malaysia construction labour rate

MARA University of TechnologyDepartment of Quantity SurveyingFaculty 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

1


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

2


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.

3


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.

4


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)

5


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)

6


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

7


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.

8


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.

9


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.

10


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.

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.

11


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

12


involved the structure which will determined the strength and stability of the

building.

I) 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.

13


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.

14


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 sub-

contractor 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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Based on Contractor

Unskilled Labour

Masonry

Carpenter

Concretor

Painter

Plasterer

Brick Layer

Drain Layer

Welder

Fitter

Plumber

0.00 20.00 40.00 60.00 80.00 100.00 120.00

Pro-ServGeo StreamCentral WinnersSeleksi BinaUsahasama BMSSBPKNS INFRATeras Khidmat NiagaIjhraaTuah Mahir

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.

16


Based on Region

Unskille

d Labour

Masonry

Carpen

ter

Concretor

Painter

Plaster

er

Brick L

ayer

Drain La

yer

Weld

erFitt

er

Plumber

Region Ave

rage

0.00

20.00

40.00

60.00

80.00

100.00

120.00

SelangorPerakNegeri SembilanLabour Average

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.

17


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.

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

Unskille

d Labour

Masonry

Carpen

ter

Concretor

Painter

Plaster

er

Brick L

ayer

Drain La

yer

Weld

erFitt

er

Plumber

Year

Averag

e0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

20092010Average

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.

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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.

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.

19


(iv) 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

20


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

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.

21


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

22


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/6 Malaysia .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

23

http://www.nst.com.my/

http://digitalcommons.ilr.cornell.edu/

http://www.google.com.my/

http://www.asiaconst.com/past_conference/conference/15th/6Malaysia.pdf

http://www.cidb.gov.my/v6/?q=en/information/695

http://en.wikipedia.org/wiki/Skilled_worker

http://en.wikipedia.org/wiki/Labour

malaysia construction labour rate

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