Cambridge University Press (2019) defines construction as new development, modification, upgrading work, demolition, equipment and plant installation, and any remodeling from the original building design. While the construction industry is defined by the Project Management Institute (2013) as an application source for producing construction processes based on performance or achievement, scope, time, cost, and involvement of the temporary organisation in the project, like a construction firm, consultant firms like suppliers, professional services people, and a financial institution like a bank or government sector. Construction involves manpower, plant, construction materials, and management. The construction industry helps in developing and connecting infrastructure in the civil, structural, mechanical, and electrical aspects.

Malaysia’s construction industry is one of the productive sectors that has made a significant contribution to the Malaysian economy as a growth catalyst for other industries. Malaysia’s government plays a key role in the construction industry. One of the government’s objectives is to allocate the nation’s wealth to people to increase their standard of living. This is achieved by raising people’s earnings and also creating employment opportunities. In addition, it is shown that the government can directly regulate the industry’s demand. According to the CIDB, the labourers distinguish themselves as skilled labourers in the construction industry after obtaining some sort of accreditation from the relevant recognised bodies. This may include undergoing proper training or studying within the stipulated duration. In the context of obtaining recognition by the CIDB, the labourers will have to pass a test or courses that will be organised by some authorised bodies, such as Akademi Binaan Malaysia (ABM). The low participation of local skilled labour, in particular, is an issue that snowballs into a severe problem and may cause other problems, directly or indirectly, in the construction industry. The Malaysian construction industry is too dependent on foreign labour. Local skilled labourers are not attracted to working in the construction industry, especially if they are working on a construction site, because it is classified as undignified work and they demand higher pay. On the other hand, foreign workers are cheaper and can work long hours without any complaints.

As a result of this scenario, most employers preferred to hire foreign labour over local skilled labour. The International Trade and Industry Minister of Malaysia (MITI) stated that the local skilled labour shortage was a serious problem and needed immediate attention. Some of the construction organisations stated that they are willing to hire local skilled labour, but the labour leaves the organisation after receiving the necessary training. According to reports, some organisations invested a substantial amount of money on labour recruitment and training programmes, but only about 50% of the trainees served the companies, while others left (International Labour Organization 2016). It has also been observed that brain drain is one of the significant causes of the non-availability of local skilled labour in the industry (Jarmolowicz and Knapińska 2011). Most Malaysians prefer to work abroad, primarily in Singapore, Australia, the United States, and the United Kingdom, because these countries offer better opportunities and higher pay for their skills and experience (Jarmolowicz and Knapińska 2011).

Labour in the construction industry can be divided into two categories: unskilled and skilled labour. Work that requires no specific education or experience is often categorised as unskilled labour. The Department of Skill Development defines “skilled labour” as a worker who obtains level three certificates based on the Malaysia Skill Certificate (SKM) as a minimum qualification. Therefore, skilled labourers are people that have served an apprenticeship, practise the trade learned activity, and, because of their knowledge and vocational capacity, are given tasks that are particularly difficult and require a lot of experience that involve different trades of specialisation.

Labour is a key element in developing construction management processes. The lack of skilled labour has had a significant negative impact on construction costs, schedules, and construction performance. Skilled labour has received professional training; has at least 2 years of work experience, is knowledgeable about building materials, equipment, and safety, and is physically up-to-date (Abdul Hamid 2013). There are three possible avenues for training skilled labour, namely schools, vocational training centres, workshops, and on-site training directly (Sulaiman and Mohd Salleh 2016). Sulaiman and Mohd Salleh (2016) also added that the most commonly used skilled labour in the construction industry where their services are required most in construction projects are as follows:

• Carpenters: The job scope for carpenters is to construct, erect, install, or repair structures, fittings, or furniture made of wood; building frameworks, including partitions, joists, struts and rafters, wood staircases, window and door frames, and hardwood floors using their skills and tools (UNESCO 2021). The carpenters build the wood framing for houses, roofs, stairs, and decks, and construct formwork to support concrete work such as footings, columns, and stairs. Besides that, the carpenter is responsible for carpentry work such as installing cabinet siding, drywall rails, building cabinets and countertops, and working on drywall, wood flooring, metal jambs, and ceilings. Normally, carpenters are skilled at exterior and interior finish work.

