Should the GCC nations be looking beyond traditional borders to plug its widening skilled labour gap?
Jim Freeman, managing director of Freeman Consultants, examines whether the GCC should be looking beyond traditional borders to plug the skilled labour gap.
The skilled labour shortage is never far from industry headlines. What is driving it?
The skilled labour shortage is quite serious. In simple terms, the construction boom is the driving force. Labour companies in India, Pakistan, Bangladesh and Southeast Asia are continuing to churn out the workers, but they are also careful to keep a certain amount of skill at home because they have a growing construction boom there.
This leads to a situation where the remaining skilled labour is spread very thinly across the GCC countries.
Is any particular GCC country competing with the UAE for the skilled labour that is available?
Saudi Arabia is in a similar situation. In Saudi Arabia they are bringing huge projects online, which they are saving an awful lot of skilled labour for, in order to drive those projects over the coming years. In Qatar the situation is very similar.
The unfortunate part for the developers is that they are creating their own problems with regards to supply and demand. The more projects developers bring on line, it stands to reason that the worse the skilled labour shortage is going to get.
What other factors should be considered?
The skilled labour are now a lot smarter then they used to be. They move all around the GCC countries, or simply back home. This definitely exacerbates the situation.
With the restrictive labour practices in place, skilled labourers say, "I can go back to my home country because there is a boom there, I can do a year there and then come back to anywhere I choose in the Gulf because I have GCC experience." In such a case, a labourer will usually come back in at a higher salary than he was earning previously.
Have GCC countries taken cheap labour for granted in the past?
It is definitely fair to say that the GCC has been dependent for too long on cheap labour. Now that skilled labour is more intelligent as well, everybody is aware that he is in demand. It's no longer a case of countries wanting cheap labour. It has become a market of choice for the labour force.
Can a company do more to train its existing work force to fill the gap?
There is actually quite a lack of training facilities. Some international companies have set up training camps to try and improve the skill set of their workers. Other firms unfortunately just work on body numbers. Although this does contribute to massive growth, the firms in question are not getting the cream of the crop because they are not paying very well.
Which leads us to the minimum wage issue. Would it be a positive step?
It's a matter of incentivisation. For the companies which continue to pay a relatively low wage, the argument is that the wage is subsidised by three square meals a day plus accommodation plus transport and a uniform.
The unfortunate part is that sometimes that is not enough. But then how far do you go when you employ thousands of people? If you make their lifestyles too comfortable, you run of the risk of a substantial drop in productivity.
If GCC countries are forced to look beyond the traditional bases of the Indian sub-continent for labour, which nations should be considered?
It's very difficult. There is no real answer. The only other places you could look would be places like Cambodia and Laos. At present the UAE uses a certain amount of Thai labour and a certain amount of Vietnamese labour.
However, Vietnam is now picking up, so it's not that easy to attract its workforce to the GCC. Again, if labour is skilled it costs more, but if it is unskilled you are back in the same boat whereby you have got workers that you are putting in a labour camp, and hoping that you get a fair days work out of them.
Would a country like China, with a population in excess of a billion, hold potential?
In China there are a number of companies coming in and bringing their own labour.
Some major contractors employ their own Chinese labour. In the early days when Chinese labour came in there were a few problems. Some labourers had to pay people back in their own country for the privilege of getting a job.
They were told that their employer would make restitution for them upon arrival in their host country. Of course, a practice such as this is nothing to do with the employer.
So are we looking at a case of no quick solution?
It's certainly a problem that is not going to go away anytime soon, and something that the industry is going to have to live with. What it needs to be doing is trying to identify and train up more of the labour force that is has and trying to identify those who have a little bit of spark or willingness to learn another skill.
That means setting up trade schools and putting the more ambitious through their trade courses and incentivising them to up the medium.
"If you make their lifestyles too comfortable, you run of the risk of a substantial drop in PRODUCTIVITY." Was the term used during the interview really "PRODUCTIVITY"? If so, then this must be one of the most irresponsible, uneducated remarks I have read. How on earth could improving lifestyles or standard of living reduce productivity? I could not even see any logic. Did he mean productivity of profitability? I am having a million thoughts getting recruits from this kind of a recruiter if that is really what he meant.
I agree with the previous poster. That's what jumped out when I read the interview also. Did he really mean Productivity??? A good sleep and 3 square meals / day would make the workers LESS Productive??? Does he actually support the practice of treating labourers like they are in a concentration camp? Please clarify before I waste any more time refuting this ridiculous statement.
It is really sad that Mr Freeman thinks that by making the life of the overworked, underpaid and exploited labourers comfortable, it would affect productivity. I think what he meant was that it would affect his profitability margins. And would he care to explain what he means by saying that he hopes to get a fair day's work out of unskilled labourers. Anyone visiting construction sites in this part of the world can easily see that workers (skilled or unskilled) are an exploited lot.
I really think you should work a day in this heat and then tell us if improving the comfort levels would reduce your productivity. Are you promoting slave labour?????
Glad to see no mention of Africa as a source for the so called cheap labour and my advise is don't even look. They can never agree to work under the prevailing conditions and terms of payment. Once bitten, twice shy ! I was wondering why labourers are paid more in the western world yet the projects are in fact less ambitious than the ones in the GCC ? labour laws perhaps ?
I haven't come across many "Skilled Workers" in all the projects that i have been involved in - Recruiting from East Asian countries is not to get better skill levels. No, its because they are cheaper - No one considers these poor guys capabilities - so long as there is a good Middle east experienced RSA / Australian Construction manager with a team of supervisors who he has brought on HR can just about throw any "skin" at them. This level of competence or should I say this lack of competence also brings with it other problems - how do you communicate. What is their work behaviour - increased fire risk and people getting hurt or worse may be the real cost.
I think Mr. Freeman needs to be nominated for the Nobel Prize for his insightful comment. (I am being sarcastic!)
...will someone please teach him how to use a shovel & give him a REAL job pronto! Perhaps then he'll keep his penetrating insights to himself.