Getting Hong Kong’s construction engine going: From a labour perspective

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Hong Kong’s suffering competitiveness will help break the deadlock on debates regarding imported labour. Attracting young talent and promoting greater use of technology are among the timely necessities of the construction industry. (Photo credit: Chris Lusher)

The construction industry of Hong Kong has and will be experiencing a halt in progress due to chronic labour shortage and an ageing workforce as a result of several hindrances. The Construction Industry Council (CIC) claims in a forecast that an additional 10,000-15,000 construction workers are required over the next several years to sufficiently complete anticipated projects by the private and public sectors. The specific skills of labour required ranges from plasterer terrazzo and granolithic workers, to refrigeration mechanics and carpenters. Proactive steps must be taken by stakeholders to create an efficient construction industry, as well as ensuring the completion of planned mega infrastructure projects primarily under the public sector, preserving Hong Kong’s competitiveness.

The degree of accuracy of the forecasted figures provided by the CIC should be scrutinised as assumptions of cause and effect of labour are incorporated. In addition, pro-market advocates argue that activities by the private sector of a free market over the next decade is unforecastable to a degree. Yet it is clear that labour is in shortage to some extent, but the businesses and the labour unions of the industry have opposing views regarding the issue of labour importation. The Hong Kong Federation of Trade Unions (FTU) and other union organisations of the industry view the importation of labour as a threat to the wages of local workers, which are currently high relative to other industries, and to the security of their jobs. On the other hand, contractors and developers are facing rising labour costs, causing construction projects to be delayed or discontinued from fear of not making adequate returns, hindering Hong Kong’s infrastructural progress and competitiveness.

Historically, Hong Kong’s construction labour market has tended to be self-sufficient, though projects such as the Chek Lap Kok Airport required the employment of high amounts of imported labour, reaching a total close to 13,000 in 1996. Margaret Brooke, Chief Executive Officer of Professional Property Services Limited, suggests: “I believe there is a middle way – specific workers could be imported under contract for specific projects. Large government infrastructure projects could be the best start followed by public housing.”

Currently, the 20-year old Supplementary Labour Scheme (SLS) under the Labour Department requires employers to pay HK$400 to employ an imported worker multiplied by the number of months of job duration, with a maximum contract of 24 months. According to a South China Morning Post (SCMP) article, leading chambers of commerce have criticised the SLS as being outdated and too rigid. “The construction industry could benefit from a government-led system that more closely monitors the supply and demand of various roles and skill sets in the market in order to adjust visa application criteria in accordance with changes in the market to control the flow of imported labour,” suggests Jason Chong, Principal Consultant at Cleverly Search.

Meanwhile, unionists such as the FTU and the Confederation of Trade Unions (HKCTU) have shown disapproval for relaxation and reform of the SLS, doubting the legitimacy of a labour shortage issue. According to another SCMP article, Chung Ling-so, vice-chairman of the Construction Site Workers General Union, claimed that the government was spreading false information about labour shortage as a ‘smokescreen’. The article also showed Fan Cheung-fung, organising secretary of the HKCTU, criticising the MTR corporation and claiming that the corporation wanted to import labour for profit and gains at the expense of local workers. Unionists suspect illegitimacy in labour shortage claims and suggest that corporations and government aim to oversupply and hence drive wages down.

There is an alternate route, pre-fabrication is a way to decrease the number of workers on site and increase the efficiency of the project. The majority of pre-fabrication is out-sourced across the border in mainland China or in neighboring countries where lower labour costs are taken advantage of. Brooke adds to the notion of a middle-ground: “The indirect route by expanded pre-fabrication which clearly would have to take place in China or elsewhere overseas could also be a partial solution.” This method in itself is a form of import labour, which can be taken advantage of to ease the demand for local workers.

Some also suggest that the unionists may be fighting a dragon that is non-existent. When asked how the unionists can actually align their interests to regulation relaxation, Jeremy Newton, Director of Due Diligence and Advisory Services of Currie & Brown, explains: “The industry can identify objectively the ‘lost’ employment caused by clients not starting projects through insufficient labour resources, and then assess the damage to the Hong Kong economy and employment.”

Newton adds that Hong Kong needs to remain competitive, and with the relaxation of import labour regulations, projects will be able to go ahead, and more jobs will be created. But a balance should be struck to address the rights and interests of the local workforce, as in any developed country. Singapore and Macau imported labour accounted for over a quarter of their workforce, whereas Hong Kong only had 0.1% of the total workforce as imported labour in 2014. Also, imported labour in Hong Kong must be below the technician level, to provide better opportunities for local individuals to reach sought-after careers in higher levels of the industry.

