'No one wants to work in Saudi Arabia, Qatar': builders

Gulf construction firms are forking out ‘premiums’ to lure workers to the less attractive countries
Cranes stand beside new high rise buildings under construction in the King Abdullah financial district of Riyadh, Saudi Arabia, on Monday, April 9, 2012. Saudi Arabias gross domestic product expanded 6.64 percent in the fourth quarter from a year ago, the kingdoms statistics agency said. (Bloomberg)
By Courtney Trenwith
Wed 11 Sep 2013 10:03 AM

Construction companies are struggling to attract workers to the growing markets of Saudi Arabia and Qatar, putting some projects under financial strain, executives have revealed.

Many construction firms and developers who have played a key role in building Dubai during the past decade are now also expanding into the emerging neighbouring markets, where Saudi Arabia is ploughing billions of oil money into housing, infrastructure and hospitality and Qatar is spending a similar amount boosting its international appeal and preparing for the 2022 World Cup.

But the widespread and rapid demand is clogging access to building supplies as well as labourers.

Arabtec chief operating officer Nabil Al Kindi said the majority of expatriate workers – which make up a significant majority of the construction workforce – were reluctant to move to Saudi Arabia or Qatar, particularly if they were already living in the more attractive Dubai.

“We have a challenge bringing the right people into Qatar because most of the best want to be in Dubai,” Al Kindi said.

“Everyone I ask ‘can we move you to Saudi Arabia or Qatar’ [they reply], ‘no I want to be here in Dubai, if that’s not an option there are other companies I can work with’. So I think that’s a challenge.”

Arabtec group chief operating officer Mark Andrews said the company had to pay “a premium” to get people to work in Saudi Arabia, where there were fewer freedoms and entertainment than in places such as Dubai.

However, Al Kindi said there were plenty of people happy to accept the compensation.

“Some people like to go to Saudi and go and live there with their families. But ... some of the people [you can] give them anything but they [don’t want to live there], which is a challenge, that’s a fact of life we have,” Al Kindi said.

“But for those who go there I think they enjoy it, they love it, they get compensated by it.”

Al Kindi said the cost of living in Qatar was about 20 percent greater than in Dubai, while the state had less entertainment and lower living standards for many.

Roger Nickells, Middle East managing director of engineering firm Buro Happold, whose projects include the new international airport in Doha, said his company faced similar difficulties finding appropriate staff but he was able to mitigate it somewhat by working with international firms, having a physical presence in their offices and then importing work back to the Gulf.

“Quality of staff is a big issue and a big issue for us whether we’re working in Saudi Arabia [or] whether we’re working in Qatar,” he said.

Atkins, a UK-based company involved in the design and project management of numerous projects across the Gulf, has moved 400-500 people into Qatar in the past 18 months.

Commercial director Simon Crispe said the company had faced several human resource issues, including the standard of education and quality of life.

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“An awful lot of people that we target are people with families and you can’t expect people to turn up to work without their family around them,” he said.

“Organisations have to look at these kinds of issues and figure out how we are going to create environments for our family people that sustain them for the medium time.”

A labour shortage is only one of many construction costs that are expected to rise as the market moves out of recovery stage, which Andrews said was likely to happen in the next few months.

He warned the industry faced greater risks and challenges in the near future as rising construction demand sent costs soaring. Making a profit would become more difficult and businesses that failed to properly foresee those rising costs and work them into tenders would collapse.

"I certainly believe that the upturn is there," Andrews said.

"It means that at some point and perhaps within the next 3-12 months the market is going to turn back and that does mean that the supply chain is going to harden and getting the level of discounts that have been built into the bids becomes more of a challenge.

"So I think when you're in this stage of having gone into a recession but now it looks like we're coming out of it, in some ways the risks just continue to intensify because we've got to try and predict when those various cost factors are going to start to shift."

Andrews said as the market picks up the cost of labour, staff, materials and subcontractors will all rise.

Nationalisation schemes also were making hiring more difficult, as governments demanded citizens replace foreign workers whether or not they were qualified.

Saudi Arabia's nationalisation policy, Nitaqat, which sets a percentage of local employees each business must have, is due to come into full effect later this year and will add "costs and complexity", Andrews said.

While the UAE's more established market made costs more predictable, many industry representatives said Qatar was the most expensive and complex market to work in.

"Moving into territories like Qatar (means) the logistics are far more challenging," Andrews said.

"There's restricted access to ports, there's a lot of work that's got to be done looking into how we transport materials into the country, what length if time that will take, what the mechanisms are.

"I think the bottom line is we've been through a very challenging period and we can see that there's some blue sky out there but I don't think contractors are really out of the water yet."

 

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