15 min read
Addressing Labor Shortages in Construction: Insights from an Industry Expert
Published 9 Apr 2025
Ahmed Elshenawy, a seasoned professional with over two decades of experience in the construction industry, currently serves as the Operations Director at BEST Contracting Company, also known as Building Co. BEST. Having started his career in 1999 as a site engineer, Elshenawy has steadily climbed the ranks, holding positions such as project manager, area manager, and vice general manager in leading construction firms in the UAE and Saudi Arabia.
In his current role at BEST, which he joined in late 2022, Ahmed Elshenawy is at the forefront of managing labor and subcontractor outsourcing challenges. His extensive experience navigating both booms and recessions in the UAE market provides him with a unique perspective on the workforce shortages currently plaguing the construction industry.
Below, he shares his insights on the issue, its implications, and potential solutions.
In his current role at BEST, which he joined in late 2022, Ahmed Elshenawy is at the forefront of managing labor and subcontractor outsourcing challenges. His extensive experience navigating both booms and recessions in the UAE market provides him with a unique perspective on the workforce shortages currently plaguing the construction industry.
Below, he shares his insights on the issue, its implications, and potential solutions.
Contents
The Current State of Workforce Shortages
The UAE construction market started recovering by the beginning of 2023 following the pandemic and geopolitical issues. Things were steady and logical until late 2023, when an unprecedented boom occurred, far exceeding expectations.
Even though everyone expected Saudi Arabia to take the lead in the Gulf's construction boom, the UAE market surged unexpectedly, surpassing all forecasts.
Labor shortages became a pressing issue by January 2024. By November 2023, there were 459,000 job openings in the UAE in the construction sector alone, which highlights the large gap in the required labor and the available pool.[?]
While this issue impacts every level of the construction industry, including seniors, the challenge is particularly acute when it comes to laborers.
India, traditionally the primary source of labor for the UAE, is also experiencing a construction boom, which has made Indian workers less eager to migrate. Many workers prefer to stay in India, where they have better opportunities and earnings than just about 10 years ago.
With over 88% of the UAE workforce being expatriates, the country's heavy reliance on foreign labor makes these shortages particularly challenging.[?]
To combat this, the UAE has introduced new flexible visa options, including expanding eligibility for the Golden Visa and launching remote work residency programs. However, the demand for skilled and unskilled labor continues to outpace supply, making workforce shortages a persistent issue in the sector.[?]
While this issue impacts every level of the construction industry, including seniors, the challenge is particularly acute when it comes to laborers.
India, traditionally the primary source of labor for the UAE, is also experiencing a construction boom, which has made Indian workers less eager to migrate. Many workers prefer to stay in India, where they have better opportunities and earnings than just about 10 years ago.
With over 88% of the UAE workforce being expatriates, the country's heavy reliance on foreign labor makes these shortages particularly challenging.[?]
To combat this, the UAE has introduced new flexible visa options, including expanding eligibility for the Golden Visa and launching remote work residency programs. However, the demand for skilled and unskilled labor continues to outpace supply, making workforce shortages a persistent issue in the sector.[?]
Factors Contributing to Workforce Shortages
Several factors have led to the current labor crisis.
1. Restricted Labor Sources
The hardest positions to fill are laborers because we must bring them from outside the country. Unlike senior professionals, who can often be sourced locally, laborers must be recruited directly from their home countries.
Legal limitations on recruiting workers from countries like Pakistan, Bangladesh, and Egypt have severely restricted the available talent pool.
For example, Pakistan and Bangladesh used to supply a significant portion of the Gulf’s construction workforce, but due to current regulations, these sources are no longer viable. This has left contractors with few alternatives beyond India, and even Nepal contributes only a limited number of workers.
Legal limitations on recruiting workers from countries like Pakistan, Bangladesh, and Egypt have severely restricted the available talent pool.
For example, Pakistan and Bangladesh used to supply a significant portion of the Gulf’s construction workforce, but due to current regulations, these sources are no longer viable. This has left contractors with few alternatives beyond India, and even Nepal contributes only a limited number of workers.