According to current estimates, nearly RM5 billion is sent out of the country each year by foreign workers working in the construction sector, who send money back to their home countries. The Malaysian CIDB stated that there were currently 420,000 foreign workers in the sector who were registered with the Malaysian Immigration Department (The Star 2019). Malaysia, with a population of 32 million people, is heavily dependent on foreign labour. They are concentrated on blue-collar jobs. There are some 1.76 million foreign workers who work legally in Malaysia, and an estimated 3.9 million to 5.5 million more illegal immigrants, as highlighted in Table 1. This shows the numbers of registered unskilled foreign labour in the Malaysian construction industry until 2018, excluding illegal and non-registered labour. Even though the numbers are decreasing year to year, the majority of the foreign labour forces in Malaysia are unskilled labour, which is not preferable since the construction industry requires skilled labour.

Malaysia seeks to overcome its reliance on low-skilled foreign labour as it attempts to move up the economic ladder. Nevertheless, it might impact other industries in the country. In the Malaysian construction industry, thousands of labourers are involved, but most of them are classified as unskilled labour. The country is experiencing a shortage of skilled and productive labour adequately trained for certain jobs. Skilled labour is the most important thing to improve the industry. The essential information of skilled labour in the construction sector must be kept up to date. If the current scenario is exposed, the authorities will find it easier to take concrete steps to improve the performance and efficiency of Malaysian labour (Najib et al., 2019). Furthermore, one of the national agendas is to reduce the number of overseas labourers by more than half in 5 years while getting companies to hire more high-skilled Malaysians to become a more developed economy. Table 2 presents statistics of registered building personnel by CIDB from 2016 to 2018. The local labour force that registered with CIDB from 2017 to 2018 plunged by −45%, while the foreign labour force rocketed by +48%. This data is alarming as the increasing numbers of foreign labourers in this country concerns us because most of them are not skilled labourers who degrade work quality and also become a social issue (Manoharan et al., 2021).

Saieed (2016) highlights that after the pandemic, the economy is expected to grow, although the headwinds buffeting the Malaysian economy make it difficult to reach the target’s upper band. Growing would mean delivering higher-value goods and services, which will increase productivity. An increase in productivity would mean a better salary for the labour force. This is the policymakers’ basic argument as they speak about how human capital will help the economy. However, the reality is different. According to data from the Malaysian Productivity Corp, the average annual labour productivity growth between 2011 and 2015 was 1.8%, while the 11 MP has a target of 3.7% annual growth. Doubling the growth in labour productivity is needed to meet the New Economic Model’s high-income target. Department of Statistics Malaysia, (2020) notes that the economy saw a 3.3% increase in labour productivity last year but claims that it will be difficult for labour productivity to grow in the coming years due to the lack of skilled labour.

The economy will struggle to move up the value chain without more skilled labour and will not be able to attract large investments in resources (Saieed, 2016). However, the target of 11 MP is well below the ratio of skilled labour to developing economies, where the ratio is at least half of the total workforce. The government’s plans to raise the skill levels of Malaysian labourers have so far only shown mixed results, with a gap between the plans and their actual implementation (International Labour Organization 2018). In the context of the construction industry, it requires a large number of skilled workers to meet the demand for construction projects. Skilled labour may face difficulties in meeting the demand. The industry is in recovery and a lack of expertise could threaten to disrupt what could well be the most positive outlook for construction in a decade.

Formal education achievement cannot be used as a criterion or yardstick in the requirements for jobs in the context of skilled labour. Employers often use the rate and perceived quality of education as a fast-screening mechanism for hiring. Often, formal education does not perfectly align with one’s ability to do the job. The great ability to do the work comes from experience. People learn from their own and other people’s experiences. That is why training on-site operations is vital. When they are trained in real conditions, they gain real experience. Working with good quality results from good work skills, which cannot be obtained solely through classroom learning.

