Hong Kong’s labour market faces repercussions from infrastructural race

Developers and investors seek solutions while being faced with significant labour shortages, hindering planned infrastructure projects. (Photo credit: Chris Lusher)


Hong Kong is currently undergoing ‘Mega Infrastructure Projects’, but the funding, labour, and skills required for these projects are at phenomenal amounts. Investors and analysts wonder if the completion of these projects within their deadlines is feasible with the current social and labour environment in Hong Kong.

Hong Kong is developing its infrastructure to improve efficiency and standard of living for its citizens, with projects including MTR links, cross-border bridges, development projects (commercial, residential, recreational, tourism, etc.), and the intended third Chek Lap Kok runway.

According to a study by the Construction Industry Council (CIC), currently and over the next few years, there is and will be a shortage of 10,000-15,000 skilled workers from a range of areas of expertise. The trade classifications of greatest shortage include Plasterer Terrazzo, Granolithic workers, Carpenters and Refrigeration/AC/Ventilation mechanics; though the lack of labour in the near future will spread to more areas. This will result in an aggregate shortage of workers. Skilled labour from different hierarchical levels are heavily demanded, these include sub-contractors, engineers, designers, architects and contractors.

There are root issues embedded in the industrial, social, educational and training frameworks in Hong Kong that turn young people away from the construction industry. A major disincentive is the project-basis employment system in the industry for most professions, where individuals may find themselves in periods of unemployment and overall employment uncertainty, despite “high and rising wages” as claimed by a South China Morning Post article.

A controversial solution for the shortage of labour and rising wage costs is the importation of labour. Labour importation takes place to fill vacant positions, where and when a local worker cannot be found. The Labour Department (LD) has a Supplementary Labour Scheme (SLS) in which any company who wishes to import labour must submit an application for a time-limited contract. There are two principles that over-shadow the scheme, the prioritisation of local workers over foreign when filling a vacant position, and the allowance of imported labour when employers are genuinely unable to find local workers for the position. Other conditions include the equal wage and benefits received by both imported and local workers.

The current debate is whether to relax labour importation regulations and create a ‘free-er’ labour market, or tighten regulations to prioritise the employment of local workers. In most markets, heavy regulation leads to inefficiencies and diminishing competitiveness of the ‘protected’ industry; in the case of the local labour market, one is in danger of getting too comfortable with protectionist regulations. According to a press release from the Legislative Council in late 2015, efforts by the government are being made to relax regulations and create flexibility under the SLS scheme to meet labour demand and complete projects on time, without the construction costs getting out of hand.

Looking forward in an innovative perspective, major developers such as Gammon have invested in a new generation of technology to improve efficiency and relax labour demand. An innovative technology that is being developed is the exoskeleton suit which can be worn and used by workers to lift heavy loads for long periods of time. Others include automated drilling, robotic zero G arm, etc. A quote from Thomas Ho, Chief Executive of Gammon, “the line between the worlds of construction and technology will continue to blur, and there is much, much more innovation to come.

 

On 8 June, a follow up article will address the root causes (educational and training systems) hindering local labour participation in the construction industry.

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James Johnston

James is a Harbour Times intern. He studies at the University of British Columbia majoring in Economics.