Minimum wage fears grip construction companies

Minimum wage fears grip construction companies
By Riyasbabu (Our staff reporter)KHALEEJ TIMES 12 February 2008

DUBAI — The proposed move of the Indian government to fix minimum wages for unskilled workers in the GCC countries has caused concerns among the construction companies in the UAE, as the budgets for the ongoing projects have been estimated on the basis of the existing wages.

India announced BD100 (Dh976) as minimum wage for unskilled workers in Bahrain last week and a similar announcement is expected for the rest of the GCC countries shortly.

Following India’s decision, it is learnt that the other South Asian countries are also mulling over setting the minimum wage for its workforce in the Gulf.

Construction firms say fixing the minimum wage for unskilled workers would have major implications in the market. However, they cannot go for the other option of hiring workers from other countries due to linguistic and unavailability issues.

N.M. Noushad, HR manager of Dubai-based Wade Adams Contracting Company, said, “The construction companies have already calculated the budget for labour wages for the ongoing projects. If the fixed minimum wages are more than those estimated in our budgets, they will have an adverse effect on us.

“It will be difficult for construction companies, especially small companies, to handle the situation. However, we will wait and see what decision that comes up.”

Biju Ninan, CEO of Grey Matter Construction Company, said, “The decision to fix minimum wages will definitely affect the budget of many companies. It would be difficult for companies if they are looking for cheap labour from other countries like China, Vietnam or African nations because of non-availability and linguistic barriers.

“Now, companies are forced to revise their provision for wages in their budget. It will impact the cost factors of construction,” he added.

Abdul Majeed, manager of Power Construct, said, “The minimum wage system will have its ripples in the market and the cost of construction will shoot up. This will affect the real estate market also.

“However, I appreciate the decision as it would ensure some standard of living for the workforce.”

Meanwhile, the workers have welcomed the move saying that it will assure them of a standard salary which enables them to save some money to send back home.

“We are hopeful that the government will fix the minimum wages according to the cost of living. It will ensure we save some money at the end of every month,” said Jissmon, a worker at Al Quoz.