There’s an overreliance on Indian labor, which now constitutes 85–90% of the workforce. Our dependence on a single source of labor is a vulnerability.
2. Demand for Higher Wages
Those who are still able and willing to migrate now demand significantly higher wages. While companies could afford to offer competitive packages in the past, such increases now disrupt internal salary structures. Hiring newcomers at premium wages creates tension and dissatisfaction among existing employees.
At the same time, companies must hire new laborers to meet project demands. UAE contractors, whether in Dubai, Abu Dhabi, or Sharjah, could take on more projects if they had enough workers.
However, due to the rising competition and labor shortages, many companies now hesitate before taking on new jobs, even as clients actively seek our services. The difficulty in securing a stable workforce, including outsourcing, forces companies to reconsider expansion to avoid disappointing clients or failing to deliver.
At the same time, companies must hire new laborers to meet project demands. UAE contractors, whether in Dubai, Abu Dhabi, or Sharjah, could take on more projects if they had enough workers.
However, due to the rising competition and labor shortages, many companies now hesitate before taking on new jobs, even as clients actively seek our services. The difficulty in securing a stable workforce, including outsourcing, forces companies to reconsider expansion to avoid disappointing clients or failing to deliver.
The competition for skilled workers, combined with recent labor market shifts — particularly the reduced availability of Indian labor — has made recruitment increasingly difficult.
3. Inexperience of New Recruits
Another challenge is the influx of inexperienced laborers. Most of the workers we bring in today are freshers who are still willing to explore other countries and try to go to some different type of atmosphere. They are typically 20 or 21 years old and lack the skills necessary for high-quality construction work.
Training these individuals is time-consuming and costly, and without proper supervision, their productivity remains low. This affects not just the pace of construction but also the quality of the finished project, which is a critical concern in a market like Dubai.
Training these individuals is time-consuming and costly, and without proper supervision, their productivity remains low. This affects not just the pace of construction but also the quality of the finished project, which is a critical concern in a market like Dubai.
4. Shift in Career Preferences
One more challenge when it comes to locals is career trends. Younger generations are now less inclined to pursue careers in construction. Fields such as IT, artificial intelligence, and other modern industries have become far more attractive, offering better career prospects and working conditions. This shift has reduced the number of mid-level professionals entering the construction industry.
Even among those who do choose construction, the focus is often on specialized roles or management, leaving a gap in essential positions like site engineers and construction managers.
Even among those who do choose construction, the focus is often on specialized roles or management, leaving a gap in essential positions like site engineers and construction managers.
5. Shortage of Experienced Senior Professionals
The issue of inexperience also relates to mid-to-senior positions, including project managers, construction managers, project engineers, and site engineers. Unlike general laborers, these roles require prior experience working in the Gulf region, particularly in the UAE.
Hiring professionals without Gulf experience is rarely an option, as for managing large-scale projects they need a deep understanding of local regulations, client expectations, and industry standards. As a result, companies must recruit from a limited pool of experienced professionals within the UAE or neighboring Gulf countries like Saudi Arabia and Qatar.
However, the challenge isn’t just the number of candidates available but finding the right fit. A project manager is solely responsible for the project's success, often overseeing thousands of workers. The focus at senior levels is on quality, but competition is fierce.
Even after securing a capable hire, they are at risk of being poached by another company offering a better deal. So, the struggle isn’t just about attracting new talent — it’s also about retaining your existing team, as replacing a key team member is never easy.
Hiring professionals without Gulf experience is rarely an option, as for managing large-scale projects they need a deep understanding of local regulations, client expectations, and industry standards. As a result, companies must recruit from a limited pool of experienced professionals within the UAE or neighboring Gulf countries like Saudi Arabia and Qatar.
However, the challenge isn’t just the number of candidates available but finding the right fit. A project manager is solely responsible for the project's success, often overseeing thousands of workers. The focus at senior levels is on quality, but competition is fierce.
Even after securing a capable hire, they are at risk of being poached by another company offering a better deal. So, the struggle isn’t just about attracting new talent — it’s also about retaining your existing team, as replacing a key team member is never easy.
