With minimum wage possibly making its debut appearance in the construction world, it has been reported that eventually, other industries will also have to comply. Facilities Management Middle East asks key industry professionals: what kind of impact could this have on the recruitment process?
What kind of impact could this have on the FM recruitment process?
Fast, is the word that sums up the rate at which building construction takes place in the Emirates.
Cheap labour, is the word that allows it to happen at such a pace.
There's no where else in the world that experiences the sheer volume of construction workers like Dubai does, and no where else in the world that can see this amount of construction taking place 24 hours a day, seven days a week.
But these workers are paid peanuts, apparently a mere 25 dirhams ($6.81) a day to survive.
Minimum wage laws are applicable in over 90% of all countries. By international standards, if authorities in the UAE were to increase the daily rate to 30 dirhams, this would still be well below most countries daily rate.
The UAE Ministry of Labour is currently working on the possibility of introducing a minimum wage for construction workers in the Emirates. This will be submitted to the council of ministers for approval and if approved could be implemented this year. There is also a high possibility that it will be rolled out to others sectors.
So what does this mean for the FM recruitment process?
People employed in most soft service jobs, cleaning for example, will no doubt see an increase in their wage but the amount of this increase is yet to be announced.
If the new set wage is comparable or higher than in other parts of the world, Dubai could well attract more lower skilled people and experience an increase in job interest.
However, with the recruitment pools already starting to dry up and employment opportunities increasing in other countries, authorities run the risk of causing extra recruitment problems for soft service employment if the wage is not attractive enough.
If companies are using an employment agency, there is a strong possibility that recruitment fees will increase. This additional charge could well force companies to source their own staff, taking business away from FM recruitment agencies.
An increase in wages will inevitably have an effect on the value of the service contract if it is outsourced. FM companies will be required to pay certain employees more and will no doubt want this extra expense covered by the client.
On the positive side, with FM now starting to attract more coverage it is hoped that the introduction of a minimum wage would make all staff feel like they are equal. It could help alleviate some of the hierarchical tension and have an overall positive effect on staff moral.
Name: Danielle Le Faucheur
Job title: Senior consultant
Responsible for: Facilities management
Company: Macdonald and Company
Based in: Dubai
Background: 2.5 years recruitment experience in the Middle East
Dubai has grown at a rapid rate over the past 15 years and this rapid expansion has meant that one area of the industry would have to suffer and in the case of Dubai this has been the Labour market. This has been a debate for a few years now with regard to labour staff being paid extremely low wages which in some cases can be deemed against international human rights. The main reason for these poor salary levels is due to having to make one area of the construction industry cost effective and the labour market being the easiest way to do this.
From an facilities management perspective, the fact that the minimum wage is being put into action now is great timing as FM in Dubai is just becoming buoyant within the property market.
Therefore, facilities management businesses will be able to develop a strong structure from labour up to management staff. A minimum wage brings standardization within businesses thus allowing management staff to control their lower end staff more effectively and to also guarantee that they employ good quality staff.
It will also sustain the development of FM businesses as staff will not be enticed to move from company to company on the basis of a higher wage as it will be the same across the board.
Within FM, the staff that will be affected by this are the individuals that look after the aesthetics of a property thus it is important that the salary offered to these individuals meets their expectations after working in other international locations. This will also ensure that the Dubai market attracts the most qualified staff as the salary levels will be comparable to other international markets.
Overall, the new minimum wage law will not have any impact upon expatriate senior facilities management staff but will improve human rights for the lower end work force. It is important that staff at all levels are treated fairly so that the facilities management process will run smoothly in its entirety.
Name: Joe Anthony
Job title: Facilities Manager
Responsible for: Managing the Co. real state portfolio
Company: Gulf Real Estate Consortium (GRESCO)
Based in: Dubai
Background: Power Engineering Technology
The impact that a minimum wage would have on the FM recruitment process would vary depending on the two main sub sectors; technical services sector and soft services sector. This would be attributed by the disparities in compensation packages between the two sub sectors.
Most of the players in the technical sector already have attractive remuneration packages for employees like field technicians, office staff and assistants, who make more than the proposed minimum wage; hence the introduction of a minimum wage would have a relatively low impact in this sub sector.
