Construction sector to remain below pre-pandemic levels amidst labour shortage

The government’s worker retention scheme partially reduced project delays and labour costs.

Despite the construction industry’s growth nearing 2019 levels, professional services firm, Turner & Townsend, projects that the sector’s performance will remain below pre-pandemic levels in the large part of 2022 amidst labour shortage.

Turner & Townsend said the Singapore government’s worker retention scheme between September 2021 and February 2022 mitigated only partially alleviated the project delays and soaring labour costs. 

The firm also cited that replenishing migrant labour workers on-site amidst easing of border controls will require time 

Restoring migrant labour on-site further to the easing of border controls will require time and careful process to ensure public safety, whilst the costs of hiring new migrant workers to meet COVID-19 safety precautions remain high, the firm added.

Aside from labour woes, the local industry’s dependence on imports was dragged down, following a sharp increase in oil prices and global supply chain challenges will continue to increase the price of construction materials and costs of transport and machinery operations.

To support more off-site work along with higher-skilled work permit holders, the Government has allocated funds to boost the industry’s digital capabilities and talent attraction. 

As this happens, the government will also lower the migrant worker dependency ratio ceiling and replace its current man-year entitlement (MYE) framework with a levy framework to reduce dependence on migrant labour.

These challenges would need sustained efforts in the industry to address these risks in a more equitable manner between stakeholders. Over the long term, these approaches will help the resilience of Singapore’s construction sector to withstand market volatility.

In the fourth quarter of 2021, on a yearly basis, the sector saw a 2.9% growth in the fourth quarter of 2021. Citing Building and Construction Authority’s (BCA) projections, overall construction demand may reach between $27b and $32b for 2022 after a 42% increase in 2021 totaling $29.9b.