The lack of experienced and skilled construction labour has become a worldwide problem. Local participation in the workforce is not very encouraging, and it is recognised that skilled labour created through vocational training does not meet industry needs. It has also become a major challenge facing the Malaysian construction industry. Some of them left the construction sector after graduating from construction-related courses. There are problems with Malaysian construction in the ability to obtain the origin of work and maintain skills, and it has to rely on foreign labour to meet the high demand for skilled labour due to rapid growth in Malaysia and low participation by Malaysians (Zaki, Mohamad, and Yusof 2012).

Therefore, the government has identified the need to intensify the construction industry. Mechanization, new building methods and technology, and prefabrication have the effect of reducing reliance on labour and improving contractors’ performance and productivity. The government has tightened the work permit requirements to limit foreign labour inflows and increased the levy on foreign labour based on their field of employment. The government also decided not to extend work permits to non-qualified foreign labourers who have been in the country for more than 5 years and has granted amnesty to illegal foreign labourers to return to their own countries without legal action. The CIDB has announced several initiatives to improve the image of the industry and raise awareness among local labour of the benefits of joining the industry, including improving incentive programs, technical and vocational education and training, raising wages to attract local labour, improving site conditions and safety practices, and raising awareness of the opportunity to get local participation and governance structure and implementing policies. Nevertheless, the changes might not happen overnight. The effects are very slow to take effect from the reforms initiated by the CIDB.

A reliability test was performed to assess the questionnaire survey’s internal consistency. The Cronbach’s alpha formula was used to compute the interval consistency level for twenty (20) items, and the result was 0.795, indicating that the items were interrelated and compatible with the study sample; hence, the interval consistency level is adequate (Pallant 2016). The closer the result to 1, the better the internal consistency it is. (Sekaran and Bougie 2016).

According to Table 3, the majority of respondents worked as project managers, with 64 respondents (60.38%). The second highest was the site manager, with 30 respondents (28.30%), followed by the managing director and the human resource manager, with 6 respondents (5.66%) each. All positions were directly engaged with labour on-site. Nevertheless, the human resources manager and the managing director were included as well because they were directly involved in the recruitment process, and their input will be useful and relevant to the research.

According to Table 4, respondents with 1–5 years of experience have the lowest response rate, with only 10 respondents (9.43%), followed by 5–10 years of experience, with 25 respondents (23.58%). Respondents with 10–20 years are in third place with 33 respondents (31.14%). The highest were the respondents with 20 or more years of experience, with 38 respondents (35.85%).

Table 5 shows that the majority of the respondents were bachelor’s degree holders, with 62 respondents (58.49%). Next, 36 respondents (33.96) were Master’s degree holders, and lastly, 8 respondents (7.55%) were diploma holders. The demographic shows that the respondents have vast experience in the industry and sit in prominent positions in the organisation, thus their input is reliable and resourceful.

Table 6 illustrates the findings from respondents about the current scenario local skilled labour participation in the construction industry. The table exhibited the ranking and mean value of current issues related to the low participation of local skilled labour in the Malaysian construction industry. The first rank of the main current scenario participation of local skilled labours in Malaysian construction is that many local skilled labours join training education such as “Sijil Kecekapan Kemahiran (SKK)” but are not participating in the construction industry with a mean value of 3.88. Most of the respondents highlighted that after the locals completed the SKK provided by the government, many preferred to work in other sectors rather than stick to the construction industry. Construction-related training is administered by the CIDB, which is part of ABM (The Star 2009). Approximately 40,000 trainees were trained under the CIDB Youth Skills Training Program between 1999 and June 2007, and CIDB also trained 40,000 construction employees at the same time. Surprisingly, the vast majority of these trainees (80%) do not work in the construction industry. The main reason behind this is that the trainees were not exposed to building sites and were not equipped with the appropriate mentality for working in the real world.

The second highest is that local skilled labour prefers building work such as architectural, mechanical, and electrical work over structural work. This statement shows that most respondents agreed that local labourers do not prefer to work under harsh weather conditions because of the structural work exposed under hot conditions, instead of mechanical and electrical work that is not exposed directly. It can be seen that the average recorded a mean value of 3.86. Next, most respondents agreed that the local labour prefers to be a site leader, such as a site supervisor, rather than become normal labour with a mean value of 3.73. From their perspective, normal labour is required to handle heavy task work and expose themselves to harsh weather conditions, whereas a site supervisor is more focused on the monitoring of work and leading the labour on the arrangement of work that needs to be done.

