Commentary: What’s behind the housing crunch for foreign workers in Singapore?

However, employers need time to adjust to this paradigm shift in dorm operations and maintenance. Dorm rental rates are already sky high, with one employer observing that they have risen by 40 per cent since the pandemic. Even if employers can produce proof of accommodation upon hiring a new worker, it is unaffordable rentals that may push them into cutting corners later.

What more can be done to improve housing for foreign workers in the long run?

A FAIRER PROCUREMENT SYSTEM

The current business model of worker dormitories is price-based and locked into fixed-term contracts. Private accommodation, on the other hand, is profit-driven in order to be sustainable.

For dorms, there is certainty in pricing and duration, unlike private accommodation for which the landlord can hike prices and terminate leases. This creates an overwhelming demand for dorms, thus shortages in supply.

Moreover, companies bidding for new projects have to increase prices under new FEDA requirements. With unreasonably short tendering periods, contractors will estimate higher prices to meet accommodation requirements without knowing if they will win the contract.

This will drive costs up and make project tenders difficult to win, lowering interest to ensure better accommodation for foreign workers. At worst, contractors may underestimate accommodation prices and then take drastic cost-cutting measures to recover.

A change in mindset and procurement processes is needed to overcome this challenge. In the procurement stage, a typical tender or quotation requires the costing of preliminaries. Workers’ accommodation ranges between 5 per cent to 15 per cent as a lump sum of the project cost.

It will be prudent for quantity surveyors, contract managers and facility managers to isolate worker’s accommodation from other costs when assessing project tenders.

Likewise, the operation and maintenance of foreign worker accommodation must also change. For instance, government agencies could put preliminaries in their construction contracts that specify the design of accommodation, minimum requirements for audits and an adequate tendering period.