrant workers. We are calling for deliberate steps to correct the process and to seriously make careers in construction viable for Singaporeans so a more sizeable number can be in the industry.
The Minister’s question and the tone of it seems to make construction as a shunned career. It sadly adds to the poor image the industry is already having because we can only think of the low wage and low skilled migrant workers. The reality in many places is that skills in a strenuous job can pay well. Many of these jobs are not shunned by the locals in say Japan, Australia, Switzerland or Finland. And some aspects of the construction sector do include skilled specialists and trained experts.
(2) The Minister assumed that Singapore construction workers can eventually be three times as productive as currently. This figure is probably arrived at by looking at the best in class, where in places like Australia and Japan, the locals are indeed three times or more productive than a construction worker in Singapore currently.
It is a big ‘IF’. We are currently so far off the chart in productivity compared to other developed countries. Why are we not even attracting Singaporeans into this industry?
Singapore took a different path from other developed countries as we started to prosper in the 1990s. Entrepreneur Jack Sim shared some interesting observations in his Facebook post recently. Jack shared that when he started in the construction industry in 1979, there were very skilled Master Craftsmen, trained Skilled Craftsmen and Apprentices.
Jack lamented that ‘the Shanghainese Masters have now passed away. The Singaporeans Master retired. The Malaysian Masters have returned home. The Thais who replaced them also returned home. The Japanese and Korean have also returned home.’
He observed that Singapore started to bring in many who ‘have never done a day of Construction work’. Jack Sim’s presentation involves some generalisation but we can all relate to our present-day situation. The salaries of the migrant workers in construction are low but the cost to employers is not low because of huge levies and accommodation costs. The effect of such a large-scale replacement of skilled craftsmen with low wage workers effectively made these jobs unattractive to locals.
Today, it is a fact that the productivity of construction workers in Singapore pales in comparison to locals in developed countries. We can only compare ourselves with our ASEAN neighbours. It is one thing to say in theory about how productive Singaporeans can be but another thing to do so in practice because what Australia and Japan have achieved took tremendous efforts. Where are we in this process today?
(3) Next, let’s examine the effect on construction cost in countries with high local participation and high-productivity. The Minister noted that ‘in many other countries, a proportion of local workers is allocated to the construction industry. In some cases, this leads to these workers becoming more expensive, and in other cases, projects take much longer to complete due to the lack of manpower.’
In the Turner & Townsend International Construction Market Survey 2019 (report available upon submission of request to company, relevant figure extracted below), we find that the construction cost of comparable projects are quite similar between Singapore, Australian and New Zealand cities and Tokyo.
In another report by Rider Levett Bucknall on the international construction market 2016 (figure extracted below), the cost per sqm of gross floor area shows that total cost is quite similar between Singapore and Australian cities. An Australian construction worker earns an average of AUD$63,830 per annum. How much do construction workers in Singapore get?
If we look at Japan, their processes in construction are highly integrated and efficient. According to the Japan Construction Information Center Foundation, there is tight integration in the industry. When the construction specialist for foundation works is done, almost without delay the next team doing structure can be onsite the following day to start work. Their planning and project management tools can talk across companies. They also need to construct to withstand earthquakes and typhoons, which makes it a lot more challenging than construction in Singapore. Yet their overall construction costs are comparable to Singapore as well.
Higher wages local workers may not lead to much higher overall costs. Top local businessman and hotel magnate Ho Kwon Ping shared in an interview in 2011 that his company has construction development experience in Australia, New Zealand, Thailand and so on. He was shocked that when they built their hotel in New Zealand, the number of workers they had to engaged was about 10 percent of what they did in Thailand — because the workers were well trained.
(4) The Minister is correct to say that Singapore has a small population. Well, so do New Zealand, Switzerland, Finland, Hong Kong and other small developed countries with high local participation in construction. The Minister also said, “If we lose out in that relative game compared to other people, then unfortunately, I think the future of Singapore will not be what we expect it to be.”
Some of these countries are globally competitive too despite relying mostly on locals for their construction industry. Some are in fact competing fiercely with Singapore to be regional hub and to be a financial centre.
Having said all these, what can we do now? I believe we cannot leave it to the market to correct itself. I recently shared in my Facebook about the preschool sector which I am more familiar with. I will use this as an example.
I recall in the 2000s, the preschool sector was shunned by young Singaporeans. In 2007, I was invited to be on a national workgroup on education and human capital. At the first meeting, we were discussing possible areas for the committee to focus on during our two-year term. Many topics from K-12 and higher learning were discussed.
