Singapore in Numbers - The Construction Sector
I started my career in the construction sector over 20+ years ago as a site engineer; and today at FYT Consulting, I spend my time teaching analytics to professionals in the construction and built environment sector. Life has come full circle.
In honour of that very fact, I plan to dedicate this segment to the Singapore construction sector; by offering some data driven sectoral insights. The chart above depicts the contracts awarded and progress payments made across the construction sector over the last 40 years. As you can imagine major jolts to the financial sector have significant impacts on the contracts awarded in the construction sector; this appears to impact both the private and public sector contracts. For example the global financial crisis in 2008 put a major damper on private construction contracts; and the MAS' series of property cooling measures had an impact as well in more recent years. No surprise that such events has less of an impact on progress payments, since work has already started.
It should be noted that COVID19 has a major and very visible impact on the sector. Both contracts and progress payments dropped significantly in 2020; due to the pandemic related lockdown, material and worker shortages on top of already increasingly stringent local/foreigner worker ratios.
Singapore's construction sector recovered very well after the global financial crisis of 2008, growing at the compounded annual growth rate of about 7.5%. However, it contracted by 35% in 2020 to about $12B; the construction sector was not the only sector that fell in 2020 due to the pandemic. That said, Singapore's construction sector does not play as large a part of the economy as it used to. At its peak in the 1980s, it made up almost 13% of the GDP; as at 2020 it only makes up 2.9%. But the numbers alone don't tell the whole story, the construction sector is crucial to the Singapore economy; it upkeeps Singapore's extensive infrastructure, it builds new capacity and capabilities for the country's future (housing, ports, drainage, etc.). Keeping a vibrant construction sector in Singapore is critical.
However, there are some disturbing trends to note
Singapore employment in construction has not changed much in the last 20 years; but employment costs have more than doubled over the same period
Value Added per worker also did not change for the construction sector over the last 20 years
The combination of the above trends suggest that the value added per employee dollar has been steadily decreasing by 3.5% each year; or fell to half of what it was in 2001.
This clearly does not bode well for the sector; amid the restrictions in material worker supply and other challenges.
That said, the construction sector is not the only sector facing falling worker productivity, accommodation and F&B and the Transportation and Storage sectors also face similar challenges
As Singapore and the rest of the world manages it way through the pandemic, almost every country and sector is left to pick up the pieces. The trends are what they are, but it does suggest that there is opportunity to innovate and come out ahead; if the sector has the will the do so. Like the national day song goes "we did it before...we'll do it again."