The Workers’ Party (WP) Member of Parliament (MP) for Sengkang GRC Jamus Lim has called for a move that Singapore desperately needs in order to raise productivity in the construction sector.
“It is well known that for all the productivity challenges that we have faced in our economy, the construction sector has been even worse off,” said Assoc Prof Lim in Parliament on Tuesday (11 May).
He noted that the justifications for the concerning productivity level have been varied – from purported lower scale of workers, especially related to the large transient foreign worker pool, to inadequate project planning and mechanization.
Assoc Prof Lim then highlighted the “one common theme” that runs through the aforementioned explanations.
“With steady access to a large pool of foreign construction workers, most paid at very low wages, it is unsurprising that firms rationally choose to substitute capital for labour, and skilled workers for unskilled ones,” he explained.
Assoc Prof Lim asserted that “this would go on for as long as it’s cheaper to bring in two or three low-cost workers to do the job of one higher skilled, but undeniably more costly, worker”.
“This practice is ultimately to the detriment of more than just productivity per se,” he added.
Assoc Prof Lim then called for a move that is “so desperately needed” for raising construction productivity.
“We would do well to carefully monitor the capital labour deployment in the industry over the next few years; and if proven efficacious for raising productivity, consider implementing measures to support high wages in the sector,” he elaborated.
In response, Minister for National Development Desmond Lee said that he agrees with Assoc Prof Lim to an extent, though he noted that the Government “can go a lot more further than that”.
Mr Lee stated that the construction sector has been undergoing transformation with significant investments since the launch of its Industry Transformation Map (ITM) in 2017.
The Minister urged Assoc Prof Lim and Non-Constituency Member of Parliament (NCMP) Leong Mun Wai to “look and read” the ITM, and subsequently convey whether or not they support it.
Mr Leong had earlier noted that more locals could be attracted to become general construction workers if the wages are more attractive.
“I always find it very uncomfortable and always find it very pitiful to see very strong able-bodied Singaporeans queuing up at F&B outlets to collect food for delivery,” said the Progress Singapore Party (PSP) NCMP.
Touching on the improvement of productivity in the sector, Mr Lee stated that improvements have been made as a result of many efforts over the years. This can be seen from the “regulatory, landsale related, skills upgrading, [and] grants”.
“All these are efforts to transform our sector. But because the construction sector is a long-value chain, it does take time; it does take resolve; and no one firm can do it on its own,” he remarked.
In a follow-up question, Assoc Prof Lim asked what is the timeline for which Singaporeans can expect an actual change in raising the wages for construction workers.
This came after he pointed out that there seems to be a “severe reluctance” from the Government to even entertain a small escalation in the transportation cost for construction workers.
Mr Lee replied saying that the Government is looking at “making significant changes” to the foreign manpower strategy for the construction sector “starting from next year”.
This include doing away with the Man-Year Entitlement (MYE) framework so as to provide opportunities for Singaporeans to come into the sector.
“And not just raise the wages of the foreign workers. But even those foreign workers working offsite, [they] will have to be more skilled [to] operate the machineries; and therefore the wages will have to be higher, because they are more productive and more skilled,” he added.
Mr Lee went on to say that the Government will also look into tightening the Dependency Ratio Ceiling (DRC) to “push sectors to be more lean”.
He asserted that the Government is “pushing on multiple fronts” to make the sectors more “expansive” and “productive”.
Before concluding his response, the Minister concurred with Assoc Prof Lim on the importance of retaining the existing foreign workers in Singapore.
Mr Lee said that all parties are aware that it is “important for employers to work with their existing foreign workers” by examining their remuneration and working conditions, as well as finding ways to “encourage them to continue to stay in the sector”.
Besides Assoc Prof Lim and NCMP Leong Mun Wai voicing out on the local and foreign workers conundrum, WP’s politician Yee Jenn Jong had also pointed out that higher wages for local workers may not lead to much higher overall costs.
Mr Yee, who was a former NCMP, gave examples of how construction costs for countries such as Australia and Japan did not differ much even when the local workers are paid significantly higher – in comparison to what they are currently paid in Singapore.
Read his full explanation here.
