Covid-19 has wreaked havoc on the building industry. The industry has been hammered by a double punch of labor shortages and expense increases since early last year. Goh Yeow Lian, of Wee Hur Holdings, says, “I’ve been in the sector for 43 years; I’ve never experienced this issue before.” “The building industry is in serious trouble.”
Many building projects are expected to take six to twelve months, if not longer, to complete. “Project delays are what contractors are most concerned about,” Goh adds. Project delays result in greater costs since the contractor must still pay for project personnel and equipment rentals, such as tower cranes, for preparatory work such as demolition, site clearing, or site survey. He continues, “We can’t stop working.” “We still have to pay the bond for foreign employees, and we have to finish the job according to our contract.”
According to the Ministry of Manpower, the number of migrant workers with work permits in the construction, marine shipyard, and process industries has decreased by 16 percent to 311,000 in December 2020 from 370,100 in December 2019. Goh regrets the fact that several skilled migrant workers from China and Malaysia did not return to Singapore to celebrate Chinese New Year. Following the virus’s breakout in India in March, several migrant workers who were concerned for their families chose to return home as well.
Singapore imposed a travel restriction on individuals with recent travel records to India on April 24, after the incidence of illnesses in India increased earlier this year. Long-term permits were included in the restriction, which was expanded to Bangladesh, Nepal, and Sri Lanka in May. As a consequence, the labor shortage in the construction industry has increased. “Our reliance on a foreign labor is one of the problems confronting our construction sector,” Goh adds. “We won’t be able to stop it because we don’t have our own local workforce. Those that wear ties aren’t interested in working in the construction industry.”
The cost of labor has risen by two to three times: “We used to pay $20 per hour, but now we have to spend $50 to $60 per hour,” Goh adds. The cost of construction materials has risen as well, from concrete to copper. He cites the price of steel, which was sitting about $700 per tonne before to Covid and has subsequently risen to $1,100 to $1,200 per tonne. “All metals have gone up in price as a result of inflation,” he adds.
Workers from India will be brought in under a trial scheme starting this month, where they will be examined at “onboarding facilities” in their home country before being required to serve a Stay Home Notice (SHN) and follow safe management measures (SMM) once they arrive in Singapore. According to a July 7 CNA article, businesses would have to spend $2,000 to $3,000 extra each worker as a result of this new procedure, in addition to quarantine charges.
This trial program, according to Goh, is a good indication. “The current increase in building costs is mostly due to a labor scarcity, a rise in the price of certain necessary materials, and compliance with SMM as a consequence of Covid-19,” Goh says. “Once the situation improves, we think the building costs will decrease.”
While government relief initiatives like as the Job Support Scheme and Foreign Worker Levy refunds have helped alleviate some of the load, the greatest issue remains, according to Goh, for projects that were approved two to three years ago but have yet to begin construction. He says that the primary problem is expenses, which are tied to current pricing. Due to Covid, expenses have increased by at least 20% since then. He asks, “Who is going to pay for all these extra costs?” “It’s a massive amount. This is a problem that affects the whole business; most contractors are affected.”
The contractor, according to Goh, should not be the only one who bears the extra financial burden. He adds, “Let’s hope the public and private sector customers share the financial load.”