After years of watching the construction industry falter on productivity, the Government has decided to introduce some tough love to get it up to speed.
Firms in this sector will soon need to have a minimum percentage of higher-skilled workers on their payrolls, said Deputy Prime Minister Tharman Shanmugaratnam yesterday.
He did so while acknowledging the patchy report card on productivity, ever since the Government set the ambitious target of raising it by 2 to 3 per cent every year by 2020. "Almost all the gains were achieved in 2010 when we were recovering from the recession."
Raising productivity was the only viable route for Singapore if it were to avoid a "zero sum game" between business and labour, he added. The alternatives were not pretty: either jobs would be lost, or prices would go up or wages would stay down.
And while some sectors have made an effort to raise their game, the construction industry remains a laggard, with its productivity in the first half of this year actually falling compared with last year.
"Construction must be transformed into an efficient and more integrated industry, led by progressive firms and supported by a higher-skilled workforce," said Mr Tharman at an event held yesterday to mark the end of the inaugural National Productivity Month.
The new rule could give it a push. It requires at least 10 per cent of work permit holders in each firm to be classified as higher-skilled, and will take effect from Jan 1, 2017.
The changes will be phased in over the next two years to give firms in the industry time to adapt. Those that fail to meet the targets will face curbs on hiring.
About 15 per cent of the 300,000 work permit holders in the construction industry are classified as higher-skilled, though these workers are unevenly distributed across firms.
To retain experienced construction workers in Singapore, Mr Tharman said firms will also be allowed to hire workers at the end of their work permit period without them having to first leave Singapore. This will take effect from June 1 next year.
Singapore Construction Association president Ho Nyok Yong said the changes will benefit construction firms in the long term, given that companies pay lower levies for higher-skilled workers.
Construction companies now pay $250 less in monthly levies for each higher-skilled worker. This difference will rise to $400 a month over the next two years.
Mr Eng Kim Chooi, the general manager of Kim Seng Heng Engineering Construction, said the company sends its employees for training to upgrade their skills.
"After they pass, we increase their salaries," said Mr Eng.
The company has 446 work permit holders on its payroll, more than half of whom are classified as higher-skilled.
DBS economist Irvin Seah said productivity-boosting measures are "likely to become more targeted towards specific industries or clusters" as the restructuring effort progresses. While construction companies will have to pay higher-skilled workers more, the new measures will help firms bring costs down in the long term if workers do become more innovative and efficient, he added.