LCQ15: Impact of labour shortage in construction industry on progress of infrastructure projects

Following is a question by the Hon James Tien and a written reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (December 16):

Question:

In recent years, several infrastructure projects in Hong Kong, such as the Hong Kong-Zhuhai-Macao-Bridge Hong Kong Boundary Crossing Facilities and Hong Kong Link Road projects (the Hong Kong Section project), have experienced cost overruns and delays, and labour shortage in the construction industry is one of the causes for such situation. In this connection, will the Government inform this Council:

(1) whether it has compiled statistics on the respective current shortfalls of construction workers for various infrastructure projects (including the Hong Kong Section project); if it has, of such figures broken down by name of project and type of trade;

(2) whether it has assessed if the labour shortage in the construction industry aggravated the situation of cost overruns and delays in various infrastructure projects in the past five years; if it has assessed and the outcome is in the affirmative, of the details; if the assessment outcome is in the negative, the reasons for that;

(3) when the authorities first became aware that the labour shortage in the construction industry had affected the progress of the Hong Kong Section project, and whether they have assessed the extent to which the works progress has been affected;

(4) whether it has taken any remedial measures to expedite the progress of the Hong Kong Section project; if it has, of the details, including whether it has assessed the effectiveness of such measures; if not, the reasons for that;

(5) whether it has plans to introduce targeted measures to effectively address the long-standing problem of labour shortage in the construction industry; if it does, of the details of the measures and the implementation timetable; if not, the reasons for that;

(6) given that the Government implemented enhancement measures in April last year to expedite the preparatory work for applications, submitted by contractors for public sector works projects under the Supplementary Labour Scheme, for importing workers for the relevant trades with labour shortage, and it rolled out further enhancement measures in May this year, but the Chief Executive (CE) admitted, when he attended the Question and Answer Session of this Council on October 22 this year, that the Government's efforts to address labour shortage in the construction industry was not remarkably effective, of the justifications for CE making such remarks; and

(7) whether it has assessed if the introduction of a special labour importation scheme for public housing and infrastructure works projects, by making reference to the arrangements made by the authorities for the new airport and related works in the past, will help alleviate the situation of delays and cost overruns in various infrastructure projects; if it has assessed and the outcome is in the affirmative, when will it implement such a scheme?

Reply:

President,

According to the forecast released by the Construction Industry Council (CIC) in September 2014, the overall construction output will remain at a high level in the coming years. All along, the Government is committed to implementing public works projects in accordance with the work schedule and within budget with a view to improving the quality of life of our people and enhancing the long-term competitiveness of Hong Kong.

Having consulted the Transport and Housing Bureau (THB) and the Labour Department (LD), my reply to the seven parts of the Hon James Tien's question is as follows:

(1) For public works projects of the Government, the contractors concerned are required to complete the works on schedule according to the requirements of the contracts. The works departments will closely monitor the works progress and spending situation. The contractors will assess the manpower demand of individual projects in the light of the works progress. Those with genuine difficulties in recruiting suitable staff locally may apply to the LD for importation of workers at the technician level or below under the Supplementary Labour Scheme (SLS). The assessment of the manpower situation for public works contracts is undertaken by the contractors concerned. The Government does not have statistics on the shortfalls of construction workers in various works projects.

Since 2013, we have collaborated with the CIC in assessing the overall construction expenditure of both public and private sector works as well as the supply and demand of construction workers over a ten-year horizon. According to the report on manpower forecast for construction workers released by the CIC in October 2014, there will be shortage of about 10 000 to 15 000 skilled workers in the construction industry in the coming several years. The manpower forecast has taken into account the forecast construction output of the public and private sectors, the number of in-service workers and their age distribution, training and other relevant factors. Currently, the CIC is updating the manpower forecast. The findings are expected to be released by the end of this year.

(2) The Government has all along been adopting long-term planning for infrastructure projects and investing in worthwhile infrastructures in a timely and continuous manner to meet social needs and maintain Hong Kong's competitiveness. There are many different challenges in delivering the Capital Works Programme, in particular for large scale projects that take longer time in planning and construction, they are more likely to suffer from delays due to unforeseen situations such as legal challenges, judicial reviews and extended public consultations, etc. Notwithstanding the above, we generally manage to complete the projects within the original Approved Project Estimates (APE) overall. 

As for the construction manpower demand, the overall unemployment rate of the construction industry soared to around 13 per cent in early 2009 under the impact of financial tsunami. With the Government pressing ahead with the implementation of infrastructure projects of varying scales, the employment situation of construction industry has improved. Since mid-2012, the overall unemployment rate of the construction industry has sharply dropped to the current level of around four per cent. 

In the light of the sustained and keen demand for construction activities and the ageing workforce, there has been tight labour supply in recent years. We have reviewed the relevant effect on 243 funding applications for capital works items approved by the Finance Committee in the past five legislative years (i.e. from 2010/11 to 2014/15). Of the 48 projects completed, nine experienced delay of over six months. In respect of approved funding applications, 18 of them were related to increase in APE. However, labour shortage is not the cause for the delay or increase in APE for the above works. 