The situation is the opposite in the soft services sector (cleaning & security companies) where employees receive lower packages as compared their counterparts in the technical services sector. This part of the FM industry is obliged to raise their remuneration packages to commensurate levels matching the latest wage rise, hence raising the inevitable question of how the raise will affect the market prices of related services, in view of overhead costs that would accrue as a result of the increased wages.
The cost of providing the services would definitely skyrocket, affecting both service providers and the recipients of these services. In this situation, the impact would be huge.
Looking at the positive side of it, establishment of a minimum wage would boost the morale of the concerned employees; their attitude towards service delivery would change for the better and ultimately better quality of service. That would be the eventual end result of a vibrant workforce that would deliver a vibrant service industry.
Overall every company will have to prepare for the proposed changes, in terms preparing their clients or customers well in advance, by any means informing them prior to any future price increase, and most importantly devising ways to ensure added value services.
Name: Ivan Brinkley CEng MCIBSE
Job title: Operations Director
Responsible for: Delivery of Integrated FM Services
Company: Emrill Services
Based in: Dubai Festival City
Background: BEng(Hons) in Building Services & PgCert in Business Administration with over 20 years experience as a Senior Manager in delivery of both Hotel Technical Services and Facilities Management Services.
What has a direct impact on the FM recruitment process is matching supply to demand.
We have a growing critical demand. What is impacting on recruitment is the dwindling supply pool and the increased competition for scarce resources. Will the minimum wage help swell this available resource pool? I am very doubtful as any increase in wage rates will be applied across the sector and this will not address the scarcity of the resources.
The recruitment process is already at critical point. The primary job categories of Cleaner, Security Guard and Maintenance Technician are a rare commodity not withstanding pay rates.
If we look at the Cleaner - his/her potential salary band, dependent on experience and language skills, ranges from construction sector related pay at 400 to 600 AED/month basic through the various FM service level sector companies at 600 to 800 AED/month basic up to the ever increasing demands of the hotel sector at 800 to 1,000 AED/month (excluding Services Charge of +300 AED/month).
The true impact of the minimum wage is therefore limited to those FM service companies recruiting in at construction level grades and then attempting to maximize by selling into the service level or hotel level sectors, which does nothing for the credibility of the FM business.
With FMS clients becoming more demanding as to the quality and experience of delivery staff, service providers are having to tap into the high end hotel sector pool to meet their clients needs - this, in reality, is putting a direct strain on the cost delivery models and associated margins. As is the norm clients want the quality while optimizing on their cost.
FM Service delivery remains a volumetric people business and as forecast by many in the know it will be a dominant commercial sector in the future. For some a minimum wage may sour the current taste of healthy margins but at the professional FM Service level little impact should be felt.
Client expectations and the issues of limited supply are the key challenges to effective recruitment. Ethically the minimum wage should only benefit the potential employee.
Name: Dan Davies
Job title: Facilities manager
Based in: Dubai
Firstly, I believe that the introduction of the minimum wage is a positive step for improving standards within the market place and also as a moral obligation. Initially, many customers will be unhappy with the sudden increase in wages as this will have a direct effect on both capital and operational projects. Those who have not factored in projected increases or have not written them into their service contracts could suffer. In many cases I can see standards dropping and/or contractors walking away from agreements as their profits will be cut. When agreeing contracts, there should always be a clause that any legislative measures brought in to control wage levels are passed on to the customer. In the UK, minimum wage increases have had major impact on the cleaning and security industry in particular and many companies and customers are hit by not factoring this into their budgets.
This is where knowledge of the industry, forward thinking by the FM provider and good a relationship with the customer are vital when preparing budgets for possible increases. However, where budgets are capped then manning levels may have to be cut and therefore standards will suffer.
Long term minimum wages should improve the quality of work and standards through improving the welfare of a work force. A more content workforce means higher productivity although businesses will still have to pay a premium for higher quality personnel. Overall, it helps businesses by ensuring companies will be able to compete on the basis of quality of the goods and services they provide and not on low prices based predominantly on low rates of pay.