Malaysia Construction Labour Rate

MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

TABLE OF CONTENT

Acknowledgement

Page

Introduction

Page

1.0

Objective

Page

2.0

Definition Of Labour

Page

3.0

Definition Of Daily Wage Rates

Page

4.0

Sources Of Labour

Page

5.0

Classification Of Labour

Page

6.0

Types Of Labour Trades

Page

7.0

Sub Contract Labour

Page

8.0

Analysis On Labour Rate

Page

8.1

Analysis Based On Contractors

Page

8.2

Analysis Based On Regions

Page

8.3

Analysis Based On Years

Page

8.0

Factors Influencing The Labour Prices

Page

9.0

Effects of labour price

Page

10.0

Conclusion

Page

References

Page

Appendices

Page

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

ACKNOWLEDGEMENT Assalamualaikum, A thousand thanks would not enough to show my appreciation to thus who helping me out to complete this report. Thus, I would like to show my appreciation with praise to the almighty god Allah S.W.T. Alhamdulillah, I’d finish this report to meet the dateline as to complete my practical training. Million of thanks to the precious company which is AAJ ASSOCIATES SDN. BHD. owned by Sr. Arrifin Bin Omar who give me opportunity to doing my practical training. Million of thanks to all my workmates especially En.Syamsul who guide and giving me advise about labour price that is very useful knowledge. Also to Mr. Simon Khoo from Usahasama BMSSB who explain to me how contractor pricing their labour. Not least, my lecturer En. Muhamad who giving advice and check my poor paper work and willing to comment even I barely miss the dateline. This report is referred from past year practical student, even though I tried to keep originality of my work but it is hard to do since the base of the report almost are the same. But 100% of originality was granted as I add my own data and in my explanation. As to avoid any plagiarism accusation, I’d put some In-Text-Citation but the original text may be not exactly from the sources since as I said I tried to keep 100% of originality of my own. Credit given to writer who I copied their text in reference, but several maybe not stated because half of my sources erased along with my hard disk formatted. THANK YOU

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

INTRODUCTION Malaysian economy generated by construction sector directly and indirectly, where it has lends strength and capability to a host of economic sectors, whilst supporting the social development of the country through the provision of basic infrastructure. (Asiaconst,2009) A construction project depends on project resources which are capital, labor, plant and materials. Among the most important source is the source of labour. Thus, to grant a quality construction, quality human resources must be developed. Quality human resources and highly knowledgeable and will continue to lead the country for excellence in the future. Along with the skills and abilities innovative, national employment growth is expected to be maintained with improve productivity and competitiveness of Malaysia continues to carry forward. Malaysia has a problem to fulfill the requirement of demand of labour because the population of Malaysia not interested in construction where the payout are not meet the level of difficulties. Therefore, the government of Malaysia had to import foreign labour from other country to fulfill the labour’s demand. Local labour which is labour that comes from our own country and has the citizenship as Malaysian. Usually local labours work as a skilled workers because of their skill and areas of expertise. While foreign labour is the imported labour usually come from Indonesia, Myanmar, India, Bangladesh and such. They fulfill the un-skilled workers position and they payout much lower than local labour but this is not including the cost to import them.

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

DEFINITION OF LABOUR According to Oxford Dictionary, Labour is referred to the people who work for food or wages while skilled labour is the person who gained expertise on certain area from experience or professional training. Semi skilled labour is person who has expertise on certain area but not skillful as skilled labour. Wikipedia defined labour as the person who sold labour power and the production process in which it is applied by an employer in exchange for the wage price. As for Skilled labour, they are generally more trained, higher paid, and have more responsibilities than unskilled workers. Wikipedia did not mention about semi skilled labour but semi skilled workers is an assistant to artisan (skilled worker) This three classification will be described in CLASSIFICATION OF LABOUR.

