Saturday, January 19, 2008

Skills shortage cuts across sectors

01/18/2008 11:28 PM By Shakir Husain, Staff Reporter

Dubai: Finding skilled people to work in key industries in the Gulf has become a daunting task due to high demand for the talent needed to support the region's rapid economic expansion.
The problem is compounded by a growing skill shortage in countries like India that have traditionally been important sources of manpower for the Gulf before the current boom.
With diversification being the order of the day across the region, hundreds of billions of dollars are being invested in the manufacturing, infrastructure, tourism, healthcare, education and financial sectors.
There are so many projects underway that even large conglomerates with huge resources at their disposal feel that they cannot accept every contract offered.
Take an example. India's heavy engineering and construction group Larsen & Toubro Limited (L&T), which operates in Oman, Qatar, Saudi Arabia and the UAE, says getting engineers has become a problem.
The company estimates that 20 per cent of its projected $10 billion revenues in 2011 will come from the Gulf.
"More is possible, but we do not have resources. The issue is skilled manpower: talented people who can deliver. Money is not a problem, for a change. Financial resources are aplenty, but both human resources and equipment are a problem," L&T chairman and managing director A.M. Naik told Gulf News. No one could have failed to notice that there has been huge growth in construction and infrastructure work across the region in the last few years.
Project value
Middle East Economic Digest estimates the value of projects in the GCC last year was $1.5 trillion, a 50 per cent rise over 2006.
With oil prices at record levels and global energy demand rising, countries like the UAE, Saudi Arabia, Kuwait and Qatar have embarked on large projects to raise oil and gas production and develop the petrochemicals sector. They all need engineers in critical areas, but there is a shortage of such people globally.
Indeed, the gap between supply and demand will become even more acute as half of the current workforce is likely to retire within the next 10 years, a study on the oil and gas industry by consultancy Booz Allen Hamilton found.
"It takes up to three years for staff to develop basic industry operating competence, and up to 10 years plus for many professional disciplines. Therefore, the gap is easily noticeable," said Raed Kombargi of Booz Allen Hamilton.
The study found that about 50 per cent of professional staff in the industry is between 40 and 50 years old, and barely 15 per cent are junior recruits.
With competition growing for skilled people, companies are paying more to hire and retain staff.
In the oil and gas industry, the salary of a geologist with 10 years' experience increased more than 25 per cent between 2003 and 2006. But salaries for oil drilling rig jobs increased by 60 per cent during the same period. Increasingly, companies are persuading their retiring staff to stay on, with offers of huge cash and other incentives.
"Companies have increased the retirement age," said L&T's Naik, whose predecessor agreed not to leave the company after reaching that point.
"With an economic boom in so many places, everyone has expanded capacity," he said.
L&T, which has a huge power plant business in India and can handle nuclear power projects, has ruled out taking up similar projects in the Gulf because its resources are fully deployed in India.
In India itself, which produces half a million engineers a year at various levels, the shortage of skills is becoming a headache for businesses because a large number of graduates go for higher studies or are hired by foreign countries, including the Gulf.
"What is available at the end of the day for employment in India is 100,000. The rest are gone. With that, we have to manage eight to nine per cent [GDP] growth per year," Naik said of India's problem..

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