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Commentary: What's behind the housing crunch for foreign workers in Singapore?

SINGAPORE: Amid a shortage of dormitory housing, employers across construction, marine shipyard and process sectors now have to provide proof of acceptable accommodation for new foreign workers.

The requirement comes at a time when the number of work permit holders is higher than pre-pandemic levels, resulting in nearly full dormitories and more migrant workers housed in non-dormitory accommodation.

Earlier in July, the Ministry of Manpower (MOM) said demand for housing cannot continue to increase unabated. It reiterated calls for employers to build their own temporary housing for workers and reduce their reliance on foreign manpower by improving productivity.

The requirement for proof of accommodation is a step forward in ensuring that new hires have satisfactory housing, despite current shortages. The recent pandemic has shone a light on workers’ housing, spurring improvements in living conditions and placemaking, and enhancements in the Foreign Employees Dormitory Act (FEDA).

However, employers need time to adjust to this paradigm shift in dorm operations and maintenance. Dorm rental rates are already sky-high, with one employer observing that they have risen by 40 per cent since the pandemic. Even if employers can produce proof of accommodation upon hiring a new worker, it is unaffordable rentals that may push them into cutting corners later.

What more can be done to improve housing for foreign workers in the long run?

A FAIRER PROCUREMENT SYSTEM

The current business model of worker dormitories is price-based and locked into fixed-term contracts. Private accommodation, on the other hand, is profit-driven in order to be sustainable.

For dorms, there is certainty in pricing and duration, unlike private accommodation for which the landlord can hike prices and terminate leases. This creates an overwhelming demand for dorms, thus shortages in supply.

Moreover, companies bidding for new projects have to increase prices under new FEDA requirements. With unreasonably short tendering periods, contractors will estimate higher prices to meet accommodation requirements without knowing if they will win the contract.

This will drive costs up and make project tenders difficult to win, lowering interest to ensure better accommodation for foreign workers. At worst, contractors may underestimate accommodation prices and then take drastic cost-cutting measures to recover.

A change in mindset and procurement processes is needed to overcome this challenge. In the procurement stage, a typical tender or quotation requires the costing of preliminaries. Workers’ accommodation ranges between 5 per cent to 15 per cent as a lump sum of the project cost.

It will be prudent for quantity surveyors, contract managers and facility managers to isolate workers’ accommodation from other costs when assessing project tenders.

Likewise, the operation and maintenance of foreign worker accommodation must also change. For instance, government agencies could put preliminaries in their construction contracts that specify the design of accommodation, minimum requirements for audits and an adequate tendering period.

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FOREIGN WORKERS STILL NEEDED FOR HEAVY LIFTING

The current shortage of bed supply for new foreign workers, coupled with added pressure on employers to ensure acceptable living standards, will result in higher project costs and delays – costs that may ultimately be transferred to consumers.

Another workaround for businesses is to wean off their dependence on foreign workers by using technology instead. However, foreign workers are still part of the backbone of Singapore’s economy without which many innovations cannot happen.

For example, the Building and Construction Authority (BCA) has been using digital technology to generate building models and simulate managing them, prior to construction. This means fewer workers are needed on site for physical installations.

But until this technology matures and becomes economically viable, construction companies still need foreign workers to do the heavy lifting.

FINDING THE RIGHT BALANCE

Accommodation for workers is not a zero-sum game, where Singapore must choose between allocating more land for dorms or clamping down on foreign worker numbers.

Unutilised buildings, such as vacant public schools and factories, can be used as temporary housing. Government agencies could consider a change of use or temporary occupation licenses to provide some accommodation relief.

However, some members of the public are uncomfortable with foreign worker housing built in their neighbourhoods. In June 2020, when announcing plans to add and upgrade dormitories, then Minister of National Development Lawrence Wong said Singaporeans must reject a “not-in-my-backyard” mindset, as it is inevitable that new dormitory sites will be built near residential areas.

The plans sparked backlash among netizens anyway, proving that a NIMBY culture still persists in some segments of society.

These public perceptions must change. It is also important to find the right balance between improving worker conditions and keeping costs sustainable for employers.

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During the pandemic, projects and facilities were put on hold across the construction, marine shipyard and process sectors. Now that all three sectors have pressed the start button simultaneously, there is a spike in the work that needs to be done. Are there enough foreign workers to deliver these tasks on time?

We are building more and faster to meet public expectations and maintain a global reputation. Singapore needs to continuously attract investments, create jobs, provide housing and amenities for its communities.

If we slow either the construction, shipyard or process sectors, the number of foreign workers can drop dramatically. But so will tenders, businesses and jobs related to these sectors. So, finding the right balance is critical.

Our government has incorporated many initiatives to control the number of foreign workers and this is already a fair quantum. It is an essential industry that needs to be nurtured, supported and enhanced through measures like FEDA.

Without help from landlords and regular enforcement, we may continually risk putting workers in substandard housing.

Daniel Wong Hwee Boon is Associate Professor (Practice), Department of the Built Environment at College of Design and Engineering, National University of Singapore.

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