Currently, the construction industry is the largest employer by sector in Abu Dhabi, accounting for 29.5% of the employed population in the emirate in 2014 according to the Statistics Centre – Abu Dhabi (SCAD), up from 22% in 2013.
Rise In Wages
Total sector wages stood at Dh29bn ($7.9bn) in 2014, up from Dh27.6bn ($7.5bn) in 2013. Labour costs have been rising in recent years; salaries rose by 22.7% year-on-year in the third quarter of 2015 according to SCAD, building on substantial rises earlier in the year. “Labour costs increase rapidly as you move up into the echelons of skilled workers,” said David Stones, who has worked in Abu Dhabi for 25 years and is currently the contracts manager at local construction firm and water infrastructure specialist Abu Dhabi Maintenance and Construction.
The rise in wages may be an indication of stretched capacity in the industry. In October 2015 Reuters reported that backlogs of work on major projects in the country had created shortages of both labour and materials. While firms can bring in more workers from abroad to address such shortfalls, industry figures say that securing visas and work permits for foreign workers has become more difficult in recent years, and restrictive labour regulations were cited as the most problematic factor for doing business in the UAE as a whole in the World Economic Forum’s “2015-16 Global Competitiveness Report” – though the country nonetheless scored 5.1 out of a maximum of seven in the labour market efficiency category.
As in other parts of the Gulf region, labour conditions in Abu Dhabi generally and in the construction industry in particular have been subject to a significant degree of international scrutiny and criticism, in particular in relation to the treatment of and labour rights accorded to the migrant workers who dominate the industry. The authorities have been taking measures to address these pressing issues.
Most recently, in September 2015 the UAE federal government announced further reforms aimed at improving the situation of migrant workers. Under the planned changes, foreign workers registered with the Ministry of Labour (the reforms do not apply to those registered with the Ministry of Interior, who are largely domestic workers) will be able to end their employment contracts and change employers, provided they receive authorisation from the Ministry of Labour. Previously such workers’ job permits had been tied to their employment contracts with their current employer through a sponsorship system known as “kafala”.
The government of Abu Dhabi is also working to reform the sector and to tighten safety standards in particular. According to media reports in mid-2015, the Abu Dhabi government is drafting new regulations for construction firms operating in the emirate, which will include a system of penalty points applied to companies that break safety as well as environmental rules. Stones said that safety culture in the emirate had changed substantially over recent years. “Previously most safety-related decisions were made by people on-site but now the government is heavily involved,” he said, adding that this was also raising some labour costs. “Salaries for safety workers have been going up as there are an increasing number of safety-related rules and there currently aren’t enough employees with the necessary expertise to satisfy demand,” he told OBG.
Industry figures in Abu Dhabi say these reforms and other changes are helping to raise standards in the labour force. “The UAE has admirably raised workers’ conditions and is trying to move them towards international standards through increased regulations,” Wassim Merhebi, executive director at Arabian Construction Company, told OBG.