Finally, respondents moderately agree that even with a higher salary, local labour participation may still be low, with a mean value of 3.64. The construction industry portrays an image of a 3D (dirty, dangerous, and demeaning) working environment. Some locals are not comfortable being in these settings. Some respondents even highlighted that even if the salary is slightly lower but there is an opportunity to work in an air-conditioned office, they are willing to go. Nevertheless, our local labourers who are willing to work on-site prefer to go to our neighbouring country, Singapore. Higher salary prospects become more attractive than in Malaysia, and the salaries are paid in Singapore Dollars, where the conversion rate significantly multiplies the amount.

This section discussed the causes of the poor participation of local labour in the construction industry. Table 7 summarises the findings and is arranged based on the overall mean value. The findings can be categorised into four (4) themes, namely (based on rank) migration development, the low assurance of salary, higher education level, and poor working environment.

Foreign labour monopoly ranks first among the causes for poor participation of local labourers, with a 3.90 overall mean value. The construction is driven by foreign labour. It demonstrates that Malaysia heavily relies on foreign labour. The migrants are monopolising the labour employment, which makes the locals look like minorities if they work as labour as well. This scenario could play out in other sectors in the country, such as service and manufacturing. The economic landscape and political governance may play a significant role in attracting foreign labour to come and work here in Malaysia. The MTUC failed to convince the government to stop the influx of foreign labour, which has the potential to depress the wage structures (New Straits Times 2020). This was echoed by Mohd Fateh et al. (2020), who pointed out that in Malaysia, it is a common perception that hiring foreign workers is less expensive than hiring local labour.

Next, is the low assurance of salary, with an overall mean value of 3.87. Most employers prefer to hire foreign labour because of their lower salaries and willingness to work long hours compared to local labour. Foreign labourers are willing to accept a low salary as long as they have a secure job (Abdul-Aziz, 2001; Narayanan & Lai, 2014). In the long run, it will have a bad impact on the construction industry because the overall average salary rate will deteriorate, and the rate of increment is very slow. Indirectly, it will affect the attractiveness of the local labour market (Del Carpio et al., 2015).

The third reason for the low participation of local labour in the Malaysian construction industry is the academic qualification level, with an overall mean value of 3.82. Most local labourers would find a position that matches their academic qualification level only, instead of accepting any position that is being offered. For example, diploma holders would like to be in a position that suits their qualifications and will not accept anything less. For a fresh graduate, it is better to gain experience first-hand rather than be too picky about the position offered. Vast experience is a quality that the construction industry values. Even if the labourer lacks formal qualifications, he has vast experience under his belt, which will carry significant weightage in his resume.

In 2021, the Construction Research Institute of Malaysia (CREAM) (2011) reported that the perception that working on a construction site is portrayed as a low-status job with a lack of prestige, class, and respectability. This perception is misleading and affects participation indirectly. The International Labour Office (2018) suggested that rather than being unemployed, which might lead to other problems, going to work in the construction industry is a decent choice to make. There are plenty of things that the applicants can learn, and they can be stepping stones for them to explore in the future. While it is the total opposite for foreign labour, Mohamed (2015) highlighted that they will grab any available jobs even if it means long hours and a harsh environment. The foreign labourers are more obedient as long as they get their payment as promised.

The poor participants of the local labours in the construction sector ranked the poor working environment on the construction site the lowest, with an overall mean value of 3.44. Mohd Fateh et al. (2020) highlighted that the construction industry has been battered by chronic issues such as poor health and safety conditions, poor working conditions, and lack of quality, resulting in poor productivity and overall efficiency. Local labour believes that working on construction sites is a 3D (dirty, dangerous, and demeaning) environment that may lead to site injuries and accidents. Working on construction sites may portray less prestigious because it is claimed that it does not require a great deal of skill or intelligence (Rahim et al., 2018). However, the claim is deceptive. As you progress through the stages, the complexity of the work will increase as well. It requires creativity, critical thinking, and good communication skills to solve any issues that may arise.