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

DEFINITION OF DAILY WAGE RATES (LABOUR RATE) It is defined as the basic cash wage per day (Basic cost to contractor) payable by building or civil engineering contractor to operative. The daily wage is for work done in a day of eight (8) working hours from 8.00 a.m. to 5.00 p.m, with one (1) hour lunch time in between. It is the cash wage payable to operative before any deduction for levy charges, accommodation, insurance, SOCSO, medical and transport charges. (CIDB, 2010)

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

SOURCES OF LABOUR There is two sources of labour which is: Local Labour Foreign Labour Local labour can be defined as workers who are recruited near a factory, and are not brought there from a distance. For this situation local labour is Malaysia Citizen, most of the local labour is not being general worker because usually local labour who stay in construction has high experience and certain skill (Wikipedia,2008) While foreign labour can be defined as any people working outside of their home country. The term can also be used to describe someone who migrates within a country, possibly their own, in order to pursue opportunity of work. (Wikipedia,2008) In Malaysia, foreign labour comes from Indonesia, Nepal, India, Bangladesh Myanmar and others country which lack with job opportunity. Malaysian construction industry has been generated by foreign labour because of shortage in local labour. Local labour shortage cause by the high wages demand and low future expectation from this manpower sector. In 2001, Migrant labor makes up approximately 20 percent of the Malaysian workforce. The country currently has between 1.7 million to two million foreign workers, of whom 770,000 are legal. (United States Department of Labor,2002) In 2010, there were 2.01 million foreign workers in the country and that the number would be gradually reduced by half by 2015. (NST,2008)

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

CLASSIFICATION OF LABOUR For construction industry, labour is individual who involves in construction work and do a site works based on their skilled and expertise. The function of labour in construction works is to done properly from the beginning until the constructions of the project is complete. These are 3 categories of labour in construction: 

Skilled labour



Semiskilled labour



Unskilled labour

Skilled Labour Skilled labour is a worker that has their expertise and skill in a particular work, where they are only do the specific work. Normally, they usually have the high level of knowledge about the work scope. (Wikipedia,2009) The example of skilled labour stated as below schedule.

NO.

TRADES

1

Bricklayer

2

Glazier

3

Plumber

4

Roofer

5

Drainlayer

6

Painter

7

Welder

8

Concreter

9

Bar Bender

10

Carpenter

11

Pavior

12

Masonry

13

Tile fixer

14

Plasterer

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

Semi-Skilled Labours Semi-skilled labours are workers that have less expertise and skill in certain works, compared to the skilled labor. They usually an artisan/skilled labour assistant. Their work are not need high skilled as skilled labour. Unskilled labours Unskilled labour is the workers that not need any special knowledge and expertise to perform their job. They usually do the general works. They also assist the particular works such as mixing concrete, cleaning the site and etc. (Wikipedia,2009) In construction work, labour has important duty to complete and performed the construction progress on site, their will categorized by their skilled and trades. Trade is a labour that has skilled in a scope of work and they will concentrates on their own scope of work, so the maintenance can be done easily.

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

TYPES OF LABOUR TRADES A) CONCRETER

 The concreter is responsible in ensuring the concrete mixing for a building is following the standard specification and they also responsible to ensure the strength of the building the concrete test done.

B) BRICKLAYER

 The bricklayer is expert in arrangement and bonding of bricks for the building wall. They are expert in Flemish bond, English bond and stretcher bond. Bricklayers build walls, chimneys and other structures from masonry units such as brick, block, glass block or stone.

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

C) DRAIN LAYER

 Drain layers are responsible for sewerage, sump, manhole and other things concerning the sewerage system. It must be done perfectly to ensure that the sewerage system in the building does not be in function when it is used.  The drain layer must be skillful in deciding the pitch for the drains and its depth.

D) MASONRY

 Masonry is a labour concerning stonework such as stonewalls sewers and others. They must ensure that the work done is neat and stable.  Mason need the skilled to arrange all stone and also they must make sure any shape for prepare exactly suitable for the building and client requirement. 10

MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

E) JOINER

 The joiner is involve in making the dovetail or wedge-shaped joint interlocking two pieces of wood and making the cabinet, shelter and engraving.

F) CARPENTER

 Carpenters in the construction industry are responsible for works concerning woodwork such as window frame, installation of formwork, doorframe and others.

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

G) PAINTER

 This trade involved in paint work to external and internal surfaces like wall, ceiling, frame, windows, doors and etc.Painter not just having the skill of painting but also the knowledge of it. Painters first prepare the surface to be covered, so that the paint will adhere properly. This may require removing the old coat of paint by stripping, sanding, wire brushing, or water and abrasive blasting.

