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Discuss this article (12 Comments)GCC businesses face recruitment crisis
by This email address is being protected from spam bots, you need Javascript enabled to view it on Wednesday, 02 January 2008
RUSH HOUR: Employees head to work along Sheihk Zayed Road in the UAE where currency issues and inflation are causing recruitment headaches for businesses. (Getty Images)
Almost 90% of businesses in the Gulf region say securing the right candidate from the international job market is either a struggle or entirely impossible, according to a new poll.
A third of respondents to the latest ArabianBusiness.com survey said “with the present exchange rates we find it almost impossible to get the right people”.
More than one half (53.8%) said that attracting and retaining the talent required to remain competitive was a “struggle” with companies “having to offer higher salaries than the business can really afford”.
Companies cited currency issues and inflation as the main impediments to staying competitive.
Downward pressure on the dollar has resulted in poorer exchange rates for GCC nations that have their currencies pegged to the US currency. As a result, purchasing power parity for expatriate wage earners in the Gulf has suffered.
Currencies like the British pound and the Indian rupee have soared against Gulf currencies over the last year, providing little financial incentive for workers from those countries to relocate.
The problems of currency weakness and high inflation have been particularly acute in nations where the workforce is predominately foreign. In the UAE, where expatriates comprise around 80% of the workforce, inflation - currently hovering above 9% - and a weakening dirham has led to a marked loss of competitiveness in the international job market.
Results from a previous ArabianBusiness.com poll indicate that attracting workers is the number one worry for GCC businesses moving into 2008.
Of the respondents, only 12% indicated that attracting workers was “very easy” and that inflation and currency issues were "no problem".
In total 618 people voted in the latest ArabianBusiness.com poll.
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
The GCC Market observing positive correction to attract and retain talent
Posted by Naseem H AlSaeed, Manama, Bahrian on Saturday 12 April 2008 at 22:04 UAE time
Well both businesses and employees in the GCC are struggling with cost increasing, which outpace their earnings. This phenomenon leads the GCC market to observe positive correction to attract and retain talent. Unlike previous decade where Western being paid higher then most other nationalities, today this trend is changing and employers are deciding pay based on competencies disregard nationality. Employees are now are more free to move, which encourage employers to look at HRM as a strategic function.
Although the response of the Governments and Employers in the GCC are slow, it is in the right direction and promising.
Posted by Naseem H AlSaeed, Manama, Bahrian on Saturday 12 April 2008 at 22:04 UAE time
Well both businesses and employees in the GCC are struggling with cost increasing, which outpace their earnings. This phenomenon leads the GCC market to observe positive correction to attract and retain talent. Unlike previous decade where Western being paid higher then most other nationalities, today this trend is changing and employers are deciding pay based on competencies disregard nationality. Employees are now are more free to move, which encourage employers to look at HRM as a strategic function.
Although the response of the Governments and Employers in the GCC are slow, it is in the right direction and promising.
Recruitment crisis
Posted by Shrikant Kelkar, Dubai, United Arab Emirates on Saturday 5 January 2008 at 13:38 UAE time
The commentary and analysis from Mr Rajendra Aneja provides an insight into WHY this situation is faced by the Gulf business. I would like to compliment him on his straight forward views.
Attracting and retaining talent are long term strategic goals that need to be embedded in the Business Strategy of the company. Employees are key human resources and valuing them correctly is an art in itself.
Business who have taken short term view in the past and have benefited by short sighted remuneration policies will be the first to get hit with this. Their business models will not be able to sustain the market salaries or attract talent from traditional sources of supply without an erosion in their previously high profit margins.
A strong HR function with business linkage is the need of the hour. It might be interesting to see how the same 90 % businesses fared on the HR front and whether they had established proper remuneration and employee development policies.
The need of the hour is to wake up to the advent of globalisation and gear up local businesses to become competitive in the international job market. This can only be done by giving due importance to both the company employees who work in the company and the HR function who should have ability and experience in managing talent - making the company brand work to attract and retain talent.
Posted by Shrikant Kelkar, Dubai, United Arab Emirates on Saturday 5 January 2008 at 13:38 UAE time
The commentary and analysis from Mr Rajendra Aneja provides an insight into WHY this situation is faced by the Gulf business. I would like to compliment him on his straight forward views.
Attracting and retaining talent are long term strategic goals that need to be embedded in the Business Strategy of the company. Employees are key human resources and valuing them correctly is an art in itself.
Business who have taken short term view in the past and have benefited by short sighted remuneration policies will be the first to get hit with this. Their business models will not be able to sustain the market salaries or attract talent from traditional sources of supply without an erosion in their previously high profit margins.
A strong HR function with business linkage is the need of the hour. It might be interesting to see how the same 90 % businesses fared on the HR front and whether they had established proper remuneration and employee development policies.
The need of the hour is to wake up to the advent of globalisation and gear up local businesses to become competitive in the international job market. This can only be done by giving due importance to both the company employees who work in the company and the HR function who should have ability and experience in managing talent - making the company brand work to attract and retain talent.
Recruitment crisis: What about local talent?
Posted by Hussian Motabagani, Khobar, Saudi Arabia on Thursday 3 January 2008 at 15:08 UAE time
I don't understand why Gulf countries are struggling to attract more foreign labour when they have an abundance of local talent lying around in the same company doing absolutely nothing.
