By Hugo Berger
As labour shortages intensify, salaries across the Gulf's construction industry continue to rise.
Hugo Berger talks with with recruitment professionals to assess the situation.
As the GCC steps up its bid to be the world leader in scale and speed of construction, the challenge to find sufficient and suitably trained personnel becomes more acute.
People need to opens their minds to people from other regions in the world, such as Spain, Portugal or Eastern Europe.
There are only a finite number of skilled professionals in the world, and only a percentage of these would consider moving to the region.
So inevitably firms have to offer greater wages as an incentive to lure them to the region.
Recent statistics reveal that in Dubai, the average wage of a higher level construction worker rose about 30% last year - more than three times the national rate of inflation.
And despite these vast salaries, many companies complain of severe labour shortages.
However, recruitment companies in Dubai say with careful planning and research, the deficit can be avoided.
One of the companies which is taking the initiative in dealing with labour shortages is Duneden, a recruitment company which specialises in construction and engineering.
According to Gregor Black, managing director of the company, it was the urgency of finishing jobs on time which was causing the huge hike in wages.
He says three years ago a project manager with eight to 10 years experience was earning US $9,500 (AED35,000) a month; whereas now they're getting almost $15,000.
He said senior development managers were looking at a rise from about $16,000 to more than $27,000.
And Simon Hobart, managing director, Millennium Solutions, says he had heard of cases of senior project managers getting rises from $15,000 to $23,000 a month.
Black says the huge increases were having an effect on Dubai's real estate sector as a whole.
"That has to come out of the pot and it will come out of the end product. This is one of the reasons why property prices are going through the roof," he says.
"It's just desperation which is pushing wages up. There are all these huge developments rolling off the design board and they need to be done because there are penalty clauses."
"If it means facing a huge bill for not finishing a project on time, or paying someone US$2,700 to $4,000 a month above market rate, they're always going to do this."
"But this has a very negative effect on market rates and blows them out of all proportion."
In the past, most project managers, architects and quantity surveyors would have come from the UK, Western Europe, Australia or South Africa. But with inflated wage demands, many contractors and recruiters began looking to the less traditional markets of India and the Far East.
However, these areas are now experiencing their own construction boom, leading to many workers either packing their bags and going home, or not leaving in the first place.
Black believes it was now time for companies in the GCC to look to further unexplored areas.
"India is booming right now, and there's a lot going on in South Africa. There's also the Olympic Games project in Beijing, so there's a huge international demand for construction people," he says.
"What's happening in the UAE is probably the first time there has been development on this scale ever in the world."
"It really is mind-blowing what's going on. Whether people will have experience of this scale of building work is questionable."
"In Asia, there has been development on a similar scale, but this is really setting a new benchmark."
"What we are looking for is people with similar project experience, if not exactly the same."
"We are breaking new barriers, but people who have experience in the industry can transfer their skills."
Davina Cooper, managing partner, Duneden, also believes that there were still untapped pools of labour in the world which the UAE could dip into.
"People need to open their minds to people from other regions in the world, such as Spain, Portugal or Eastern Europe, not just the traditional countries like the UK or Australia," she says.
"There are qualified people, who with the right training and development, can then go on to manage the type of projects under construction here elsewhere in the world."
"There are only a finite number of people with a certain amount of experience, and at some point we are going to run out of these guys. But new methods need to be explored."
Cooper says that by only employing a handful of trusted recruitment agencies, there would be better relationships, which would lead to better results.
She says: "There is a huge shortage of qualified people in Dubai, but, that said, some companies don't do a lot to help themselves when it comes to finding staff."
"Some companies are still doing it the old-fashioned way by putting out their own adverts. But I don't think a construction company or a project management company really has the time to do their own recruitment."
"And some companies take the approach where they use a lot of recruitment companies and hope a bigger resource is going to get a result."
"They're getting their CVs from different sources but it's hard to manage them."
"It can lead to delays between first and second interviews and actually offering the job, and that's when you lose people."
Yet, it has also been suggested that the negative publicity about Dubai which has been generated around the world was beginning to deter potential employees.
Cooper says: "There are other things that put people off coming here. You hear a lot about how the workers are treated, many of the schools are full, the traffic is really bad, plus the rent has increased.
"People have to take these things into consideration when moving here."
But, on the flipside, they're being offered tax-free earnings, there's a fantastic lifestyle and there's almost year-round sunshine.
Hobart agrees that there was still a lot of appeal for construction industry workers to move to Dubai.
"With some clients we are finding them 30-35 people of all levels a month," he says. "Dubai is still an easy place to sell to people as the size of the projects is a big enough draw."
"But it's not just the money. If you work on the one of the mega-projects for a couple of years and then you put that on your CV, it will look amazing."
But the high salaries were still the major reason many people chose to come to work in Dubai, he adds.
"If you are talking about project managers from the UK earning about $300,000 a year tax-free, back home with taxes they would be earning almost $500,000 a year," he says.
"We're talking about blue chip CEO salaries here. It's good business for us if we can place someone on those kind of figures."
"But we also have a duty towards the client to say to them ‘you don't need to pay that kind of money' even though they have the budget for it."
"The question is: where does it stop?"
Black adds: "The companies which don't take a more measured approach are usually the ones who are screaming that there's a labour shortage."
"There is, but it depends on how you deal with this. If you build a good relationship with a recruitment company which focuses all its resources on you, you should hopefully be able to overcome the shortages."
Yet even when a company has attracted the right employee, the transient nature of Dubai's workforce was still leading to people being poached by rival companies.
Black believes this could also be reduced by a good recruitment agency.
"There is poaching going on, but we like to think if everything is done right at the beginning - they start with the right company and are on the right salary, then it's unlikely they are going to be poached," he says.
"Often people get poached because they've been mis-sold the situation by the company. "And then they're in an awful situation where they've got their visa but they can't move on."
"If both sides have done their homework, such as flying people out to meet them and build a rapport, it could be avoided."
So as new mega-projects are launched almost every week, the demand for labour will continue to grow.
And possibly issues such as the spiraling cost of living are beginning to affect foreign workers desire to move to the region.
Yet, firms in Dubai insist that by hiring a reputable recruitment company which finds suitable employees and by offering workers good packages, vacant positions can be filled.