Future Middle East Workforce Faces Issues
By Helen Campbell
The Middle East project cargo market might be booming, but securing the necessary workforce of the future faces region-specific challenges. These include managing a transient workforce, adjusting to increased demand for local content in supply and support services amid enduring cultural norms that see locals conventionally flock to the public sector, and balancing the investment economics of training local people with when to bring in talent from overseas.
Middle East businesses also face the same human resources challenges that other regions do, including demand for flatter organizational structures, a drive for greater transparency, diversity and inclusion, and employees that are, understandably, seeking a work/life balance.
During their years of rapid growth, some of the nations of the Gulf Cooperation Council, or GCC, were a magnet for young professionals bored of the drizzle and grey skies of London, Rotterdam or Bremerhaven. Starting out in their bulk cargo logistics careers, looking for three or four years of life-changing experience and a tax-free salary in the sunshine, they would eagerly take up positions in Dubai, Abu Dhabi or Bahrain for a few years before returning to their home countries with new experience on their résumés and a tale to tell.
Overseas recruits at a slightly later life stage would comfortably opt to relocate their entire families from the U.S. or Europe, lured by housing and education allowances, committing to longer-term rents, school places and perhaps house sales back home, and stay for significantly longer periods. A number of the GCC economies have been built and sustained on this influx of experienced individuals from overseas to lend their professional skills in breakbulk and project cargo logistics, project management, and related port operations.
A Slower Pace
That boom — in the UAE at least — has lulled and project investment is less frenetic. While project cargo stakeholders continue to need global talent like every other sector, there is less of a frantic scramble to entice expatriates over to Dubai or Oman. Additionally, Middle East-based operators have grown wise to expatriate demands, and know they no longer have to offer what can now be viewed as extravagant packages. This means expats, especially older, more experienced individuals with slightly older children in key school stages, are harder to entice as the career benefits need to overcome the opposition to uprooting their families.
At the same time, some of the regional governments, mindful of the last oil price crash and the global drive for a lower carbon future, are pushing hard to diversify away from oil, to future-proof their workforces and to persuade young Emiratis, Kuwaitis and Omanis of the opportunities in the private sector. It’s an interesting time to be in human resources in the Middle East and no less so in project cargo recruitment.
Against this background, the Middle East project cargo sector faces much the same challenges in recruitment and retention as any sector in the Middle East. At a macro level, the workforce of the GCC is not sustained by the indigenous population, no doubt a symptom of the pace of investment that began two decades ago far outpacing availability of local staff. The UAE, for example, comprises just 13 percent locals and 87 percent expats, from all over the world. Cultural habits, convention and the prestige of a government career mean that local populations sway towards long-term employment with the public sector and are significantly harder to attract to the private sector.
This heavy reliance on overseas workers means the employment market has been of a transient nature for some time. A sector all about movement might make the project cargo sector seem the last sector to be concerned about a lack of permanence; after all, if an item under shipment from one side of the world to another stays in one place for an extended period of time, something has probably gone wrong with the logistics. Cargoes should, by definition, be on the move, but the same does not go for employees and a key characteristic of employment in a number of Middle East nations is “permanently temporary.”Retention Worries
Staff retention is a major concern for GCC employers, according to a report from international recruitment firm Hays. A high degree of reliance on overseas workers in the UAE, for example, means that while the country’s employers and employees have undoubtedly benefited from recruitment flexibility and swiftness of hire and start dates, that transience is a double-edged sword that makes it harder to plan and invest in training. UAE does not give citizenships to foreign nationals, even those who reside for 30 years. Consequently, with all overseas employees on short-term renewable contracts, the right to reside goes hand-in-hand with the job so, if the latter comes to an end and is not replaced, the right to reside also ends and the former employee must leave the country.
“All the expats in UAE are permanently temporary,” said Mandar Apte, project manager with Technip FMC in Abu Dhabi. “I have lived in UAE for 18 years, but my notice period is just one month. If we decided to part ways, I would have to leave the country if I did not find new employment. That would mean one month to close down all my activities, take my children out of school and go back to my home country.
“Contracts are permanently on a renewal program. People work in UAE for long durations, but without any confidence that they will be working for a longer duration. This induces a sort of semi-permanence to the jobs market and the work environment also.”
Moreover, the cost of living in the GCC has also risen with the introduction of value-added tax, or VAT, at a rate of 5 percent from Jan. 1, 2018, further reducing the financial benefits for those considering a move from elsewhere. This was another, sensible, move by GCC nations to reduce oil dependence and narrow the fiscal gaps that widened during periods of low oil prices.
“Last time, there were massive job losses,” Apte said. “More than 50 percent of the UAE workforce lost their job and many had to leave the country. It’s always in people’s minds.”