Unlike labor shortages, which can sometimes be addressed through increased wages or recruitment drives, the difficulty here lies in finding and keeping the right people — those with both the necessary expertise and a commitment to long-term project success.
6. Subcontractors’s Struggle
While outsourcing labor through subcontractors may seem like a viable solution to workforce shortages, it is only a temporary fix — not a sustainable one. Subcontractors face the same challenges as main contractors, just on a smaller scale.
They are also overwhelmed with job offers but lack enough workers to meet demand. To cope, they raise their prices, but there’s a limit to how much they can increase costs. As a result, maintaining the necessary workforce to match their workload remains just as difficult for subcontractors as it is for main contractors.
They are also overwhelmed with job offers but lack enough workers to meet demand. To cope, they raise their prices, but there’s a limit to how much they can increase costs. As a result, maintaining the necessary workforce to match their workload remains just as difficult for subcontractors as it is for main contractors.
Implications of Workforce Shortages
The implications of workforce shortages are severe. Delays in project timelines result in losses for both contractors and clients. Clients often impose penalties for delays, and the law does not relieve contractors of responsibility, even when delays are caused by external factors like labor shortages.
To complete projects, companies often turn to subcontractors or outsourcing, but these options come at a higher cost. Subcontractors face similar labor shortages and must increase their rates. This impacts contractors’ profit margins, as the extra expenses were not factored into the initial project bids.
This is also a loss to the client because the client is willing to start investing in his property — whether through selling, renting, or other commercial use. If the project is heavily delayed, the client will be at a real loss, unable to generate the planned earnings.
Additionally, if the quality of work suffers due to inexperienced laborers, the client will struggle to market the property or building in an increasingly competitive real estate market.
To complete projects, companies often turn to subcontractors or outsourcing, but these options come at a higher cost. Subcontractors face similar labor shortages and must increase their rates. This impacts contractors’ profit margins, as the extra expenses were not factored into the initial project bids.
This is also a loss to the client because the client is willing to start investing in his property — whether through selling, renting, or other commercial use. If the project is heavily delayed, the client will be at a real loss, unable to generate the planned earnings.
Additionally, if the quality of work suffers due to inexperienced laborers, the client will struggle to market the property or building in an increasingly competitive real estate market.
Solutions to Address Workforce Shortages
To mitigate these challenges, I see a few potential solutions:
1. Expanding Labor Sources
The cost of labor recruitment is not the primary challenge. While hiring foreign workers involves expenses such as visas and work permits, these costs are reasonable, especially when compared to other Gulf countries like Saudi Arabia, where labor recruitment expenses are more than triple those in the UAE.
The real issue is availability, not affordability — companies are willing to bear these expenses, but the limited access to labor sources continues to create bottlenecks.
One approach could be expanding labor sources by opening up recruitment from additional countries, such as Vietnam. Even if their workers are less experienced, they would help fill the gap and relieve some of the pressure on the existing workforce.
For me, this is the root solution to the workforce crisis. Expanding labor recruitment would directly address the problem, whereas other strategies — such as subcontracting or raising wages — are merely short-term alternatives that help mitigate risks but do not solve the core issue.
However, no company can directly influence this solution, as labor policies and recruitment regulations are controlled at the national level. Businesses must respect and operate within the country’s legal framework.
While companies can suggest and adapt to new recruitment channels, the ultimate decision lies with the authorities.
For me, this is the root solution to the workforce crisis. Expanding labor recruitment would directly address the problem, whereas other strategies — such as subcontracting or raising wages — are merely short-term alternatives that help mitigate risks but do not solve the core issue.
However, no company can directly influence this solution, as labor policies and recruitment regulations are controlled at the national level. Businesses must respect and operate within the country’s legal framework.
While companies can suggest and adapt to new recruitment channels, the ultimate decision lies with the authorities.
2. Training Programs
We are increasing training efforts for existing laborers to enhance their productivity. Previously, many workers were primarily engaged in non-specialized tasks such as housekeeping, material shifting, or assisting in concrete casting.
