Dubai: Tariq Chauhan is facing a new type of challenge as he expands his company’s business empire across the Gulf region.
As group chief executive officer of Emcor Facilities Services (EFS), one of the Gulf’s biggest facilities management companies, he faces the daunting challenge of having to increase the number of local employees on its payroll.
“I strongly advocate the idea of increased nationalisation — be it Emiratisation, Saudisation or Omanisation,” he says. “It is the right step and should be part of every company’s business agenda. However, there are daunting challenges — in mainly getting the right human resources – with the matching skill-set that suits the industry requirements.”
Even though the GCC region is blessed with oil resources and wealth, paradoxically it also suffers from a high level of unemployment, mainly due to disconnect between skill sets and market needs, said a latest report by Kuwait Financial Centre.
Due to these most young Gulf nationals struggle to get employment in the private sector.
“The GCC countries have realised this gap and have effected reforms and established various governing bodies to improve overall education structure,” the report says.
Chauhan’s company, which has an order backlog of Dh1.5 billion from 100 clients spread across 350 projects, employs more than 9,000 people, including 3,000 in the UAE. The company has a presence in 16 countries, including most of the GCC countries, Egypt, Lebanon and India.
One of the key problems in pursuit of nationalisation in facilities management is the technical workforce that includes mechanical, electrical and plumbing (MEP), cleaning, maintenance and security — that is traditionally not a preferred occupation by the GCC nationals.
For one, the bulk of the work — or more than 75 per cent — is being carried out by low-paid foreign migrant workers, where he can’t possibly accommodate the Gulf nationals for reasons attributed above.
“We can’t accommodate them at the bottom, for sure, and even in the middle of the organisational pyramid, that’s where the challenge lies,” said Chauhan, who is in his mid-40s, at the company’s headquarters in Dubai Investment Park.
“We have therefore worked on different models and have succeeded with this in Saudi Arabia through a Saudi graduate programme. We have employed young Saudi graduate engineers in middle levels of our organisational pyramid — they currently represents almost 10 per cent of total workforce.
“Our objective is to hire more national workforce. However, as we expand, we will need to hire more at the lower and mid level — not the top management. Which means, even if I fill the higher level with local manpower, they will still be less than 10 per cent of the total workforce.” His company is among a thousand other large corporations that are coming under increasing pressure to hire more local talents as part of a nationalisation drive in the GCC region.
Dr Giyas Gokkent, Chief Economist of National Bank of Abu Dhabi, says there is a social imperative of creating more employment opportunities that are attractive for nationals.
“More domestic employment will contribute to greater domestic demand and help limit remittance outflows from the country,” he says.
“On the other hand, the introduction of restrictive rules affecting labour markets pushes up the cost of labour and renders companies and the economy, in aggregate, less competitive.”
EFS has recently won Dh250 million worth of contracts for which he needs to hire more people. The facilities management industry is growing across the Gulf due to the completion and delivery of an increased number of properties that require cleaning and maintenance. The growing pressure of nationalisation of the workforce is expected to push up costs — at a time when the margins are reducing gradually.
“So, the challenge has multi-faceted dimensions,” he says.
Unemployment is a ‘ticking bomb’ in the Arab world and was a contributing factor behind the Arab Spring in 2011-12. Despite regime changes in all the five out of four countries affected by the Arab Spring, it still remains a ‘ticking bomb’ that could explode again. Thant’s why, governments of the GCC countries are taking national employment more seriously now.
More than half the working-age population of the Middle East and North Africa (Mena) region are neither employed nor in school, and both the share of women not working and the unemployment rate for young people are the highest in the world, said a recent report by the World Bank.
“As well as a source of frustration, the high level of joblessness translates into high levels of vulnerability,” the World Bank said in the report released in April this year.
However, private sector officials feel this should not be done by blocking papers or rejecting visa applications or — in extreme cases - by imposing a minimum quota of local manpower.
Saudi Arabia has implemented a new law — Nitaqat — that makes it mandatory for local companies to hire one Saudi National for every ten migrant workers. According to reports, Nitaqat Law threatens the livelihood of nearly two million expatriates, mostly Indians. The policy might lead to the denial of job opportunities for a large number of expatriates.
A number of Indian expatriates have already lost jobs due to the new law. However, the good news for Saudi nationals is, that Nitaqat has already nationalised 600,000 jobs in Saudi Arabia.
However, Chauhan is not the type of leader who frowns when faced with challenges. With every challenge, there are opportunities. Even if there are no opportunities, a true leader changes things to create opportunities from the situation. This is exactly what he is currently doing.
According to Chauhan, the best way to mitigate operational risks is to build a powerful nationalised work force alternative and he is seizing this as his competitive advantage by integrating more than 30 per cent Gulf nationals in his workforce across the region.
“Companies will have to re-think their strategies,” he says. “Integrating local workforce will have to be part of that strategy. The writing on the wall is very clear.”