Construction Industry in Dubai Hardest hit in GCC

The past 12 months will not be remembered by the business world as being particularly pleasant following the worst global downturn in 80 years with hundreds of thousands of jobs being lost.

In the United States in particular job losses have been a key factor to an $800 billion government rescue package to kick-start the economy as the car industry founders with all three major manufacturers, Chrysler, General Motors and Ford feeling the pinch.

Across Europe and in Japan and China the problem is also acute with some Chinese factories closing, leaving tens of thousands jobless and having to return to their villages.

In the Middle East the situation has not been quite so bad but the construction and realty sectors have been hit hard in Dubai with some companies having multi-million dollar contracts cancelled and staff being sacked.

Hiring and Firing Survey

A recent survey from management and recruitment specialists, Antal International, on hiring and firing says that companies laying people off in the UAE has increased in the past four months by 10 per cent.

“Although the Gulf may no longer be in the ‘boom’ market of recent years hiring levels for professionals and manager are still relatively healthy and have only experienced a fairly minor drop from 56 per cent at the beginning of 2009 to 47 per cent now,” says Nizar Lalani, who runs Antal’s operations in the UAE.

“Innovative measures such as the fact that expatriates no longer immediately lose their visas along with their job have certainly helped here. However, firing levels have begun to rise from 11 per cent in our last report to 21 per cent now.”

UAE Sheds Less Staff Than Global Average

The percentage of organisations in the UAE expecting to shed staff in the next three months is also substantially lower than the worldwide average off 35 per cent, suggesting that the jobs market is at least beginning to level out.

Antal interviewed HR managers from 4,217 companies, professional partnerships and financial institutions across 32 countries.

“Things are levelling out now but generally employers are deferring hiring until after the summer months,” adds Lalani.

“What is happening now is that companies are not downsizing but right-sizing.

“The real estate and construction sectors have been the worst affected in the past quarter, especially in Dubai.”

Current hiring across the globe was down from 54 per cent of respondents at the beginning of the year to 47 per cent now.

However, the percentage of organisations intending to hire in the coming quarter had actually risen from 43 per cent to 44 per cent.

In the UAE 47 per cent of businesses currently recruiting and 50 per cent expected to recruit in the coming quarter and 21 per cent were in the process of reducing headcount and only 14 per cent expected to do so over the next three months.

High Levels of Recruiting in Egypt

Elsewhere in the region the employment situation was variable with 51 per cent of businesses were currently recruiting in Egypt and 65 per cent expected to in the coming quarter.

“Whilst the percentage of organisations hiring in the 32 countries surveyed has gone down, it has not plummeted in the way that the economic statistics, many pundits and the ever-cheerful IMF might have led us to believe,” says Antal’s global CEO, Tony Goodwin.

“At the same time the percentage of organisations expecting to hire managers or professionals in the coming quarter has actually risen, albeit by a very modest one per cent.

“The period of panic and unilluminated gloom does finally seem to be behind us. Recovery may still be a good way off, but it could be that we are now better prepared to pave the way to it than we have been for quite some time.”

In the construction industry many companies have been letting staff go as well as redistributing staff from Dubai to other GCC countries.

Construction Industry Affected by Low Consumer Confidence

David Yaw, regional director for the Middle East for infrastructure developers Halcrow, says that external forces and a lack of consumer confidence had been a double blow for Dubai.

“In all GCC states construction is a key contributor to GDP and is an important part of the economy,” he adds.

“If there is an external economic shock the construction sector is going to suffer like any other sector.

“But this is where they differ: construction in Dubai has been largely driven by speculative residential development and in part the sales off plan so as soon as the external shock comes and you get consumer confidence waning you have a double whammy.”

Yaw believes this is why there has been a slowdown in the construction sector more so in Dubai than other cities and why ambitious projects such as the $11 bilion Arabian Canal have been put on hold.

“It is less evident in Abu Dhabi and Qatar and other GCC states and from Halcrow’s perspective our core business is in infrastructure and the property sector accounts for only 11 per cent of our 2008 turnover in the Middle East.

“That doesn’t mean we haven’t been affected but we have had limited redundancies. But do I think there will be more in the next quarter? I cannot count it out.”

But Yaw also says that Halcrow, which recruited 50 staff in the Middle East last year, is still willing to recruit talented individuals.

“We are always on the lookout for good people and may have to reassign some staff to other more buoyant areas.”

Halcrow is current projects include, Business Bay, Dubai, Yas Island in Abu Dhabi, the Lusail development in Doha and the Qatar Bahrain Causeway.

The company is currently bidding for the Abu Dhabi Metro contract.