Dealing with skills shortages

This week’s revelation that senior salaries have gone up by 15% over the last year shouldn’t really come as a surprise. The construction sector is booming, inflation is on the rise and there is intense global competition for the most skilled people

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By  David Ingham Published  December 9, 2006

|~||~||~|This week’s revelation that senior salaries have gone up by 15% over the last year shouldn’t really come as a surprise. The construction sector is booming, inflation is on the rise and there is intense global competition for the most skilled people. Right now, there is little to do but absorb the cost somewhere and get on with the job. But given that the Gulf’s construction boom is likely to continue for decades, sensible solutions to the skills shortage are needed. One approach is for governments to invest heavily in the development of indigenous talent, but it will take at least a generation for fresh graduates with specific skillsets to come through the pipeline. Even if a native skills base can be developed, there is still the question of how to make the industry more attractive to national graduates. Nationals who call Gulf countries home are understandably more reluctant than cash-driven expatriates to tolerate the long hours and high stress levels that characterise the construction industry. Another tricky question is who should absorb the cost of higher senior salaries. Does the contractor or the developer take the hit? The contractor, for example, can attempt to pass on rising salary costs to developers in the form of higher quotations for jobs. Developers would then have to charge customers more for the finished property or accept lower profit margins. In reality, this is unlikely to happen because of intense competition for business and the price sensitivity of the regional market. Instead of raising prices, contractors are more likely to absorb higher senior salaries by procuring cheaper products or even cutting back on labourer benefits. Neither course of action is desirable, but could be inevitable in the prevailing market climate. The unfortunate truth is that there is no easy solution to the skills crisis. Until the required skillsets become more readily available locally, or developers are prepared to pay higher prices, contractors may have to use unpalatable means to absorb higher salaries.||**||

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