Construction firms may seek to adjust value of business contracts amid increased labour costs

Victor KangMay 12, 2021

In a bid to mitigate the impact of the border restrictions, the government has also increased foreign worker levy rebates from $90 per month to $250 per month per worker from May to December.

With the amendments to the COVID-19 (Temporary Measures) Bill passed in Parliament on Tuesday (11 May), construction companies may now apply to adjust the value of their business contracts, reported TODAY.

This comes as they face increased manpower costs due to the restricted flow of foreign workers into Singapore.

Speaking during the debate in Parliament, National Development Minister Desmond Lee said construction companies still need support since they have not factored in the unexpected hike in labour costs when they bid for projects.

“Because the costs have increased beyond their expectation at that point in time when they bid for these contracts, should we or should we not pass legislation to facilitate the sharing of these additional costs?” he asked the House.

“This is to ensure that no one single stakeholder group in the construction industry bears a disproportionate share of the burden imposed by COVID-19,” added Lee as quoted by TODAY.

Long-term pass holders from Bangladesh and India, where most of Singapore’s construction workers come from, have been banned from entering or even passing through the city-state after the two countries registered a surge in COVID-19 cases.

With this, Lee noted that the number of work permit holders within the construction sector fell by around 15%, while construction manpower costs increased, with median wages rising by 15% to 30% in March compared with pre-pandemic times.

In a bid to mitigate the impact of the border restrictions, the government also increased the foreign worker levy rebates to $250 per month for each worker from May to December this year, up from $90 previously.

With the ban on workers from Bangladesh and India, Member of Parliament (MP) Louis Ng and MP Henry Kwek asked whether the construction sector can be allowed to source for workers from other countries.

To this, Lee said the government is willing to consider other options. However, he noted that the government still has to consider the COVID-19 situation in such countries as well as the demand from the construction industry for workers from these other sources.

“Adding more sources may not necessarily be the solution, as the pandemic seems to be worsening globally,” he explained.

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this story, email: victorkang@propertyguru.com.sg

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