Then I shared a story. My wife met by chance a former staff of a preschool we had previously operated. The teacher had already attained diploma in teaching and in leadership and was a senior teacher with us until we sold our centre.
My wife had not met her for several years and asked where she was working at then. She had become a masseur and her basic pay as a rookie was already higher than what she commanded as a senior teacher after more than 10 years in the industry and after having gone for the training required for the industry.
Those who were not in the industry in the committee were shocked. They probed further about pay and prospects in the sector. In the committee, we had another long-time leader in the industry. She confirmed the situation and added her own stories. Staff turnover was high and it was tough to attract good locals to the sector. There were increasingly more foreign teachers in the sector as employers could not find locals.
That sharing decided what we were to focus on for our committee’s term. Several bold recommendations were made after extensive research into the sector. Unfortunately, the government was not ready then for these changes. It was only after 2011 that a national drive was put into the sector, including the government running their own kindergartens, massive training and scholarship opportunities for pre-service and in-service teachers, merging of MOE and MSF preschool sectors into an agency (ECDA) and lots more funding. All these were actually recommended by our committee earlier and the boldest and what we felt were most necessary of our recommendations, were then turned down.
The effect of the massive government push is that the preschool sector today attracts young Singaporeans. There are now good career prospects. My daughter for one, decided to take up early childhood on her own when choosing what to study at the polytechnic. She was attracted to the scholarship for her studies and the security of the job. She found that she like the industry and has stayed on and even went for further studies in the same field.
My niece is a nurse. She had excellent A levels results but she chose nursing. This was another industry that used to suffer from poor image and low pay. After much concerted effort at developing the industry at the ITE, polytechnics and universities level, added with scholarships, better pay and improved career prospects, coupled with aggressive marketing, young locals are moving into this industry once more. Even the SAF used to be unable to attract people until it was rebranded and career prospects became better.
Today, when there is talk that we have become too reliant on migrant workers, the industry associations quickly responded to say that cutting down on migrant workers would kill businesses and destroy the economy. They are not totally wrong. The situation has become so bad that we cannot just leave it to the market to correct itself. We cannot just tell employers to be more productive with their workers, cut staffing and to find their own ways to hire Singaporeans. The companies that try to do this now may find themselves priced out of business in the short run.
We will need to tackle sector by sector, those sectors with low productivity, mostly untrained workers and low take up interest from Singaporeans. Many aspects of the whole system are broken. We need to fix it at the national level with a big push from the government side, including perhaps to take the lead in several areas. The recruitment and training aspects for foreign workers is messed up. Middleman make huge money and the workers coughed up large sums to come here, laden with debts. Many have not even worked in construction or the trade they are recruited for in their own country. Dormitory operators make huge profits housing migrant workers in what many consider as crowded and relatively poor living conditions.
Singapore had taken a different path from other economies as we started to prosper. Australia, New Zealand, Japan, Hong Kong, Switzerland, Finland, and many other developed economies do not have this huge reliance on low cost migrant workers, such as in construction. There is decent pay for their locals in the sector and they are better trained, more productive and manage automation better. These have evolved over the years because their government had decided that they cannot rely on low cost migrant workers from the start.
To correct decades of neglect in Singapore, we cannot just ask the market to correct itself. Private companies are forced to accept the current market situation because each by itself cannot correct the industry. For years, the preschool sector could not correct itself and was moving towards the path of large number of foreign teachers, poor pay relative to peers, and low interest by locals to be preschool teachers. Painful and difficult though it might be, the situation has to be changed with major government interventions.
In case I am being accused of simplifying the problem, I acknowledge that this is a monster of a problem to solve, way more difficult than the other sectors I had cited. I am not an expert in this industry. I am gleaning data from around the world to look at the problem we have created for ourselves in order to offer my views. It will take many years to correct the unfortunate path we had taken to become too overly dependent on low wage migrant workers. We pride ourselves to pay the best in the world to have the Team A in government (and with constant reminders that Singapore can never have a Team B). We pride ourselves to plan 20, 50 and even 100 years down the road.
But the experience of other developed countries like Japan, Australia and Europe shows us it is possible to have a higher skilled, more productive, largely locally-manned construction industry that pays decent wages and where construction work is a skilled and respectable profession.
While we may take years to get there, it is clear that it will take a concerted industrial upgrading effort by government to do so. If anything, this Covid-19 crisis has underlined the important strategic need to do so both in construction and in other industries which have through our misplaced labour intensive growth policy, created a low wage industry far too dependent on migrant foreign workers and low wages for working class Singaporeans.
We need to start somewhere and start it in a massive and decisive way. Let’s not use mathematics and rhetoric to brush the problem aside for the next generation to solve.