All unoccupied building sites can reopen with 50 per cent capacity from Wednesday including those in eight local government areas of concern where work has been halted for weeks. Workers who live in those LGAs - who represent a significant chunk of the state's construction workforce - have also been ordered to stay home. But now the jab is the key to their livelihoods.
Construction employees from the affected LGAs will be able to return to work with proof they have either received two doses of a COVID-19 vaccine or one dose at least three weeks ago.
They can also show they have received one dose and returned a negative test in the past 72 hours, if they received the dose in the past three weeks.
Rapid antigen testing may be used in the future when NSW Health signs off on the technology, the government says. There will be exceptions for people with medical conditions that make vaccination unsuitable. Business groups have welcomed the news.
Business Council of Australia CEO Jennifer Westacott said the decision showed the government was "listening, pragmatic and working to get the state back on track as fast as possible".
Urban Development Institute of Australia NSW CEO Steve Mann said the approach was "more durable" given the likelihood of LGAs moving in and out of different levels of restrictions.
"The construction industry directly or indirectly impacts one in four jobs in NSW and this decision is crucial for our economy," Mr Mann said.
Zeeshan Hamid, a 34-year-old construction worker from Auburn, said the news was a relief. Being forced to stay at home started out relaxing but quickly became "awful", he told AAP.
"It's good, at least I will earn something," he said.
The home renovation company he owns in partnership normally operates seven days a week, and the support from the government is nowhere near what he would normally earn. Mr Hamid and his labourers have all received the first dose of the vaccine and have their second booked in. He said he had no issue with vaccines being used as a precondition for work.
Construction workers will be prioritised at a special clinic at Sydney Olympic Park on Sunday, August 15, Jobs Minister Stuart Ayres said. The government hopes 8000 workers will be jabbed that day.
"We are also working with industry to facilitate rapid antigen testing trials on a number of public and private sector construction sites and that will soon provide added COVID-19 surveillance capability when approved by NSW Health for wider use," Mr Ayres said.
The eight affected LGAs are Blacktown, Campbelltown, Canterbury-Bankstown, Cumberland, Fairfield, Georges River, Liverpool and Parramatta. Meanwhile, a Unions NSW survey of workers across the state shows almost half (46 per cent) feel they have been put at risk of COVID-19 at work.
Eight in 10 of the 2993 education, manufacturing, professional services, health and other employees interviewed between July 28 and August 4 also said government had moved too slowly to lock down Sydney. Fifty-nine per cent said they expected the NSW health situation to deteriorate in the near future while 66 per cent also thought economic conditions would worsen in the short term.