Inflation rate and labours’ wages in construction projects: economic relation investigation
Engineering, Construction and Architectural Management
ISSN: 0969-9988
Article publication date: 16 June 2021
Issue publication date: 24 June 2022
Abstract
Purpose
Labours are one of the key resources of construction projects having a significant impact on economic development. With time, the construction industry is getting a boom due to numerous construction projects in which labours’ contribution is significant. Project betterment is associated with the project productivity which relates to the labours. Wages play a vital role in retaining labours in the construction industry.
Design/methodology/approach
This study focuses on investigating the increasing and decreasing behaviour of labour wages in the construction industry and observing the impact of the inflation rate in deviating labour wages. Initially, the percentage deviation was calculated to observe the changing behaviour of the data and then the Spearman correlation test was used to find the relationship between the inflation rate and the labour wages.
Findings
It is evident that even with a good economy and a stable construction sector, still, the labour wages faced a decline over time, which is a matter of concern. Also, based on the correlation coefficient, it was revealed that several labour wages categories are moderately and strongly correlated with the inflation rate and can impact project cost if the inflation rate is not considered while finalizing the budget. Besides that, the changing behaviour of labour wages due to the inflation rate impacts significantly on gross domestic product (GDP); therefore, it requires vital attention.
Originality/value
Changes in labour wages are not considered in budget estimation which drag the project towards cost overrun. This study brings the attention of the stakeholders on the issue with experimental justification. Also, how the inflation rate is affecting the labour wages has also been addressed.
Keywords
Acknowledgements
The authors would like to thank Universiti Teknologi PETRONAS (UTP) for the support provided for this research.
Data Availability Statement: All data, models and code generated or used during the study appear in the submitted article.
Citation
Musarat, M.A., Alaloul, W.S. and Liew, M.S. (2022), "Inflation rate and labours’ wages in construction projects: economic relation investigation", Engineering, Construction and Architectural Management, Vol. 29 No. 6, pp. 2461-2494. https://doi.org/10.1108/ECAM-07-2020-0478
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited