Construction Sector Faces Chronic Labor Shortage

Cambodia’s construction sector is facing a massive labor shortage due to a recent boom in construction projects throughout the country and workers migrating en masse to Thailand in search of higher wages.

In 2012, the construction sector expanded rapidly with the total value of approved projects totaling $2.11 billion, a 72 percent increase on the previous year’s figures, according to data from the Ministry of Land Management.

Workers toil at a Phnom Penh construction site on Tuesday. Industry experts say that amid a boom in the building sector there is a serious labor shortage. (Siv Channa)
Workers toil at a Phnom Penh construction site on Tuesday. Industry experts say that amid a boom in the building sector there is a serious labor shortage. (Siv Channa)

But construction companies are in some cases having to wait months while they search for an able workforce and, economists say, will have to increases wages if they are to compete with jobs on offer over the border in Thailand.

With eight projects currently operational, Advanced Construction (Cambodia) Co. Ltd., which also has operations in Thailand, is currently employing about 50 workers, said James Sterling, the company’s managing director. But the company needs twice that number to meet their projects’ demands. And, hiring workers has become so challenging that Advanced Construction is relying on subcontractors to make up numbers.

“We work with smaller Khmer companies for specific types of work and specific projects and they are struggling as well to get staff,” Mr. Sterling said Tuesday.

“The whole country has got this issue; it’s not just us,” he said.

Making matters worse for Mr. Sterling’s firm, most of the staff they have spent years training have crossed the border to Thailand in search of higher wages.

“Obviously, there’s a boom in construction and there’s a shortage of workers. For us, we had a very amazing team…and we’ve trained with them for many years. But now they’ve all left and gone to Thailand,” Mr. Sterling said, adding that the dearth in workers is especially felt among those trained in more advanced vocations such as carpentry.

Srieng Panha, an engineer working for Li Construction on the site of a luxury apartment project on Street 240, said the country was suffering from a severe labor shortage in the building sector.

“If we want 200 workers, we would have to wait two months to recruit all of them. Before, we could find them immediately,” Mr. Panha said. “The main reason they are going to Thailand is because there is less money here and it’s not enough to pay for their daily life.”

In Thailand, construction workers earn a minimum of $10 a day, whereas in Cambodia construction workers earn an average of just $5 a day, Mr. Panha said.

One way of attracting workers into the construction sector, said Thierry Loustau-Khao, managing director of LBL International, a large firm that hires more than 500 workers for their projects in Phnom Penh and Siem Reap province, is to provide workers with higher wages and incentives such as onsite accommodation.

“We have to increase their wages and provide them with accommodation and shelters, which is not what we had to do before,” Mr. Loustau-Khao said, adding that LBL could also do with increasing its workforce by 20 percent to meet demand.

Peter Brimble, senior country economist for the Asian Development Bank, said that the construction sector is steadily playing a bigger role in Cambodia’s economy, which is expected to grow by at least 7.2 percent this year. Cambodia’s construction currently accounts for 6 percent of GDP and the International Monetary Fund said in January that Cambodia’s con­struc­tion sector “is picking up thanks to the real estate rebound, in part fueled by rapid credit growth.”

Mr. Brimble said the current shortage of laborers would eventually force construction firms to increase their wages.

“Wages will go up. If people want to build more factories and buildings and developments, then the wages will go up,” he said.

Chong Pitou, an engineer for Vispan Construction Company, said the minimum wage on building sites is currently about 18,000 riel a day, or about $4.50. That is a marked increased from a year ago, when it was about 12,000 riel a day, he said.

“The price of food and goods and the price for everyday living —the government should lower them so that there is enough money for the workers to stay and they won’t go to other countries,” Mr. Pitou said.

According to Joel Preston, a consultant for the Community Legal Education Center, which often helps stranded migrant workers from Thailand return home, there are at least 500,000 Cambodians currently working in Thailand. Only about 50 percent of that number is estimated to be legal mi­grants, Mr. Preston said. However, with Thailand offering higher wages, the prospect of working abroad often proves too enticing.

“Definitely, the onus is on the government, especially with the upcoming elections, this is now a public debate and if they want to stop excessive labor migration and undocumented labor migration and human trafficking, they need to improve wages,” Mr. Preston said.

Prime Minister Hun Sen has appealed publicly several times for people not to migrate overseas for jobs, citing that the country’s expanding sectors desperately need to retain local workers.

In a speech in December at the Ministry of Labor, Mr. Hun Sen said that Cambodians should not be risking their lives to work in Thailand, and urged businesses here to increase their wages to keep the workers in the country.

The garment industry, which employs hundreds of thousands of workers in Cambodia, is also facing a shortage of workers, said Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia. Despite currently employing about 700,000 workers, the industry “can easily absorb 50,000 more workers,” he said.

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