There are a number of young graduates who need training and experience, so why not introduce a fair starting package with gradual rises? This way you will have the staff you're looking for. It's sad when your younger university colleagues, who have graduated with a bachelors in building engineering, are offered only 4000 Riyals plus another 1500 Riyals in benefits "in one of the biggest construction firms in the world.
And that's what most Saudi engineering graduates are earning nowadays until they shift to Aramco or Sabic. I should know I've been there myself.
If that's how much a local national engineer is getting paid then don't expect to find any foreign experts flocking to your offices.
Posted by Hussian Motabagani, Khobar, Saudi Arabia on Thursday 3 January 2008 at 15:08 UAE time
I don't understand why Gulf countries are struggling to attract more foreign labour when they have an abundance of local talent lying around in the same company doing absolutely nothing.
There are a number of young graduates who need training and experience, so why not introduce a fair starting package with gradual rises? This way you will have the staff you're looking for. It's sad when your younger university colleagues, who have graduated with a bachelors in building engineering, are offered only 4000 Riyals plus another 1500 Riyals in benefits "in one of the biggest construction firms in the world.
And that's what most Saudi engineering graduates are earning nowadays until they shift to Aramco or Sabic. I should know I've been there myself.
If that's how much a local national engineer is getting paid then don't expect to find any foreign experts flocking to your offices.
TALENT SHORTAGE, WHOSE FAULT?
Posted by RAJENDRA ANEJA, DUBAI, UAE on Thursday 3 January 2008 at 14:27 UAE time
This refers to the survey, indicating that 90 per cent of the businesses in the Gulf region are unable to attract candidates from the international market. These businesses are finding it “a struggle” or “entirely impossible”, to source candidates from the international market.
If businesses in the Middle East are unable to attract good talent, it is a misfortune, of their own creation. The way many Gulf businesses are managed, they do not deserve, good quality professional staff. A study of the Gulf market shows:
a) Many companies do not value the people who work for them. People are just a raw material for these companies, irrespective of their professional qualifications and backgrounds.
b) Quite a few companies do not pay adequate attention to the welfare of their employees. There is negligible to nil time spent, on employees who work for them, (mostly expatriate workers).
c) Despite the rampant inflation in the Gulf Region, many businesses have not empathized with the hardships of the employees. A few companies have updated the compensation packages, but the general reaction has been silence, non-action, or behaving like the traditional ostrich and just pretending that there is problem.
d) The quality of management in some businesses in the Gulf, is best termed as “primitive”. Many business organizations in the Gulf are run on principles and practices, which were followed in developing countries like India and China, about 30 years ago.
e) Most of the Gulf companies are habituated to managing businesses in a protective, monopolistic economy. So, when free market, demand-supply equations commence in the talent market, they are floored.
Finally, most business organizations in the Gulf, employ expatriate workers from different countries and as in the past, it is assumed that the latter will remain silent and motionless. With economic conditions having improved in many supplier-countries, it will be very difficult to source talent in the future.
The writing on the wall is clear. The operating, remuneration systems in the Gulf business will have to be upgraded. Otherwise, the Gulf may become principally dependant on oil refining. The Gulf will have to kiss good-bye to the manufacturing, financial, marketing, research, etc., sectors, quite simply, because nobody will find it financially fulfilling or fun, to work in the Gulf.
Posted by RAJENDRA ANEJA, DUBAI, UAE on Thursday 3 January 2008 at 14:27 UAE time
This refers to the survey, indicating that 90 per cent of the businesses in the Gulf region are unable to attract candidates from the international market. These businesses are finding it “a struggle” or “entirely impossible”, to source candidates from the international market.
If businesses in the Middle East are unable to attract good talent, it is a misfortune, of their own creation. The way many Gulf businesses are managed, they do not deserve, good quality professional staff. A study of the Gulf market shows:
a) Many companies do not value the people who work for them. People are just a raw material for these companies, irrespective of their professional qualifications and backgrounds.
b) Quite a few companies do not pay adequate attention to the welfare of their employees. There is negligible to nil time spent, on employees who work for them, (mostly expatriate workers).
c) Despite the rampant inflation in the Gulf Region, many businesses have not empathized with the hardships of the employees. A few companies have updated the compensation packages, but the general reaction has been silence, non-action, or behaving like the traditional ostrich and just pretending that there is problem.
d) The quality of management in some businesses in the Gulf, is best termed as “primitive”. Many business organizations in the Gulf are run on principles and practices, which were followed in developing countries like India and China, about 30 years ago.
e) Most of the Gulf companies are habituated to managing businesses in a protective, monopolistic economy. So, when free market, demand-supply equations commence in the talent market, they are floored.
Finally, most business organizations in the Gulf, employ expatriate workers from different countries and as in the past, it is assumed that the latter will remain silent and motionless. With economic conditions having improved in many supplier-countries, it will be very difficult to source talent in the future.
The writing on the wall is clear. The operating, remuneration systems in the Gulf business will have to be upgraded. Otherwise, the Gulf may become principally dependant on oil refining. The Gulf will have to kiss good-bye to the manufacturing, financial, marketing, research, etc., sectors, quite simply, because nobody will find it financially fulfilling or fun, to work in the Gulf.
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