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UAE May Face Shortage of Skilled Workers

The recent job cuts by companies may take its toll on the future of UAE’s workforce both in public and private organisations which rely heavily on expatriate labour, warned management expert Zed Ayesh, managing director of Flagship Consultancy.

“Mobility of skilled professionals remains a challenge to UAE businesses,” said Ayesh, adding companies that gave up their best talents could lose their competitive edge to companies that opted to keep their skilled recruits amid the downturn.

Before the worldwide economic slump, labour migration gained momentum in recent years with hordes of both skilled and unskilled workers wanting to tap opportunities in the booming UAE economy.

UAE Ministry of Labour figures show that expatriate labour in the country makes up more than 90 per cent of the private sector’s labour force with more than 3.1 million employed by 260,000 establishments or an average of 12 workers per company.

A recent Bayt.com and YouGov SIRAJ study noted that the average monthly salary for expatriates in the UAE is Dh10,120 or about $2,750, and they stay for an average of 4.7 years.

Based on these figures, the cost of turnover per worker is about Dh15,180 annually. At a turnover rate of 21 per cent or 657,930 workers, this will cost Dh9.9 billion or $2.7 billion yearly. For an average business of 12 workers, the yearly turnover cost will amount to Dh38,250 or $10.400.

“Costs of turnover can easily surpass 150 per cent of the employee compensation figure and would be much higher for managers and highly-paid executives.”

Ayesh cautioned companies against acting hastily by trimming their workforce which in the end, could result to even bigger headaches.

“Regional companies are losing significant revenue opportunities because the majority of the departing professionals own unique expertise and knowledge”, and “they are being head-hunted by direct competitors to their incumbent companies.”

But some economists like Simon Williams of HSBC in Dubai believe skilled expatriates will be attracted to going back to UAE when jobs are available again.

“The UAE is open to immigration, the labour force will be there again when there is demand again. Skilled labour will return when there are opportunities that will open up again.”

“There won’t be a big problem of finding skilled labour. Unemployment is cyclical. In times of strong growth, the number of people employed increases, and consequently, when the economy weakens, demand for their skills also diminish.”

Ayesh maintained that aside from separation processes like payment of severance package and end-of-service benefits, companies will suffer productivity losses.

Companies will eventually spend for recruitment of new talent to replace those handed out pink slips.

A company’s productivity is also stalled as new personnel are trained, thus resulting in slower customer service, lower production and inability to expand business.

The non-monetary costs include a strained workforce wherein newly-trained staff will be under greater pressure to deliver and a resentful current staff who feel unappreciated.

· rocel@khaleejtimes.com