To address this, we have started training programs aimed at equipping workers with specialized skills in productive trades. Now, instead of focusing solely on general labor, they are being trained in block work, carpentry, steel fixing, plastering, and painting.
This shift allows us to rely less on subcontractors, who have also become increasingly difficult to source due to labor shortages.
To address this, we have started training programs aimed at equipping workers with specialized skills in productive trades. Now, instead of focusing solely on general labor, they are being trained in block work, carpentry, steel fixing, plastering, and painting.
This shift allows us to rely less on subcontractors, who have also become increasingly difficult to source due to labor shortages.
3. Extending Project Timelines
While not ideal, extending project durations is another way to manage labor shortages.
Instead of struggling to meet an unrealistic deadline with insufficient labor, companies could set realistic expectations from the outset, preventing excessive pressure on resources and avoiding last-minute delays. For instance, instead of completing a project in 24 months, we could plan for 36 months.
Extending timelines is not healthy — neither for contractors, who face increased overhead costs and prolonged commitments nor for clients, whose investments are delayed. Yet, given the current labor shortages, it remains a practical option when other solutions are not feasible.
In reality, projects are rarely completed on time anyway. Delays have become the norm rather than the exception in the industry.
Given this situation, it makes more sense to acknowledge the constraints and plan longer durations from the beginning rather than setting overly ambitious deadlines that inevitably lead to complications.
Instead of struggling to meet an unrealistic deadline with insufficient labor, companies could set realistic expectations from the outset, preventing excessive pressure on resources and avoiding last-minute delays. For instance, instead of completing a project in 24 months, we could plan for 36 months.
Extending timelines is not healthy — neither for contractors, who face increased overhead costs and prolonged commitments nor for clients, whose investments are delayed. Yet, given the current labor shortages, it remains a practical option when other solutions are not feasible.
In reality, projects are rarely completed on time anyway. Delays have become the norm rather than the exception in the industry.
Given this situation, it makes more sense to acknowledge the constraints and plan longer durations from the beginning rather than setting overly ambitious deadlines that inevitably lead to complications.
4. Limiting Project Commitments
Contractors need to be realistic about their capacity. Taking on more projects than you can handle only leads to failures and dissatisfied clients.
However, while this approach helps manage the workforce shortage, it will make the market very, very demanding.
Currently, investment and new project plans are expanding like mushrooms. If contractors decide to slow down their new contracts, it will increase the cost of construction, as fewer companies will be available to take on work. As a result, the cost of selling properties and attracting new investors will also rise.
When construction costs become too high, investors will start thinking twice about expansion plans, as their expected profits will be diminished. This could slow down the overall growth of the market, making it harder for developers and businesses to move forward with large-scale projects.
However, while this approach helps manage the workforce shortage, it will make the market very, very demanding.
Currently, investment and new project plans are expanding like mushrooms. If contractors decide to slow down their new contracts, it will increase the cost of construction, as fewer companies will be available to take on work. As a result, the cost of selling properties and attracting new investors will also rise.
When construction costs become too high, investors will start thinking twice about expansion plans, as their expected profits will be diminished. This could slow down the overall growth of the market, making it harder for developers and businesses to move forward with large-scale projects.
The Role of Automation in Labor Shortages
Automation, while helpful in other industries, is not a viable solution for construction. It might assist senior staff in certain areas, but it cannot replace the workforce on the ground. This field still depends heavily on human labor, especially for on-site tasks.
Attracting and Retaining Talent
In the construction industry, addressing labor shortages isn’t just about attracting workers — it’s also about keeping them. With employees frequently moving between companies in search of better pay and benefits, retention becomes just as crucial as recruitment.
To attract workers, we need to offer competitive salaries and benefits. Improved medical care, better accommodation, and comfortable transportation are critical. Workers need to feel respected and valued, which goes beyond just financial compensation.
However, loyalty today is largely materialistic. The best way to retain workers is by ensuring they have access to superior benefits and are treated with dignity.
To attract workers, we need to offer competitive salaries and benefits. Improved medical care, better accommodation, and comfortable transportation are critical. Workers need to feel respected and valued, which goes beyond just financial compensation.