Safety precautions on the construction site are a serious concern. Most organisations now have a competent safety officer who monitors and recommends the safety policy and procedure to ensure that the site is a safe place to work.

This section elaborates on the recommendation on the initiatives that relevant stakeholders can look into on how to encourage the local labour force to participate more in the construction industry. According to the findings, there are six (6) themes (based on the rank): provide economic welfare to labour, encouraging labours intensive with IBS, raising wages to attract local labour, improving working conditions and safety practices, and raising awareness of opportunities. Table 8 summarises the overall mean and ranks the initiatives on how to encourage the local labour force to participate more in the construction industry.

The first initiative, with an overall mean value of 4.21, agreed upon by the respondents on how to encourage the local labour force to participate more in the construction industry is to provide economic welfare to the labour force, which includes providing comfortable accommodation and providing some activities as incentives whenever labour has completed some important milestones in the projects. The comfortable accommodation can attract local labour to join the construction industry. Usually, only temporary accommodation was given to the labourers, which led to overcrowding, inadequate sanitation, unregulated drainage of surface water, and improper disposal of waste.

Malaysians are reluctant to remain in that condition and feel that jobs in the construction sector are not dignified enough. cramped, dirty, and unhygienic conditions. This was agreed upon by Marhani et al. (2012), who reported that the accommodation is cramped and dirty. Indirectly, it might impact the labourers’ health and the surrounding neighbourhood. The respondents added that the labourers have spent 8–9 h on-site and are looking forward to going back to decent accommodation to rest and recharge for the next day. Mohd Fateh et al. (2020) added that the accommodation needs to meet with the national legislation and international good practice, for example, a minimum amount of space for each worker, provision of sanitary, laundry and cooking facilities, and portable water.

Next, the second initiative that was agreed upon by the respondents is fully utilising the IBS, with an overall mean of 4.09. The respondents highlighted that most of the work being done for the IBS construction approach is off-site and in a controlled environment. CIDB (2015) described IBS as a construction system using a mixture of construction components that are either manufactured on or off-site and then installed and assembled into construction structures. It can be a factory or fabrication yard where the conditions are not too harsh compared to a typical construction site. In these settings, it can reduce the perceptions of the 3D workplace that have been portrayed. The increase of IBS in Malaysia can be a catalyst to reduce the dependency on foreign labour and start engaging with local talents. Mydin et al. (2014) concluded that since IBS construction relies more on state-of-the-art construction technology, reliance on manual labour can be reduced, and subsequently, foreign labour flows to Malaysia are reduced.

Low-skilled foreign labour fills vacancies in construction and other economic sectors because these jobs are physically demanding and labour intensive, and thus are often avoided by most locals (Kupets 2016). Many foreign workers are willing to accept lower wages in comparison to Malaysian workers, undermining wage structures. Kupets (2016) also exposed that local construction labour generally receives 40% higher pay than their foreign counterparts. Pension funds, medical and social benefits are among the legal requirements, and other employee benefits are relieved by employers upon hiring a foreign worker. Therefore, hiring a cheap foreign workforce keeps the production costs low and reduces the bargaining power of locals in the labour market. The tremendous influx of foreign labour into the country is also causing an outflow of money. Some studies have shown that as much as 80% of a foreign worker’s pay is sent back to their respective home countries regularly.

The third initiative by the respondents was to increase the minimum salary and introduce performance benefits for the labour in the construction sectors, with an overall mean value of 3.92. This was agreed upon by Narayanan & Lai (2014), who highlighted that recruiting local labour to participate more in the construction industry increases the minimum salary. Pillai et al. (2016) reported that the MTUC had called on the government to create a minimum wage for the lowest-paid labourers to meet the cost of living that had arisen in the 2000s. It is also a prominent employee engagement programme that includes career advancement and learning and development opportunities. The CIDB claims that if Malaysia can build more participation, they can be paid higher by skilled local labour and industry, and the country will break foreign workers’ reliance.