Government urged to implement reforms in education systems

By: Yip Wai Fong

Labour shortage has become a linchpin in the property sector, choking outputs and driving up costs. The industry has tried coping with it as best as it could under the current policies that have affected the supply of both skilled and unskilled labour in the industry. At the StarProperty Budget 2024 Roundtable, developers said a broad-based policy reform to correct the issue’s chronic root causes is urgently required.

Lack of unskilled labour

Shortage of unskilled labour is an immediate and pressing problem faced by the property industry. Caused by the freeze in foreign workers hiring during the Covid-19 pandemic, the resumption of construction activities in 2021 was met by delays in the return of workers. The Construction Industry Development Board (CIDB) chief executive Datuk Ahmad Asri Abdul Hamid said in Dec 2022 that the industry still lacked 400,000 workers. 

At the roundtable, Real Estate and Housing Developers' Association (Rehda) president Datuk NK Tong said it takes a long time to undo the disruption caused by labour shortages. Although foreign workers are now returning, their slow return, bureaucracy and the need to train them before they can start to work means that the labour headwind faced by the industry is not yet over. These challenges are something that the general public is often not aware of, he said. 

FIABCI-Malaysia immediate past president Datuk Seri Koe Peng Kang said the 10 year-limit on a foreign worker’s work permit is inadequate to compensate for the long training period invested in the worker. He said that the policy results in the loss of skilled workers, as the industry has to let go of the workforce it has taken time and resources to train. 

Matrix Concepts Holdings Bhd group managing director Ho Kong Soon said the resources it takes to train the unskilled foreign workers, only to relinquish them at the end of 10 years has made dependency on foreign labour not ideal for the industry, but it has no better option as yet because of the shortage of skilled workers among the locals. 

Lack of skilled workers 

Despite the industry being levied by two government agencies – CIDB and the Human Resources Development (HRD) Corporation – for the purpose of training construction workers among others, developers said the bulk of workers’ training is done internally by the developers or contractors. 

Koe said that the CIDB should step up its efforts to meet the industry’s demand for skilled workforce and help it reduce its dependence on foreign workers. He said the industry is largely unaware of CIDB’s training output and continues to be plagued by shortages of skilled labour. Meanwhile, Tong said that the industry should not be double-taxed by the HRD for similar purposes. 

A check by StarProperty with CIDB’s training centre for construction personnel, the Akademi Binaan Malaysia (ABM) found that it graduated a total of 67,307 trainees between 2018 and 2022. The trainees were both locals and foreigners and according to ABM’s tracer study on its 2022 graduates, the overall employability rate reached 83%, with 59% of the respondents being employed in the industry. For context, there were 308,886 foreign workers in the construction sector in 2022, according to Home Minister Datuk Seri Saifuddin Nasution Ismail. 

Re-prioritise TVET and foster partnerships with the industry

A higher level policy is clearly needed to resolve the labour issues. Sendayan Properties director Louis Ting said that the government must seriously encourage the locals to take up Technical and Vocational Education and Training (TVET). It has to change the people’s perception that TVET trainees are associated with low social status. 

OSK Properties chief executive officer Seth Lim Sow Wu agreed that the nation should give importance to TVET because there is a good demand for technical and vocational workers. 

Gamuda Land chief operating officer Wong Siew Lee said the government should also help to foster collaborations between institutions of higher education and the property sector, to close the gap between the quality of graduates and the actual job demands. She said the industry has struggled to find more talent as it moves towards digitalisation. Gamuda Land itself has collaborated with some institutions of higher learning, but she said the effort should not be left to individual companies or academic institutions alone. 

Labour issues in the property sector reveal a fundamental need for reform in the policies of labour, the education system and the economy. The disarray caused by the Covid-19 pandemic is a siren to the government that the necessary reforms can no longer be delayed. 

Developers' recommendation

1. The government to look into foreign workers' employment period, that is, extend working years over 10 years. The current policy only allows foreign workers to work in this country every year for up to 10 years, which is inadequate to compensate for the years spent on training the workers. It also leads to the loss of skilled workers trained by the industry to other countries as they leave.
2. The government should also look into incentivising the local workers that take up 3D occupation by complementing their income and raising their wages on top of the remuneration from their employers, where in the long run, it will wean the Malaysian construction industry from the need for foreign labour which in turn will also lower the outflow of the ringgit, providing more job opportunities to Malaysians, and also paving the way for a more rewarding employment path compared to working in the gig economy.
3. The education system needs updating. TVET: To emphasise and generate first-class quality graduates that fit the domestic requirements. University courses: To be up-to-date with industry requirements and have collaboration with industry players for practical training sessions, guest seminars, etc.
4. Exemption from HRD contribution because the industry is currently being levied by CIBD for the same purpose.
5. CIBD should have documentation of their training such as the levy collection versus the target human resource strategy, core topic structure, KPIs, no. of training sessions conducted, no of graduates, and KPIs to assess their skill.

Stay ahead of the crowd and enjoy fresh insights on real estate, property development, and lifestyle trends when you subscribe to our newsletter and follow us on social media.