However, loyalty today is largely materialistic. The best way to retain workers is by ensuring they have access to superior benefits and are treated with dignity.
Future Outlook
Based on my experience, construction in Dubai follows cycles — periods of booming activity followed by slowdowns or recessions. However, all current expectations indicate that the ongoing boom will continue for at least another three to four years without signs of deterioration in the near future.
If we do not address labor shortages now, the situation will only worsen as demand for projects continues to rise.
Contractors and stakeholders must adopt practical strategies to sustain operations during this period, ensuring they can meet project demands without compromising quality or profitability.
My advice to smaller firms is to focus on productivity and avoid overcommitting. Take on projects that align with your capabilities. Trying to do more than you can handle will only lead to problems.
Forming joint ventures with other contractors is a potential solution. Although this approach is not widely practiced, it could help alleviate labor shortages and may become more popular in the near future.
By pooling resources, we can manage labor shortages more effectively and deliver projects on time. The road ahead will be challenging, but with collaboration and innovation, I believe the construction industry can overcome these hurdles and thrive.
My advice to smaller firms is to focus on productivity and avoid overcommitting. Take on projects that align with your capabilities. Trying to do more than you can handle will only lead to problems.
Forming joint ventures with other contractors is a potential solution. Although this approach is not widely practiced, it could help alleviate labor shortages and may become more popular in the near future.
By pooling resources, we can manage labor shortages more effectively and deliver projects on time. The road ahead will be challenging, but with collaboration and innovation, I believe the construction industry can overcome these hurdles and thrive.
Editor's Note: How Can FirstBit Help?
As Ahmed Elshenawy explained, the construction industry is still heavily reliant on human labor, with automation offering limited applicability for tasks on-site. While technology cannot replace the human workforce entirely, FirstBit ERP bridges this gap by enhancing productivity and streamlining operations, helping construction companies adapt to workforce shortages more effectively.
FirstBit’s robust resource management tools optimize the allocation of existing manpower. By analyzing project requirements and matching them with available resources, FirstBit ensures that every worker is utilized to their fullest potential, reducing waste and improving overall efficiency. This addresses one of the key solutions Ahmed mentioned — maximizing the productivity of existing laborers through better planning and task management.
In addition, FirstBit simplifies subcontractor coordination, another area highlighted by Ahmed. With subcontractors facing similar labor challenges, FirstBit ensures that communication, timelines, and budgets are efficiently managed. This reduces the risk of delays or errors caused by misaligned subcontractor workflows, allowing companies to maintain project quality even with limited resources.
FirstBit’s robust resource management tools optimize the allocation of existing manpower. By analyzing project requirements and matching them with available resources, FirstBit ensures that every worker is utilized to their fullest potential, reducing waste and improving overall efficiency. This addresses one of the key solutions Ahmed mentioned — maximizing the productivity of existing laborers through better planning and task management.
In addition, FirstBit simplifies subcontractor coordination, another area highlighted by Ahmed. With subcontractors facing similar labor challenges, FirstBit ensures that communication, timelines, and budgets are efficiently managed. This reduces the risk of delays or errors caused by misaligned subcontractor workflows, allowing companies to maintain project quality even with limited resources.
Subcontractors report in FirstBit ERP
Where automation becomes indispensable is in reducing administrative burdens, and this is where FirstBit excels. The system automates repetitive processes like payroll management, resource scheduling, and reporting. This allows project managers to focus on strategic decisions rather than administrative tasks, indirectly improving workforce efficiency.
Payroll calculation in FirstBit ERP
Moreover, FirstBit supports companies in cost control — critical during times of rising labor expenses. By offering real-time insights into labor costs, material expenses, and project budgets, FirstBit helps contractors stay within financial constraints without compromising on project delivery.
Though the human factor remains dominant in construction, FirstBit ERP ensures that companies can leverage technology to maximize the efficiency of their workforce, streamline operations, and remain competitive in a demanding market.
Though the human factor remains dominant in construction, FirstBit ERP ensures that companies can leverage technology to maximize the efficiency of their workforce, streamline operations, and remain competitive in a demanding market.
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