Shortage of skilled labour in construction sector hinders the Philippines' infrastructure development initiatives

In April 2019 the Department of Labour and Employment (DOLE) reported that the construction sector’s share of total employment rose to 9.5% in October 2018, up from 8.5% a year earlier. This figure accounted for 328,000 additional jobs with the total employed in the sector reaching 3.9m. The Construction Industry Authority of the Philippines aims to increase this to 7m under the Construction Industry Roadmap 2020-30. However, the number of people in technical positions is not keeping up with demand. In February 2019 President Rodrigo Duterte acknowledged that his administration’s flagship P8trn ($148.8bn) Build, Build, Build (BBB) infrastructure programme was suffering delays due to a shortage of skilled labour. In particular, he noted a lack of electricians, carpenters and plumbers.

Skill Shortage

Amid reports of major construction firms seeking the DOLE’s assistance in sourcing thousands of workers, it remains to be seen whether the Philippines can maintain an adequate supply of skilled and unskilled labour to complete BBB and other projects on schedule. “With contraction in all sectors, there is a lack of qualified labour supply,” Charmaine Uy, senior vice-president of Daiichi Properties, told OBG. “Many of the best Filipino professionals emigrate for better salaries and those who remain in the country ask for very high wages.” The need for labour is illustrated by the number of jobs that are advertised on the government’s BBB portal: 10,000 in August 2018 and over 16,500 in July 2019.

Nevertheless, there are signs that the market is responding to the shortage. According to Ciriaco A Lagunzad III, the undersecretary of DOLE, construction wages are likely to rise to meet demand, particularly in Metro Manila where projects are sourcing workers from as far away as Bohol. “Competition for employees is fierce, with rival companies offering higher wages to attract the labour they need,” Morris Agoncillo, president of the Philippine Constructors Association (PCA) and president of construction firm Datem, told OBG.

Overseas Labour

Workers from overseas are plugging gaps on an official and unofficial basis. A Senate investigation in January 2019 suggested that the 52,000 skilled Chinese workers permitted to work in the Philippines since 2015, including in construction, are joined by hundreds of thousands of their countrymen working without the proper permissions.

The PCA has discussed new incentives to tempt back the tens of thousands of skilled Filipinos working in construction roles overseas to cut back on foreign labour, including the possibility of multi-year tax relief. Information from the Philippine Overseas Employment Administration shows that the number of Filipino civil engineers, welders, flame cutters, plumbers and pipe fitters employed abroad already declined substantially between 2016 and 2017 – from 21,851 to 14,236 – amounting to thousands of skilled workers returning to or staying in the local market.

To reinforce and bring dignity to the domestic workforce, the PCA has signed a memorandum of agreement with the Technical Education and Skills Development Authority to train an initial 2000 construction supervisors, Agoncillo told OBG. The body also hired UK firm People First to train instructors. At the moment they have around 62 trainers nationally, 33 of whom are master-level instructors dispersed across the country. In the longer term there are plans to upskill digital engineers who will be necessary for the industry to transition to more efficient practices, such as the 5D building information modelling used by market-leading developers in the UK, Spain and Switzerland.

In addition to labour issues, the BBB initiative has been impacted by delays in the passing and distribution of the budget, as well as hurdles surrounding land acquisition. Even so, the country can work to keep its ambitious infrastructure plan on track by addressing the squeeze on manpower with a combination of higher wages, additional training for local workers and continuing to incentivise skilled Filipinos to return home.