The silver lining of the slowdown in construction is reduced pressure for labour, but the country still needs a solution beyond foreign workers
The ongoing political conflict is expected to ease the labour shortage in the construction sector as government projects are stalled and private-sector projects are delayed, says a construction executive.
With the 2-trillion-baht infrastructure programme derailed and the caretaker cabinet unable to approve large projects, most construction in the public sector is limited to projects already approved under the 2014 budget. In the private sector, construction will primarily be property, said Chakporn Oonjitt, executive director of the Construction Institute of Thailand (CIT).
“Government projects usually drive domestic construction. However, the ongoing political conflict means fewer new projects from the government and as a result the private sector,” he said. “This should ease pressure on labour demand.”
On average, the Thai construction sector is worth 900 billion baht a year, with the public and private sectors each contributing half the total value, said Mr Chakporn.
A Kasikorn Research Center report on Thai labour in Asean estimated growth in the Thai construction sector of between 2.5% and 5% this year to a range of 994 billion to 1.02 trillion baht.
Large companies can rely on a big backlog to compensate for the lull in activity, but the same cannot be said for smaller companies, he said.
“The last few years except for the 2011 floods, the construction sector grew on average by 10%, while the supply of labour rose only around 6% per year,” said Mr Chakporn.
Yongyuth Chalamwong, labour development research director at the Thailand Development Research Institute (TDRI), said the Thai construction sector employed about 2.2 million people but could accommodate up to 2.9 million.
Construction is the fourth largest sector in terms of labour demand in Thailand after retail, automobiles, and other industrial manufacturing, he said.
Of the 2.2 million employed in the sector, 300,000 are registered foreign workers, but Mr Yongyuth said the actual number is estimated to be much higher as they are increasingly needed to fill the demand for labour.
The labour shortage hit the construction sector the hardest in early 2013 as the property sector experienced a boom, creating a massive backlog for construction companies.
Increasingly, large contractors such as Italian-Thai Development Plc, Ch. Karnchang, and Sino-Thai Engineering and Construction Plc have begun to import and train their own foreign workers, while many small and medium-sized companies find workers through subcontracting.
Foreign workers provide a short-term solution to the problem, but Mr Yongyuth said the shortage would continue to persist if a sustainable solution is not found. For instance, many companies have begun using more technology, such as pre-cast materials rather than on-site assembly, to reduce the amount of workers required on the job.
Kasikorn Research suggested the government could help ease the problem by developing educational standards that reflect the country’s industrial needs.
At the same time, it should set a clear framework regarding foreign workers to ease the country’s unskilled labour shortage, said K-Research.
The report said the labour shortage stems from changes in the structure of the Thai population combined with a lower birthrate and an increased preference toward freelance or self-employment among younger generations, especially in low-skill labour.
Mr Chakporn said the trend was not unique to Thailand.
Other developed economies in the region such as Singapore, Hong Kong and Japan make up the difference by using foreign workers.
“Fewer people want to work in the construction sector because of the low amount of skills needed for the job and their negative perception of construction work,” he said.
“To put it in perspective, 10 years ago Thailand sent a lot of construction workers overseas, but this is no longer the case. Most Thai construction workers overseas now are those staying on from that period.”
First published: Bangkok Post, May 21, 2014