Initially, it was steel that caused concern, as rising prices ate away at profit margins on long-term, fixed-price contracts. Then came the cement shortages that threatened to bring work to a standstill in the region’s construction hotspots.
But the industry is now facing a challenge that is set to be dwarf the previous problems: a chronic skills shortage. A lack of experienced workers is hitting productivity on construction sites in Dubai and other booming construction markets, as contractors have been forced to recruit untried workers from new markets such as China just to keep going.
Last year, poor conditions in Dubai’s construction industry triggered the first serious industrial unrest in the emirate, with a strike by construction workers leading to a 20 per cent pay rise for workers.
This, combined with rising materials costs, has contributed to a 30 per cent hike in construction costs in Dubai in the past year. The trend is spreading across the region. The costs will quickly be passed on to clients, adding further fuel to the region’s inflation problem.
Governments, employers and workers need to find a way through the issue before it begins to put the brakes on the region’s development.