Thousands of Arabtec Holding workers in the UAE have had their wages hiked by an average of 20 per cent, it has been reported.
Analysts said the pay increase for the 36,000 workers would affect company earnings by up to a quarter.
Stock of Arabtec, the UAE’s largest construction company, yesterday closed down 1.13 per cent at Dh2.62.
The move was part of the Government’s effort to provide an “exemplary work environment to workers” as well as ensuring conditions for labourers were in line with the UAE’s own economic development, according to the Wam news agency late on Sunday quoting an Arabtec official.
Arabtec was not available for further comment. It was not clear if the pay rise applied to all its UAE- based workers or only unskilled labourers who are estimated to earn from Dh650 to Dh1,200 a month.
Arabtec’s workforce has hit the headlines on several occasions in recent months.
In May, workers from Bangladesh, India and Pakistan refused to leave their accommodation in Abu Dhabi and Dubai, asking management for their Dh350 monthly food allowance to be paid with their salaries, rather than the company providing them with three daily meals. In a separate incident, police were called to the company’s Saadiyat Construction Village in August after a dispute over the key to a kitchen escalated into a mass brawl.
A regional construction boom has enabled Arabtec to expand its geographic reach outside its UAE base and widen its building expertise into new areas such as offshore oil and gas installations. The company snapped up Dh7.3 billion in new orders during the first half of the year, taking its total backlog to Dh24.4bn, a 42 per cent rise on a year earlier.
Last week Arabtec launched a joint venture with the engineering arm of the South Korean conglomerate Samsung to expand into more complex engineering and “big ticket” infrastructure work around the Middle East and North Africa.
Raising staff wages was important as workers formed the “backbone” of the company, Hani Hirzallah, personnel manager at Arabtec, said in a statement broadcast by Abu Dhabi TV Channel and reported by Wam.
Some labourers have complained of not benefiting from Arabtec’s success. More than 460 workers involved in the four-day strike in May quit their jobs rather than return to work. Arabtec then helped them return to their home countries.
Nishit Lakhotia, the head of research at Bahrain-based Securities and Investment Company (Sico), said the pay hike could shave about Dh70 million off annual earnings.
“With 36,000 labourers benefiting from this increment, we are looking at 20-25 per cent of Arabtec’s earnings being reduced out a quarter,” he said. “This will increase operating costs, and as a result impact their bottom line.”
Sico plans to revise down its profit estimate for next year of Dh340m. It expects earnings to reach Dh288m this year.
Another analyst, who asked to remain anonymous, said although the pay rise would help to minimise the risk of future worker unrest, most earnings’ forecasts already factored in an assumption that Arabtec would be able to manage labour issues when it executed projects.
Conditions for labourers in the Arabian Gulf is a topic has frequently come under the spotlight. Last month, the UK newspaper The Guardian reported that 44 Nepalese workers died between June 4 and August 8 working on projects in Qatar in preparation for the Fifa World Cup 2022.
Arabtec’s stock has risen by more than 40 per cent in the year to date on the Dubai Financial Market.