By now, the entire construction community in Hong Kong (and likely a lot of other people globally!) will be informed some way or another about the extensive delays that the MTRC mega project XRL has suffered. In spite of other contributing factors for the two year delay, one of the major causes for this and other construction projects in Hong Kong is a shortage of skilled labour.
As of 2014, the Hong Kong construction market has an approximate shortage of 10,000 construction workers to handle projects scheduled to complete within the next 4 years. Much of this requirement is related to MTR projects which drives a large portion of the construction industry in HK. According to the Construction Industry Council, Hong Kong has approximately 320,000 registered construction workers, but only 70,000 of them are active. However, what is significantly lacking are construction workers with specialist skills such as tunnel working. For the Hong Kong Zhuhai Macau Bridge project, 160 specialist workers were brought on with skills in design, marine and geotechnical engineering. Obviously construction companies have meticulous cost cutting strategies within programmed works. This often leads to strict timing about bringing workers on and letting them go once they are no longer needed generating short fixed term contracts which may not be so appealing to workers.
While demand for workers increases, as does the salary expectations. Fresh engineering graduates are clocking on to the increased demand, therefore their starting salaries are reflecting this with many companies now offering HK $17,000 – 19,000 per month as a bare minimum. This could be an indication of where the market is leading as companies are slowly, but surely realising that paying that extra few thousand will garner more solid interest to stay and work in Hong Kong, rather than going elsewhere such as China where the market competition is greater still.
One obvious solution to the problem is to import labour. Other construction markets similar to Hong Kong (i.e. working on similar projects) like UK, Australia and Middle East are prime locations to target imported labour. There is a clear abundant source of tunnel specialists and rail specialists. This sounds simple enough, however there is still a preference for the young construction professional moving on single status, keen to explore the Hong Kong market. Expats coming into Hong Kong with families will inevitably look for a larger place to live, education fees for children and generally a high cost lifestyle.
Further tackling the problem of labour shortage, the government has also suggested solving the problem through innovation, and not solely with manpower. As the labour demand and supply problem perpetuates, the construction industry as a whole should create innovative solutions and methods to complete projects without an increased supply of labourers. This could come in the form of new design and new technology as well as simple construction methods. This could increase efficiency and productivity on certain construction projects with standardised designs such as residential blocks.
It seems for the time being, Hong Kong is still gambling on bringing in foreign workers on substantial packages as well as offering local workers matching figures to retain the best talent. We never know where this upward slope will end up, but the pressure is increasingly high for companies to pay what needs to be paid!
Senior Recruitment Consultant
Hong Kong & Asia Region