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End of ‘Glory Days’
Crucially, Middle East firms are a lot more knowledgeable about the “going rate” for an expat. While certain very specialized project cargo roles, and expert-level training roles in particular, are still more likely to have to be filled by an overseas recruit rather than locally or even regionally, firms in the Middle East know they don’t now have to offer the earth to entice someone to move from the U.S. or UK to fill a position. Jason Trenchfield, a consultant with AECOM, highlighted the related generational shift.
“For example, I was working with DP World 10 years ago and they would struggle to bring over a specialized training manager from, say, the UK. Now it is very different. There is more uncertainty in Europe and the UK, but the client is more knowledgeable about the market generally. People who came to the Middle East over 10 years ago have tended to stay; it’s very family-orientated in the ports environment, younger generations often follow the older generation into the same employer, there is the tax-free salary, the pensions and, of course, the weather … people in this industry spend a lot of time outside!
“So those who came over earlier are established, but others coming now find it harder and do encounter more of a brick wall in terms of their expectations. There is less project investment now, particularly in UAE and in cargo in general. Port development has lessened and the inflated salaries don’t exist anymore. The demand is coming to us, so we can pick and choose who we want. A lot of people from the UK or U.S. still expect the glory days over here.”
Age is a factor too. GCC nations collectively have one of the world’s youngest populations; 40 percent of the population are under 25. The young graduates and indigenous professionals of the Middle East are no less ambitious than their counterparts in the U.S. or Europe and substantial numbers seek extended study abroad. They do return to the Middle East in large proportions, but the tendency to shun the private sector in favor of the public sector generally prevails. There is a hope that younger graduates returning, having spread their wings and become less conventional, will be less likely to be automatically drawn to a government job than perhaps their older peers.Local Content Values
Planning for a more sustainable future, the UAE government has implemented its Vision 2021 program. One of its aims is to increase the percentage of UAE nationals in the private sector from a very low proportion to about 5 percent to 6 percent – this still-low aspirational target serving as clear evidence of the magnitude of the issue. There are signs of a tentative shift though, as “people under 30 do have more tendency to head towards to the private sector compared with those over 30,” Apte said. “Foreign education broadens the horizons, and also there is a finite number of jobs in government and the public sector and a large proportion of the UAE population is under 25. There are not enough jobs in the government and public sector to satisfy the young workforce so moving to the private sector is certainly becoming more of a reality.”
Suppliers and service providers bidding for contracts in the GCC project cargo sector will certainly start finding national content growing in importance. Abu Dhabi National Oil Co., or Adnoc, has taken the first step with its “in-country value,” or ICV, formula, which has been in place for little more than a year. The ICV requires all suppliers and service providers bidding on a contract to demonstrate their contribution to the UAE economy. The bidder with the highest ICV score will be asked to match the price of the cheapest bidder, moving towards a workforce and supply chain with increased national content.
Pecking Order
Hierarchies are also of high importance in much of the GCC. Organizational structures have started to flatten out in the UAE and the country has been a very effective testbed in investment terms for the rest of the countries in the GCC, which are beginning to show tentative signs of a shift.
“Flat structures typically eliminate all managers except executive level managers, so you can run a leaner operation and get more out of your staff, which increases productivity relative to the number of people you employ,” said Hisham Alkhaldi, chief support officer at Bahri in Riyadh, Saudi Arabia. “Companies are not running after experienced manpower, rather targeting young talent who can be an active asset for them at low cost. Under limited supervision, they are giving good results.”
Companies in the region also increasingly recognize the importance of a diverse and inclusive workplace in driving business growth and differentiation.
“There is strong momentum for championing a female workforce, as well as hiring and promoting women into critical and leadership roles,” Alkhaldi said. “Furthermore, building a trusted and transparent culture has also become a priority for businesses in the region.”
Whatever an individual’s gender or background and whatever the location, work/life balance has become a key requirement for the vast majority of job seekers, and particularly millennials who are highly sought after as the future of business in the region.
“Balanced employees tend to have greater levels of satisfaction and hence they are more productive at work,” Alkhaldi said. “Even though employees have a key role to play in ensuring work-life balance, organizations can encourage them to do so by providing a healthy and pleasant work environment. Companies must offer flexibility in work schedules, encourage vacations, provide wellness benefits and conduct employee engagement initiatives.”
The GCC nations are all looking to diversify and to build their economies on something other than the “black gold.” In the UAE for example, oil was at one point 60 percent of the economy. This dropped to about 30 percent in 2017 and the government has a target to bring it down to 20 percent by 2021. The sectors looking the most attractive for diversification and where the government is driving investment include manufacturing for sectors other than oil; travel and tourism; hospitality; financial services; and media and communications.
These do not instantly scream “large pieces of project cargo” of the sort typical in the oil, power and utilities sector, so the project cargo business serving the region will need to diversify as well if it is to maintain momentum as these economies shift gears.
Helen Campbell is a freelance journalist based in London who has specialized in energy, environment, sustainability and technology for more than 20 years.
Photo: Shutterstock
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