Amnesty leaves labour shortage

Mass exodus of over 200,000 illegal workers from UAE may cause ripple of problems in construction industry.

An estimated 200,000 construction workers made use of the amnesty, which has left a shortage. (Valeriano Handumon/ITP Images)
An estimated 200,000 construction workers made use of the amnesty, which has left a shortage. (Valeriano Handumon/ITP Images)

The mass exodus of over 200,000 illegal construction workers from the UAE may cause a ripple of problems in the industry, including delays in ongoing projects, scepticism among contractors on taking on new projects, inflated salaries and rising project costs.

Speaking to Construction Week, Aju S, HSE manager, Civilco, said: "The smaller contracting companies will be most affected as they are the ones that usually hire illegal workers.I suspect there will be a rise in salaries for workers since there is a shortage now. Project costs will go up now because the rise in salaries will be reflected in the tender when a price for the construction of a project is quoted."

He said that Civilco has already hired an additional 800 workers from Bangladesh, Pakistan and India in a pre-emptive move to tackle the shortage.

Statistics from the Ministry of Interior revealed that nearly 285,000 illegal workers, 70% of whom worked in the construction sector, had taken advantage of the three-month amnesty, and this number is expected to rise with the scheme being extended until November 2007.

"The construction industry is facing a massive shortage of workers at the moment," said Sana Kapadia, equity analyst at investment bank, EFG Hermes, Dubai.

"The short-term effects will result in projects getting delayed due to a lack of workers to physically do the work on site, while the long-term effects could be a rise in workers' salaries in order to encourage new staff to come over to Dubai, or to retain existing staff from going anywhere else.

"This could also see a tiny slow-down in the construction industry with contractors being unable to take on new projects until they manage to hire more workers."

The amnesty is being viewed as a step towards eliminating the exploitation of workers and improving their conditions with the shortage of labour acting as a catalyst for better market regulation.

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