Sunday, April 02, 2006

Construction companies struggle to entice Indian workers to UAE :: TMCnet

Our hawk-eyed informant, onebigconstructionsite (samuraisam), IMs us this story:
Dubai: Contracting companies are increasingly finding Indian workers turning down construction job offers because salaries here are too low while wages in India are rising.

One of the companies' officials and many labour agents have said it is increasingly difficult to convince Indian professionals and labourers to work in the UAE, because salaries here are stagnant against rising inflation, while the Indian economy is booming.
. . .
Rashid Kamaal, manager of Asia-Gulf Recruitment Services, said the UAE and India were experiencing a construction boom, but people were often offered higher salaries in India.

He said even if salaries were less in India, many agents demanded workers pay thousands in transaction costs, effectively making their salaries less, with the added burden of separation from family.

Kamaal warned salaries had to increase and workers had to be treated better.

"Otherwise I fear we'll have a true labour shortage."
. . .
Some labour agents said there was not a shortage of Indian workers, but an increasing refusal to pay high transaction fees to unscrupulous agents.

"Agents have to charge because labour permit fees are high. Companies pressure us to find the cheapest worker, willing to take the least salary and pay the most to come here," one agent said.

While he said many workers were choosing to "live off bread and onions in their homeland than come here and work one year for free," many others were still willing to be exploited.
That's a very accurate description of current labor market conditions here in the Emirates. There may be a construction boom going on, but given the UAE's relatively small size, wages are always going to driven by what the expat laborer can get back home. The number employed does not affect the going wage; you can hire as much as you want at the going wage. But the going wage is not frozen. If wages back home rise that means UAE wages have to rise an equal amount in order to be attractive. If the worker's cost of living in the UAE rises relative to COL back home that also drives up the wage necessary to attract the worker to come to the UAE.

The UAE has also hiked transaction fees for bringing in expat workers. The economics says it does not matter who you make responsible for paying those fees, but if the arrangement is that the worker pays the fees then the worker will require the firm to pay a corresponding increase in the wage.

What if the firms try to hold the line on wages? If they try to do so they will not be able to hire the numbers they seek, or they will fill their openings with less qualified persons. Or you can reward recruiters more, driving them to comb more remote areas. Or vacancies will go unfilled.

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