Friday, February 19, 2016

A nation built by foreigners, brick by brick

Sharing with you here a good article about foreign workers in KINIBIZ

A Nation Built by Foreigners, Brick by Brick 

KINIBIZ As the Malaysian construction sector boomed over the past few years, with a 12-quarter run of double-digit year-on-year growth rates in terms of construction work value up to the third quarter of 2014, much of it had been on the sweating backs of foreign labourers.
A telling point is that the number of low-skilled foreign workers in Malaysia has increased by 152 percent between 2000 and 2013, according to a strategy paper that formed part of the 11th Malaysia Plan (11MP) that was tabled earlier last year.
Statistics can be deceptive. According to Construction Industry Development Board (CIDB) data, the sector employs 9.5 percent of the Malaysian workforce, or 1.2 million registered workers in 2013. Of these, only a quarter of them are foreign workers, according to CIDB.

However, the figure encompasses a wide of range of functions in the construction sector, from architects and managers all the way down to general workers, the latter category making up 53 percent of total construction workforce.
And here is the crux of the matter: 93 percent of registered foreign workers in the construction sector are unskilled, according to CIDB.
This implies that an overwhelming majority of the general workers on site – bricklayers, roof-tilers and the like – are foreigners, building our national infrastructure, houses and schools, brick by brick, on relatively minimal wages.
And as the construction sector looks set to continue growing – the Master Builders Association Malaysia (MBAM) expects an 8.4 percent growth next year – this undue reliance on foreigners to drive a cornerstone sector does not look like it will change anytime soon.
Unrealistic goals?
Against this context, the government’s goal of capping foreign labour to 15 percent of the total national workforce across all sectors by 2020 may seem ambitious, considering the current share is at 17 percent as of 2013.
Worse, the government estimates this percentage to be as high as 27 percent if illegal immigrant workers are taken into account, it said in the 11MP strategy paper. A fifth of an estimated two million registered foreign workers are in construction – and the roots of heavy reliance on cheap foreign labour have taken a strong hold.
The 6P amnesty programme seemed to have been designed to wean off businesses from this reliance by getting these foreign workers to prepare for life after they go home.
However, that has not been the case. The construction sector, in particular, is reluctant to move into a less labour-intensive modus operandi, citing a high cost barrier, despite the precariousness of continuing to rely on cheap foreign labour with what seemed to be a ticking clock to a mass exodus.
This means the construction – and by extension property development – is far from ready to face a mass departure of foreign workers, Real Estate and Housing Development Association (Rehda) president Fateh Iskandar Mohamed Mansor told KINIBIZ earlier last year.
“(Such a scenario) will adversely affect the construction sector as well as the property sector,” said Fateh Iskandar, more commonly known as FD Iskandar, in a previous interview with KINIBIZ. “And it’s going to be very likely that these huge infrastructure projects (such as mass rapid transit and light rail transit extensions) will also be compromised.”
As things stand, not renewing permits issued to registered and legalised illegals under the 6P amnesty programme doesn’t make sense, Fateh Iskandar added, because labour is still needed and this will only lead to rerecruitment, which wastes resources and time to retrain fresh recruits.
“When they come here, most of them are farmers, unskilled. We train them and after five, six years, they become bar benders, they become tilers, they become roof tilers and whatnot,” said Fateh Iskandar. “Then, after that you ask us to send them back? Then they go to Singapore, they go to Dubai. What are we, a training ground?”
Unglamorous jobs
This is exacerbated by the reluctance of Malaysians to take up employment in the construction sector. Various industry players said the main issues here are working conditions and negative perceptions towards manual labour on site, which entails long hours of physical exertion under the sun with associated workplace safety risks.
“Locals often have negative perceptions of the industry and perceive it as a challenging industry to work in, with limited career progression,” said CIDB in its Construction Industry Transformation Programme 2016-2020 (CITP) master plan. “This has resulted in relative reluctance among locals to work in the industry, especially, in the wet trades (ie bricklaying and plastering).”
It is a vicious cycle. The reluctance of locals to take up jobs in the sector causes construction players to turn to cheap foreign labour, many of whom have little to no skill. According to CIDB, 93 percent of the registered foreign labourers in the sector are either low-skilled or unskilled.
In turn, this depresses salary levels, which further deter locals from stepping in. “The low wages of foreign labour reflect their low skill levels,” said CIDB.
According to MBAM in an interview with KINIBIZ earlier this year, unskilled workers stand to make a minimum salary of RM1,200 per month and up to several thousand ringgit with higher skill levels.
While corresponding with the minimum wage level for West Malaysia before the Budget 2016 increase, this falls short of the median household income of RM4,256 per month in 2014.
