LABOUR RESTRUCTURING POLICIES AND THEIR IMPLICATIONS ON THE MULTI-LAYERED SUBCONTRACTING SYSTEM IN THE SINGAPORE CONSTRUCTION INDUSTRY

Abstract

The phenomenon of multi-layered subcontracting has always been prevalent in most construction industries not just in Singapore. In the recent years the Government has been pushing for productivity driven growth within the construction industry and also emphasizing the urgent need to rectify the over reliance on labour. As such, labour restructuring policies have been introduced to encourage construction companies to reduce their reliance on construction workers. This study aims to explore how these labour restructuring policies affect the subcontractors within the multi-layered system and assess the effectiveness of the Construction Productivity and Capability Fund. A review of literature reveals possible reasons why multi-layered subcontracting may not be beneficial for the construction industry in Singapore and covers the peculiarities of multi-layered subcontracting system; before it explains why there were severe difficulties faced by small medium-sized establishments (SMEs) subcontractors since the introduction of the labour restructuring policies. After the literature review, a pilot interview was conducted with a subcontracting company. The pilot interview was conducted to gain a better understanding of multi-layered subcontracting phenomenon due to the limited local literature available. Two different surveys were then designed for primary and secondary subcontractors respectively, where the responses collected were 26 and 15 respectively. The surveys were designed to explore (1) subcontracting business practices, (2) the impact of labour restructuring policies on subcontractors and the multi-layered subcontracting system, and (3) the effectiveness of the Construction Productivity and Capability Fund. Lastly interviews with 5 different subcontractors were conducted, where it served to deepen the understanding of the effects of labour restructuring policies, and the effectiveness of the Construction Productivity and Capability Fund. The labour restructuring policies were tested to have insignificant effect on the practice of secondary subcontracting, hence labour restructuring policies did not display a reduction in the multiple layers of subcontracting but has instead proved to increase the cost passed on to their clients. It also established how subcontractors, especially those lower down the multi-layered, were suffering the most effects from such labour restructuring policies due to the reduce profit margins at the lower tiers. Consolidating the analysis results from the surveys, the interviews and literature reviews, problems with the current policies were identified and possible recommendations were proposed. Thereafter, limitations of this study were discussed and lastly a conclusion was made.