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Indonesia - Construction workers increasing salaries

03 April 2013

Faced with dirty, dangerous and difficult work, construction workers who used to earn RM30 a day (approximately €7.50) are now commanding double to triple that price with skilled workers drawing RM95 daily and upwards, say Malaysian property developers as they warn of an impending economic crisis due to labour shortages.

The government’s RM1.38 trillion (approximately €345 million) economic transformation projects are fuelling stiff competition among builders to net skilled construction workers from a limited pool and will drive up costs according to the Master Builders Association of Malaysia (MBAM).

“We have had member companies complaining that there is a pulling [sic] of key personnel from their organisations to join companies that are involved in the announced projects,” said Matthew Tee, president of the umbrella organisation representing the country’s construction industry and services sector.

A persistent contributor to the labour shortage is the lack of Malaysians willing to work in what Yam described as the three “Ds” plaguing public perception of the construction industry ― dirty, dangerous and difficult. Builders say they have little choice but to hire foreign workers to meet project deadlines.

Datuk Kenny Tan, chairman of the public-listed KEN Holdings Bhd said his company has been affected: “My contractors have been complaining that they have not enough workers and that we may fall behind schedule. Also, before, very seldom contractors will say they can’t do a project because they don’t have enough workers.

“Now, even after tendering, that can happen,” Tan told The Malaysian Insider.

To avoid any delays in the delivery of a project, he said his contractors had no choice but to fork out extra money for workers.

Contractor Phuah Chong Ehi said the going rate for skilled workers now was RM60 to RM75 on average (approximately €15 to €19) although he said some could demand as high as RM95 (approximately €24) and more, compared to the RM30 a day (approximately €7.50) when the government enforced its minimum wage policy in January.

Contractors were willing to hire illegal workers because of their immediate availability, MBAM’s Tee said, compared to having to put up with the hassle of applying for permits through official channels that could take between six months and a year before actually being able to put the migrant worker to use.

“Many Indonesian skilled workers have gone back during the 6P programme,” Tee said, referring to the two-year amnesty offered to illegal immigrants by the government in 2011 that saw about 74,000 Indonesians, many of them construction workers, return to their home country.

Indonesia has been the biggest supplier of labour to Malaysia, and its workers are preferred by employers due to similarities in language and culture.

“If the Indonesian economy or GDP growth continues to be around six per cent, those skilled workers originally trained in Malaysia will never come back,” he said.


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