80% of building projects to be hit by labor cleanup

Many ongoing construction projects in the Kingdom are expected to be delayed due a rising labor shortage caused by the exit of tens of thousands of illegal workers taking advantage of the Kingdom's amnesty offer, according to some experts in the realty sector.
As much as 80 percent of construction projects could suffer in the coming days and months, said Raed Al-Aqeeli, vice chairman of the Contractors Committee in the Jeddah Chamber of Commerce and Industry.
Pointing out that only 10 percent of the laborers who had committed violations could correct their status, the experts believe that lack of labor could cause a major setback to the sector and result in project completion delays.
Raed Al-Aqeeli, vice chairman of the Contractors Committee in the Jeddah Chamber of Commerce and Industry, is of the view that as much as 80 percent of the construction projects could suffer in the coming days and months. “With only a few days remaining for the amnesty period to end, we still can’t see the government apparatus gearing up to accommodate and clear the large numbers of paperwork and transactions which are estimated at 450,000,” he said, adding that projects would have to be put on hold since both employers and workers are worried about the punitive measures they would face in case of violations.
Stating that they were in the process of addressing high-level authorities to extend the grace period, Al-Aqeeli said: “The time period is just not enough considering the fact that the sector was totally dependent on illegal laborers and part time workers, as well as small enterprises. Under the circumstances, it would be difficult for companies to manage the worker shortage issue.”
Waleed Abu Sabah, chairman of the Hotels Committee at the Makkah Chamber of Commerce and Industry, claimed that companies were facing problems in paying the fees due to the allocated sum of money that government bodies should receive per day, pegged at just SR 20,000.
Fahad Al-Said, CEO of Al Akaria Real Estate Co., however, believes that fears about projects getting delayed following the implementation of the new labor laws was grossly exaggerated. “I don’t foresee any significant delays in completing ongoing projects. Undoubtedly, some projects will be delayed but the overall percentage should not be high. In any case, construction activity can be expected to slow down in the coming days because of the hot weather. And with Ramadan and the season round the corner, any slowdown in the sector would only be logical,” he said.
Al-Said also considers the launch of the correction campaign as being healthy which would help in organizing the real estate job market besides facilitating issue of visas to professional companies. “We have noticed that there are a large number of fake or small companies which seek large number of visas from the Labor Ministry only to sell these later. Such companies force the MoL to be more parsimonious while issuing visas. The new labor laws will ensure that such small and fake companies are weeded out, following which the ministry can start issuing large number of visas to big professional companies that take on mega projects,” he said.
Faisal Aqil, director of the Business Development Department and chairman of social responsibility at CPC Holding, said professional contractors had to handle labor issues regardless of the current changes. Most of the major projects are being handled by professional companies and they will finish their projects on time, he said, adding: “I don’t think there are many companies that couldn’t handle their workers’ issues, unless they are not serious. Professional contractors with high levels of capability will never hire illegal workers for their projects.”