Additionally, working demands of the construction sector, which involve regular movement from location to location after a development project is completed, also deters locals, who usually want to stay near their families, industry players told KINIBIZ.
In contrast, foreign labourers are more flexible in terms of location and movement, even willing to stay in crowded, makeshift accommodation on or near the construction site using portable toilets and water tanks for water supply.
Far from their families and desperate for more income, foreign workers are also more keen to work overtime during weekends and public holidays, in contrast to locals who would want to spend such times with their families, said industry players.
Low productivity
In the larger context, the reliance on foreign labourers has depressed productivity levels for the construction sector, which are far lower relative to that of other sectors in Malaysia, according to CIDB.
“Global benchmarks also indicate that Malaysia’s construction sector is at the lower end of the productivity spectrum,” said CIDB in the CITP document. “The relatively low productivity is a reflection of limited modernisation of construction methods and practices as well as the reliance on low-skilled labour.”
This consideration, alongside the consideration that Malaysians aren’t likely to start chasing jobs in the construction sector anytime soon, necessitates a sector-wide shift towards automation, especially since the CITP framework aims to boost sector productivity by 2.5 times by 2020.
The Industrialised Building System (IBS), also known as pre-fabricated construction, seems the logical answer. Its benefits are aplenty, though so are the hurdles towards its adoption across the board.
The most obvious benefit is speed, as IBS can reduce construction time by about a third up to one-half, experts said.
China, for example, has provided several shining (and viral) examples of how IBS can significantly get buildings up much faster – among others, in 2010 the nation saw a six-storey building called Broad Pavilion completed in one day. In December the year after, the city of Changsha saw a 30-storey hotel erected in two weeks, surprising even IBS experts.
This was made possible as different components for various stages of construction could be manufactured simultaneously, meaning they only needed to be assembled on site. In comparison, a traditional labour-intensive construction requires each phase to be completed before work can begin on the next.
Another benefit is higher quality of construction, given that construction components are manufactured in a controlled environment as opposed to being put together manually on site.
The quality shows. According to CIDB senior general manager for the development sector Ahmad ’Asri Abdul Hamid, developers who use IBS score higher on CIDB’s Quality Assessment System in Construction (Qlassic) assessment system.
Qlassic was introduced by CIDB to measure and evaluate the workmanship quality of a building construction work based on Construction Industry Standard (CIS 7:2006).
“Overall, costs are cheaper through IBS because the completion is a lot faster and the owner is able to use the building faster, maybe in six months instead of one year,” Ahmad ’Asri told KINIBIZ in a previous interview.
“There are also cost savings on wastage because we have a lot of wastage on site now. If you go to Japan, 90 percent of construction materials are recycled but here it is cheaper to throw them away,” Ahmad ‘Asri added. “We don’t have the infrastructure yet to recycle all construction waste, only some.”
Hurdles to IBS
However, the adoption of IBS in the construction sector faces several hurdles, which ultimately boil down to cost considerations and industry preparedness.
It is not that the sector does not see where its interest lies in the long-term vis-a-vis cheap foreign labour. According to CIDB’s Ahmad ’Asri, sector players know that IBS is beneficial and that it is where the sector should move towards in the long run.
“(But) as long as you have cheap foreign workers, you cannot move towards IBS,” Ahmad ’Asri told KINIBIZ. “Eventually for companies, it is about economies of scale.”
At the heart of the matter, the availability of cheap foreign labour means that construction players remain reluctant to move towards IBS, which increases their operating costs and, ultimately, hurts their competitiveness relative to peers.
“Labour cost is cheaper than using pre-cast, so would people go for pre-cast? The cost of using IBS would be more expensive,” said MBAM vice-president Chuan Yeong Ming to KINIBIZ, adding the cost increase may be as much as 30 percent in some cases.
This presents the biggest obstacle towards engineering a construction sector shift from being labour-intensive towards being more machinery-based, in line with the national economic agenda outlined in the 11MP, which aims to boost productivity as well as emphasise knowledge-based and high-skilled employment.
Another related hurdle is the need to pay a huge upfront deposit to IBS manufacturers, which may hurt cash flow for construction players, said CIDB. Costs for importing machinery are also high, given the existing import duty rates, which MBAM has been asking to be lowered for years, without much success.
Other challenges include a lack of readiness among industry service providers to fully immerse themselves in an IBS-driven environment, according to CIDB.
However, these challenges are surmountable, though it requires concerted government effort on the federal level. In the next article, KINIBIZ delves into the hows of this.