The Hong Kong government has tried to address the issue with a tripartite commission with business (industry) and labour (unions) as a political solution. This may not be an optimal method of civic engagement as the rest of the population has no say. As Brooke comments, “There needs to be a more independent way of identifying public opinions, views, concerns, ideas, etc., than the current engagement exercises.” She suggests the establishment of an independent centre which takes responsibility for such “public participation” activities (for both government and private sectors) to ensure their impartiality and credibility. The FTU and HKCTU are seen as a major opposition in the LegCo, that even if there is a public consensus supporting imported labour, it would be difficult to get reforms through the legislature.

The local construction industry labour force suffers from ageing population, with a median age of 55. This can be attributed to the lack of attractiveness of the industry towards the younger generation, as well as a vocational training and educational system which is struggling to promote and encourage working in the construction industry as a career.

“The authorities should ensure that all vocational training courses have day access to better sites as part of degree courses,” Newton says. The CIC and bodies such as the MTR Corporation have been taking initiatives in vocational and educational schemes to train up the younger generation to ease the shortage of labour. Unionists have been claiming that the CIC’s training initiatives are causing a mismatch in skills of young workers, hence not allowing the industry to ‘absorb’ them. On the contrary, Brooke argues that the new training academy will help. “But this will, I believe, be targeting youngsters with interest in making a ‘career’ in construction, rather than simply joining the general construction workforce – we need both types.”

Regarding the attractiveness of the construction industry, the sites themselves are not represented in a visible, open and attractive way. Green netting, bamboo scaffolding, high walls and fences are what most Hong Kong construction sites look like to the public, and the sites tend not to be visibly appealing either. To address the issue, Newton points out that better sites can be promoted by public viewing facilities such as windows in hoardings. Young individuals can be inspired by the machinery, technology, ingenuity and impact on society that construction has, hence generating a pull effect for working in the industry as a career. Chong, an industry recruiter, echoes Newton’s point. “Whilst salaries within the industry are competitive compared to other sectors, incentives such as training programs, enhancing site safety and work environment, in addition to enhancing the youthful image of the industry to attract new entrants would improve the overall image of the industry,” he says.

Technological progress and innovation is a partial solution to relieving the high demand for skilled labour as well as to improve the industry’s image. The progress, however, has been arguably hindered by the current conservative bureaucratic and industrial framework. The Policy and Project Coordination Unit (PPCU) succeeding the Development Opportunities Office (DOO), was established to provide coordination services for development projects from the non-government sector. Carrie Lam, former Secretary of Development and current Chief Executive, has been behind the establishment of schemes such as the DOO. With her current position and high-level policy coordination, developers hope for a simpler and streamlined process for development.

Regarding Building Information Modeling (BIM), the CIC has an independent committee on BIM that advocates and promotes the use of the technology on projects. Though greater incentive is required to shift the industry towards the use of BIM as approval times are slow, along with other factors. Chong adds: “The government is in the best position to embrace and drive advancements in technology […] including new software, materials and construction techniques. However in many instances they do not have the capacity to assess them quickly enough to keep up with the fast pace of construction in Hong Kong.”

Gammon, a leader in the industry, is at the forefront of the use of innovative technologies such as robotics and virtual reality, boosting efficiency, safety and easing demand for labour. The company also claims that bamboo scaffolding is too dangerous and hence uses relatively modern and advanced methods. Brooke states: “In due course, new technologies and new materials and methods of construction will make a significant difference. The government should support research and adoption – where appropriate – of such innovations.”

Chong continues by explaining, “Advancements in technology and the subsequent application of it require time, effort and money which in most cases are not amply available for construction projects which are generally commercially driven.”

If Hong Kong wishes to remain competitive amongst its competitors and neighbours in the region, the state of infrastructure plays a pivotal role in the efficiency, mobility and output of resources. Factors such as technological progress, vocational training schemes and attractiveness of the industry for the younger generation can in part solve the issue of labour shortage, though in a timely (long) manner. Currently, projects within the next few years will and are suffering from issues of high labour costs and shortages, the relaxation of import labour regulations can relieve these issues for the time being, not hindering the progress of maintaining Hong Kong’s competitive position.