Except for the Hong Kong Section project, up to now, there are no other on-going works projects facing delay as a result of labour shortage. According to the THB, as for the Hong Kong-Zhuhai-Macao Bridge (HZMB) local projects in Hong Kong (i.e. the Hong Kong Boundary Crossing Facilities(HKBCF) and Hong Kong Link Road(HKLR)), it has encountered many difficulties and challenges in carrying out the works including the unstable supply of materials, labour shortage, restriction in airport height, constraints in environmental protection requirements, and slower-than-expected consolidation performance of reclamation works, etc. Labour shortage is one of the factors affecting the works progress of the HZMB local projects.

(3) and (4) According to the THB, the supply of skilled workers in the construction industry has been tight since the commencement of the HZMB local projects. The contractors for the works of the HKBCF and HKLR found it difficult to recruit suitable workers locally. Thus, they need to apply for importation of suitable workers through the SLS to cope with its manpower needs. Nevertheless, the situation of shortage of skilled workers persists and poses impact, to a certain extent, to the works progress of the HKBCF and HKLR. Although importation of workers has helped relieve the tight manpower resources for the HZMB local projects, since it requires certain time in processing the applications and there are difficulties in recruiting imported workers, the shortage of skilled workers for the HZMB local projects persists. The contractors are taking appropriate measures to press ahead with the project.

As mentioned in part (2) of the reply, labour shortage is one of the factors affecting the works progress of the HZMB local projects. Therefore, the Highways Department cannot assess the extent of impact of labour shortage on the works progress separately.

According to the THB, for the remaining period of the construction works, if the contractors have difficulties in recruiting qualified skilled workers locally, they will continue to consider applying for importation of suitable workers through the SLS to meet the manpower needs of the works. Together with its consulting engineers as well as resident site staff, the Highways Department will continue to closely monitor the progress of the works and supervise the contractors to implement the works in full swing including suitable deployment of labour resources and arrangement of works sequences, with due consideration for safety and quality.

(5) We and the CIC have all along closely monitored the manpower situation of the construction industry. To cope with ageing workforce and shortage of skilled workers, we and the CIC have introduced a host of measures including stepping up of training, enhancing the professional and youthful image of the industry to attract new entrants, and enhancing the construction productivity in order to reduce the demand for skilled workers.

Since 2010, we have obtained a total of $420 million from the Legislative Council to support the CIC in strengthening the training for local construction personnel and attracting more new entrants through promotion and publicity, particularly young people, to join the construction industry. Between 2009 and end October 2015, the CIC has trained more than 18 000 semi-skilled workers. To further enhance the skill levels of construction workers, the CIC launched two pilot schemes in 2015. One of them aims at upgrading the skills of semi-skilled workers to the levels of skilled workers. The other aims at training in-service ethnic minority general workers to become semi-skilled workers.

On the publicity front, we collaborated with the CIC to launch the "Build-Up Publicity Campaign" in 2011. The result of the 2015 survey revealed that over 25 per cent of young people are interested in joining the construction industry, as compared with eight per cent before the launch of the campaign. We are promoting collaboration amongst the CIC and relevant training organisations in setting out clear progression paths for skilled workers in the industry. We will also continue to enhance the working environment and site safety to attract more young people to join and develop their career in the industry.

Moreover, we and the CIC will keep close contact with the industry to promote the utilisation of mechanised processes and prefabricated parts as well as application of the latest technology and innovations to enhance construction productivity, thus alleviating the demand for skilled workers.

(6) and (7) According to the LD, in recent years, it took an average of 7.5 months in processing construction-related the SLS applications. In April 2014, the Government rolled out enhancement measures to help expedite the preparatory work of public sector works contractors in the SLS applications involving 26 trades with manpower shortage. Since the launch of the enhancement measures, the average time for processing of its related applications was about six months. There were some 800 skilled construction workers approved to be imported under the SLS between 2011 and 2013 (three years in total) whereas over 1 200 skilled construction workers were approved to be imported between January 2014 and end November 2015.

In May 2015, having regard to the unique characteristics of the construction industry, the Government launched flexibility enhancement measures under the SLS to allow public sector works contractors to enhance flexibility in deployment of imported workers. Imported workers are allowed to work across more than one specified public sector works contract under the same contractor. The resulting synergy effects help achieve more effective utilisation of productivity. As at end November 2015, the LD has received two applications under the flexibility enhancement measures and is processing them.

Having considered the manpower demand and supply at different stages of individual works projects, and under the premise of upholding priority in employment for local workers and safeguarding their wage and welfare under the SLS, contractors may consider applying for importation of skilled workers to meet the manpower needs of the works. The Government has not set any target for the numbers of applications and approved imported labour under the SLS for overall and individual industries (including the construction industry). Every application will be considered and assessed according to its own merits (including the result of the four-week local recruitment for local workers).

The LD is earnestly preparing for setting up a Construction Industry Recruitment Centre to assist local construction workers to secure employment and employers of the industry to recruit local workers. It is targeted to commission in service in early 2016.

The Government will continue to keep close contact with stakeholders of the industry and closely monitor the manpower supply and demand of the construction industry. We will review the effectiveness of the measures in a timely manner and make necessary adjustments. If these measures still cannot effectively resolve the acute shortage problem of skilled workers, the Government will explore with the industry and labour sector the introduction of other more effective and appropriate measures to achieve the sustainable development of Hong Kong's economy and society.

Ends/Wednesday, December 16, 2015
Issued at HKT 16:06

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