H) BAR BENDER

 The steel bar bender are responsible for work involving steel and reinforcement such as joists and fixing. These work require steel bar bender to ensure the work are done according to the specification. This is very important trade because it involved the structure which will determined the strength and stability of the building. 12

MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying I)

REPORT B: Labour Rate

ROOFER

 Roofer is responsible to arrange the roof tiles properly and making the strong roof trusses, this is to make sure no leakage on the building.

J) PAVIOR

 Pavior is responsible in installing the floor or wall tiles to internal or external of the building following the client and drawing requirement.

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

K) PLASTERER

 Plasterers are skilled labours whose work to apply plaster to interior wall, column, beam, and celings, to form fire-resistant and relatively soundproof surfaces. Plastering works usually interior and exterior works.

L) WELDER

 Welder is involve in steel work where they will heat the steel until molten and fused or soft enough to hammer or pressed together, the welder must wear goggles for eye’s safety. They will use electrical power to heat the steel and tie the reinforcement bar.

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

ANALYSIS ON LABOUR RATE It is necessary every contract to fill with the labour prices as to prepare when there is a variance of works. Thus, contractors usually enter the amount much higher than the real payout. To make a comparison I choose 10 differences sources from several contractor and subcontractor range between 2007 to 2009 project from 6 regions which is Selangor, Johor, Perak, Negeri Sembilan, Penang and Kedah (Project Location).

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

Based on Contractor

Plumber Pro-Serv

Fitter

Geo Stream

Welder Drain Layer

Central Winners

Brick Layer

Seleksi Bina Usahasama BMSSB

Plasterer

PKNS INFRA

Painter Concretor

Teras Khidmat Niaga

Carpenter

Ijhraa Tuah Mahir

Masonry Unskilled Labour 0.00

20.00

40.00

60.00

80.00

100.00

120.00

Figure 1: Labour Rate Based on Contractor

Chart above contain 12 difference trades from 9 different contractor and 6 different region and of course it is on 3 years range which is 2007-2009. The lowest rate in average and all others trades is from Pro-Serv which priced on 2007 with average RM58.64 while the highest is Teras Khidmat Niaga with RM95.45 which priced on 2009. Tuah Mahir and Usahasama BMSSB both has the highest rate of unskilled worker which is RM55.00 while Teras Khidmat Niaga paired with Usahasama BMSSB in skilled worker highest rate for Painter, Plasterer, Welder, and plumber which is RM100.00.

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

Based on Region 120.00 100.00 80.00 60.00

Selangor Perak

40.00

Negeri Sembilan Labour Average

20.00 0.00

Figure 2: Labour Rate For 3 Difference Regions

Chart above shows the distribution of labour rate between three difference region which is Selangor, Perak, and Negeri Sembilan. This three labour rate, priced on 2009 from 3 difference contractor which is Tuah Mahir Sdn. Bhd will be known as TM later (Selangor), Teras Khidmat Niaga will be known as TKN later (Negeri Sembilan), and Ijhraa Sdn. Bhd. Will be known as ISB later (Perak) . From the chart we can derived that unskilled labour for this three is not much difference with RM51.67 as for the average. The highest rate is Selangor with RM55.00. There is no pattern to the differences in rate between these three regions, as for example Drain Layer rate. TM price is RM70.00, TKN RM100.00 and ISB RM85.00. While for fitter TM price is RM70.00, ISB RM85.00 and TKN RM100. The changes in price not moving into some direction due to different factors are taken into account when the rate is priced. If we not taking into account for general labour we can see the mode of the skilled labour price is about RM70.00 for TM, RM85.00 for ISB and RM100.00 for TKN. 17

MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

Negeri Sembilan rate are the highest with RM95.45 for all labour rate in average compare to Perak (RM77.27) and Selangor (RM69.09)

BASED ON YEAR 90.00 80.00 70.00 60.00 50.00 40.00

2009

30.00

2010

20.00

Average

10.00 0.00

Figure 3: Graph Based on Year of Project

Graph above shows the rate of labour for Selangor in 2009 and 2010, 2009 rate taken from Seleksi Bina Sdn. Bhd. While 2010 is from JB Consult. For 2009 the average rate is RM69.55 and 2010 is RM71.82 increased in 3.26%, this increase is not considered as high since the average for this two years is RM70.68. 1.63% higher than 2009 and 1.62% lower than 2010. The rate is in fluctuation and not stable, we can conclude that since the brick layer drop RM10.00 from RM70.00 to RM60.00 while the plasterer increase by RM10.00 from RM70.00 to RM80.00. Although its only one year gap and project location is from the same state the difference are so obvious. This is because it is has been price by a different contractor who considering different factors when pricing the labour rate. The reason will be discussed in the next section. 18

MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

FACTORS INFLUENCING THE LABOUR PRICES

Labour rate will change along with time. From analysis before we can see difference contractor will have several differences between their rates. This is due to below factors: (i)

Location

Location is one of the factors that influence the labour price. For the place with a smaller amount of infrastructure facilities, the demand and supply for labour are less needed compared to the urban area. Rural area also has low living cost, so labour has low expectation on wages. Thus, it makes the labour price for rural area lower than urban area.

(ii)

High-risk project

The risky project will influence the price of labour. It is because the labours need to face the high-risk situation on site. For the risk taken, the insurance need to cover the workers and high skill needed to handle a risky situation, as not many labour is willing to take a big risk.

(iii)

Competition among the contractors

There are many contractor companies in our construction industry. It is divided to a certain level or class of contractors, followed by the reputation and experience of the contractors. For the tender competition, contractors will tackle the client by offering them a lower rate for labours. There is why the competition among the contractors also is the one of the factors towards the labour rate.

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying (iv)

REPORT B: Labour Rate

Labours market

Local labour cant fulfill domestic demands thus government allow foreign labour to be imported to work as labour. In some situation foreign labour wage is much lower than the local labours but their imported fees has being a big issued, thus many contractor use illegal foreign worker to cut their wages expenses. (v)

National Economic State

A firm and stabile economic state will causes the growth of construction industry in our country. Therefore there will be a lot of construction projects running in our country and as well as the demands for construction labors increases. This demand of labours will increases the chances for local people to work in the construction industry, as well as increase the rate. That is why the economic growth and stability is very important in helping the construction industry. (vi)

Size of projects

Sizes of projects also influence the labour price. For example, in multimillion projects the rate of labour usually expensive than smaller project depends on the difficulty of the projects as contractor want to avoid any losses if there is variance of works.

(vii)

Government policy

Malaysia Government by the Ministry of Human Resource has stated that the labour rate for the local labour must be higher than the foreign labors. The purpose of the policy is to attract our local people to involve with the construction sectors. The policy also wants the local labours to get the specialty. Because of this, there will be a different rate in the labour price.

(viii)

Completion period

The completion period of the project will also influenced influctuation of labour rates. For those project which the client want to complete in short period of time, the rates of labour will be

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

increased. It is because sometimes the labour will do extra work or overtime which require a payment. They have used all the energy to complete the work on times specified. Beside that, they have to work in night that is very risky and they are exposed with an accident. At least, the increasing of their rates will balance with their work. All these factors are considered to determine their rates.

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

EFFECTS IN LABOUR PRICE CHANGE 1. Increasing and decreasing the cost of building construction. o

Labour rate will directly effecting the cost of the construction since labour is one from construction resource. Higher labour rate will increase the cost to carry out work.

2. Decrease the intake of the foreign labour o

A higher fee was a big factor to the foreign labour to take place in Malaysian construction industry. They get lower fee if they work in their own country but compared to local labour, foreign payout is much lower. This is one government strategy to attract local labour.

3. Actuate the migration of labour o

The rate in urban area much higher than rural area. Thus labour from rural area will seek an opportunity to migrate to the city as to get a better payout.

4. Increasing and decreasing in the labour demand o

High rate of labour price usually due to high demand of labour which

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MARA University of Technology Department of Quantity Surveying Faculty of Architecture Planning and Surveying

REPORT B: Labour Rate

10.0 CONCLUSION

REFRERENCES http://en.wikipedia.org/wiki/Labour http://en.wikipedia.org/wiki/Skilled_worker Oxford English Dictionary, Third Edition, 1993 http://www.cidb.gov.my/v6/?q=en/information/695 www.asiaconst.com/past_conference/conference/15th/6Malaysia.pdf image from http://www.google.com.my United States Department of Labor, Cornell University ILR School http://digitalcommons.ilr.cornell.edu

www.nst.com.my

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