Labour shortage worries builders, developers

Labour shortage tops the list of business risks for property and construction firms in 2013. To consumers, this could mean longer construction periods while they wait to take possession of their new homes.
With a low unemployment rate of 0.6 per cent, or only 232,400 jobless, the situation is grave. The construction, infrastructure and manufacturing sectors are now facing a shortfall of about 200,000 workers. They expect the situation to worsen next year when the government’s infrastructure projects are kicked off, which will lead to skyrocketing demand for workers.
To ease the situation, Housing Business Association president Issara Boonyoung said his organisation had asked the Labour Ministry to relax the rules on employment of foreign labour. Foreigners’ entry to the Thai labour market should be facilitated, and they should be allowed to relocate once they are here.
“As we have many construction sites, so workers should be allowed to move around,” he said.
According to the National Economic and Social Development Board, there are about 2 million foreign workers in Thailand, mostly from Myanmar, Laos and Cambodia.
After enduring the labour shortage for some time, some property companies have resorted to technology. Pruksa Real Estate has moved towards prefabrication, for example. Others have modified the construction process so that fewer skilled workers are needed.
The labour situation is aggravated by the continued expansion of the property sector as it enjoys a 10-per-cent annual increase in housing demand. Each year, about 80,000 residential units are launched in Bangkok and the peripheral provinces alone. In other provinces nationwide, 150,000 units hit the market each year.
“This problem will worsen in 2013 when the government’s infrastructure projects worth at least Bt500 billion start. This will attract labour away from private projects to public projects, as some are in the workers’ provinces or nearby. This will affect both the real-estate and construction industries,” Issara said.
The government is scheduled to announce the bidding results for its Bt350 billion worth of water-management projects early in the new year and construction should start shortly after that. Meanwhile, a portion of the Bt2.2 trillion worth of infrastructure projects planned for 2013-20 will be put to tender next year.
Thailand is among the few countries with an unemployment rate below 1 per cent, compared with nearly 30 per cent in Spain and Greece and nearly 8 per cent in the United States. A low fertility rate coupled with growing labour demand in the agricultural sector has exacerbated the situation, as the workforce has not increased much. In the third quarter of this year, agricultural-sector employment rose 3 per cent from the same period last year as farmers expanded rice-plantation areas.
Bank of Thailand data showed that in September alone, employment in the agricultural sector expanded by 6.3 per cent but employment in the non-farm sector contracted 2.7 per cent, mainly because of fewer jobs at hotels and restaurants. In the manufacturing sector, export-oriented factories reduced their workforce but those focusing on the domestic market employed more workers.
The data also showed that the labour market had tightened. The number of employed as of September stood at 39.2 million, up 0.7 per cent from the same period last year. Average pay also rose by 7.9 per cent.
The central bank’s Labour Sourcing Difficulty Index in the month was below 50, indicative of business operators’ hardship in sourcing workers.
Thongma Vijitphonpun, chief executive officer of leading firm Pruksa Real Estate, said property companies had to develop innovations to reduce the number of staff needed to develop residential projects.
He believes that the labour shortage will continue to be the main problem for the industry, especially once the Asean Economic Community becomes effective in a couple of years. This will move labour to other countries in the region even though Thailand’s minimum daily wage will increase to Bt300 nationwide next month.
“The problem facing our industry is not the increased minimum wage, because we pay more than the minimum. The problem is that we cannot find the skilled labour to run our business if we cannot find an innovative system,” he said.
For this reason, the company has designed a real-estate manufacturing system to support the growth of its business. “It’s our policy to develop at least 15,000 residential units a year,” Thongma said.