Although COVID is often cited as the cause of the key challenges faced by Singaporean construction with regards to labor, it is more accurate to view it as just one of the contributing factors – a catalyst for the increased magnitude of these challenges, as opposed to the root cause. Below, Michael Murphy and Shennen Chiam examine some of the other contributing factors, which have been exacerbated by COVID and are posing a considerable challenge for the industry at large.
The reliance on foreign labor
The resource pool for Singaporean construction is heavily reliant on labor from various parts of Southeast Asia – particularly Bangladesh, India and China. Looking at the vast majority of other major markets, such as the US, UK and Australia, the proportion is much higher in Singapore. In fact, as of last year, the number of Singapore residents involved in construction stood around 97,200, while the foreign component of the construction workforce was almost 300,000.
Ultimately, there was a lack of local labor available to meet the market demand, and so foreign labor became increasingly important and constituted a higher proportion of the overall construction workforce. While COVID has further magnified and highlighted the challenges posed by this overreliance, this has been an underlying theme that has been intensifying in the background for a number of years.
During 2020, there was a marked outflux of the foreign workforce from Singapore, which can be attributed to a few factors. It was kickstarted by the onset of the pandemic. The impact of the extended circuit breaker period, running from 7th April 2020 to 6th August was further compounded by the sluggish site restart period, which was slower than expected due to the tightly-controlled BCA approval to resume work, reduced numbers on-site to maintain social distancing measures, swab tests and labor unavailability.
The industry’s foreign workforce had been significantly reduced by the timing of the pandemic, with the initial outbreak in Singapore coinciding with late January and early February, when many foreign workers typically take a break to return home to their own countries. With the timing in question, they faced the dilemma of being unable to return to Singapore as both countries began to lock down and travel restrictions evolved from there on in.
Furthermore, there were cases whereby workers returned home to markets that offered better opportunities than Singapore did, and often this was closer to their families. Migrant workers have traditionally been housed in crowded dormitories. As the circuit breaker was imposed and the role of the dorms in the spike of COVID-19 cases in-country was recognized, strict dorm quarantines were introduced, leading to a much lesser extent of social interaction, and new dorm restrictions were put in place. This in turn will have had an impact.
Having accounted for approximately 90% of Singapore's total employment contraction in the first three quarters of 2020, according to the Ministry of Manpower (MOM)'s labor market report, the number of migrant workers has dramatically reduced. Of the 158,700 decline in the total number of people working between January and September (excluding foreign domestic workers), non-residents made up over 139,000 of this figure, and the Q3 decline was the steepest (72,300). At the end of 2020, the Ministry of Manpower put the fall in the number of migrant workers year-on-year at 200,000.
Lastly, the Singaporean Government built upon its measures in the preceding years to stem the flow of foreign workers, and took action to tackle the spread of COVID-19, lowering the quota for work permits, raising the qualifying salaries for S Passes and Employment Passes. issuing travel bans and border restrictions for Bangladesh, Nepal, Pakistan, and Sri Lanka.
Effects of the labor shortage
The effects of the labor shortage are being felt in a number of ways, and these will be explored in further detail in our forthcoming labor and commodities report:
- Premium rates now associated with labor in Singapore
- Some instances of schedule impacts
- Increased construction costs due to project delays, as well as material and labor cost increases
- Projects face cancellation in cases where the labor is simply not available or causes the project to become cost-prohibitive
- Higher bid costs are creeping in
- Reduced bid returns, as contractors are reticent to take on an increased rate risk
Although the pandemic has undoubtedly served to further emphasize the challenges faced by construction in Singapore, it has evidently not been the sole cause. More so, it has served to bring some of the issues and complexities that were bubbling under the surface to the fore, and in many cases, has forced the industry to look towards implementing improvements, technologies and new processes to overcome these challenges with regards to labor.
However, the effects of the labor shortage have undoubtedly been felt in Singapore, and in our forthcoming report on the local commodities market, the effects of the labor shortage and material price fluctuations are explored. This is before some actionable points are put forward with regards to securing project success against the background of the challenges that exist at the present time. If you would like to receive a copy of this report when it is published, please email firstname.lastname@example.org to join our content mailing list.