MARKET watchers and practitioners agree that increasing productivity in the construction sector is a move in the right direction, but some question the need for formal qualifications, which ultimately pushes up costs.

Deputy Prime Minister Tharman Shanmugaratnam announced on Thursday night that construction firms will have to have at least 10 per cent of their Work Permit holders qualified as Higher Skilled (or R1) workers by 2017. This will be phased in over the next two years, with firms required to upgrade 5 per cent of their workers by end-2015, and another 5 per cent by end-2016. Those that fail to meet the targets will face curbs on hiring.

The move comes as no surprise, as the possibility of mandating a minimum proportion of R1 workers in each construction firm had previously been floated in Budget 2014. The issue at hand is that workers must pass a test conducted by the Building and Construction Authority (BCA) to meet the R1 requirement.

"I have workers who can work, but when I send them for the exams, they cannot pass the test. Test is test, but the ground involves human beings," said Lee Yeow Khoon, managing director at BK Civil & Construction, citing the example of a worker who had been with him for 10 years and for whom customers were willing to defer projects in order to obtain his services.

The language barrier is the main problem, said Ivy Tjin, human resource manager at Feng Ming Construction. "In the near future, we intend to select those from our workforce with potential to go for language courses before they go for the skills upgrading course so that it will make learning easier."

Cost is also an issue, especially for smaller contractors, said Ms Tjin.

"They may not (have the financial strength) to send their workforce for this kind of training because the training fees are quite high . . . I hope the government can look into issuing subsidies . . . they do have subsidies now, but it's for those who pass. The problem is: how many workers are able to pass if the exam is English-written and lessons are conducted in English?"

The cost of training and testing per worker is from S$900 to S$1,000. If workers pass the test, the authorities give subsidies of 80 per cent to defray the costs.

BK Civil & Construction's Mr Lee added: "If you pass, you pay levy of S$550. If you fail, you pay S$950. The difference is not much. If I send (my worker) for training three times, it will cost me S$3,000 already. Those days that he is not working? It costs me another S$4,000. We contractors suffer because we cannot work," said Mr Lee.

Already, construction firms are lamenting manpower shortages with the foreign workforce tightening measures.

"It definitely shows that the government is relentless in ensuring the construction sector continues to push and gain momentum as far as trying to improve worker productivity is concerned," said Kurt Wee, president of the Association of Small and Medium Enterprises.

Despite some growing pains, Feng Ming's Ms Tjin stresses that it is a move in the right direction.

"It is a good measure because everybody will be really knowledgeable and maybe next time construction workers will be more educated. It's better this way."

According to the Building and Construction Authority and Ministry of Manpower, about three in five construction firms already meet the minimum requirement. Of the rest, around 80 per cent need to upgrade just one or two of their R2 foreign workers to R1 status in the next two years to meet the new condition.