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SINGAPORE: Construction firms in Singapore estimate that their labour costs could go up by five per cent, once the hike in foreign worker levy kicks in from July. Industry players expect that this could hit 10 per cent in two years when the levy reaches its peak in 2012.
With foreign worker levies going up from July, costs are certain to heat up for the construction sector.
Eight in 10 workers from the sector are from overseas and companies are now scrambling to find ways to manage escalating costs.
Market watchers said one of the quickest ways firms can offset the increase in levy rates is to improve workers' productivity through training.
Louis Lee, group publishing manager, BCI Asia Construction Information, said: "So instead of employing 50 workers, they have to cut down to 20 and these 20 must really be able to maximise in terms of their skills. They can do more than just one task, two tasks, read drawings, read computer printouts."
The industry expects the initial increase of between S$10 and S$30 in July to raise their labour costs by three to five per cent. But with rates going up by between S$150 and S$250 in 2012, that could add as much as 10 per cent to manpower expenditure.
Although implementing labour-saving technology like self-compacting concrete may help to offset the cost increase, observers said this may be difficult for smaller firms.
Simon Lee Fun, executive director, Singapore Contractors Association, said: "They are working hand to mouth, so they may be too busy doing their jobs, getting the project done. So they may not have the time to source for the software or the hardware."
Streamlining the construction sector could also hit the pockets of clients, with firms likely to pass on the higher costs to customers by adding them to their bid prices.
Observers said that it could take some time for Singapore's construction sector to make the change. The test bedding and implementation of new methods alone could take at least five years as firms adjust their methods to meet the changing environment. - CNA/vm
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