Gulf projects boom: A $2 trillion trade triangle

16 March 2008
How to humanely manage the annual arrival and departure of 4 million construction workers?

A new triangular trade is developing between the region, the construction industry and the countries expected to supply at least four million extra workers, which the $2 trillion Gulf projects boom will soon need each and every year.

If the triangle works, the GCC will get iconic, economic and sustainable cities, construction service suppliers will earn up to $100bn over a 20-year period and some of the world’s poorest nations will benefit from a generation of workers’ remittances worth at least $300bn.

This is more than a business opportunity. It is a development process vital to global prosperity, since the projects involved include the oil and gas oil export capacity needed to cap energy prices.

But it could go wrong.

If the Gulf project boom derails, the region will be left with ugly, incomplete and unsustainable buildings that damage rather than lift the economy. The construction industry could be debilitated by disputes, not enriched. And the sums being remitted by millions of migrant construction workers could be misused by criminals and extremists.

The rise of Columbia’s FARC guerilla movement is partly due to the fact that it controls cocaine production. Its activities threaten the stability of several Latin American states. In the wrong hands, Gulf project money would be similarly lethal to some Asian countries.

There is an echo of an earlier triangular trade - the slave trade which connected West Africa, north and south America and Europe. Historians argue that Africa has never recovered, and that the politics of the US and parts of Latin America are still scarred by the racial divisions they were bequeathed by slavery.

Potential security risk

About 15 million people were affected by the Atlantic slave trade over four centuries. This figure will be overshadowed in no more than two decades by the numbers expected to travel to the Gulf as a result of its project boom. More than four million people, mainly from Asian economies, are now working in the region’s construction industry. This figure is forecast to double in as little as five years.

Since the first oil boom of 1973-74, up to 20 million have worked in the Gulf and returned home. At least that many people will participate in GCC construction alone by 2030. It could be history’s greatest ever cross-border movement of people seeking jobs.

Government and business are beginning to recognise the scale of the GCC construction triangle, but are yet to devise a coherent response to its largest implication: how to humanely manage the annual arrival and departure of a workforce that will be equal to the adult male population of Sweden.

At present, most people hired to work in GCC construction are recruited through labour companies whose practices often fall short of acceptable standards. One of their most persistent abuses is to demand, in advance, up to two-thirds of what a migrant worker expects to earn in their entire Gulf assignment.

The established system of construction labour recruitment also fails to deliver value to the Gulf construction industry. Those earning the least in their home countries are the ones prepared to pay the most for a job. The system is biased, as a result, towards hiring too many people - and far too many with low skill levels.

There is a wider danger. Millions of discontented workers with no stake in the Gulf constitute an unacceptable potential security risk.

Some of the Gulf’s largest developers have declared war against bad labour practices.

Labour-saving technology

Dubai’s Nakheel is building workers’ accommodation for 60,000 people and has announced that companies failing to adhere to stringent employment standards won’t get contracts.

It also believes that the productivity of construction workers could be doubled through better management and the use of labour-saving technology.

Abu Dhabi has started erecting hundreds of thousands of homes for migrant workers. Similar initiatives are under way in other GCC states.

But a larger programme of action is necessary to deal with the wave of humanity heading for the Gulf.

The construction industry needs a labour supply system that selects and prepares construction workers for employment in the region, trains them while they are there and returns them smoothly to their home countries once their work is done.

It will require the involvement of all stakeholders in GCC construction. It will take time, money and vision.

But there may be no alternative if the abuses that shame the industry are to be eliminated, and the GCC construction triangle is to fulfill its potential to benefit the region and enrich the world.

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