Labour laws threaten contractors margins in Oman

Labour laws threaten contractors margins in Oman
Photo for illustrative purposes
Published: 23 January 2013 - 11 a.m.

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Fierce competition for construction contracts in Oman is having a negative impact on the industry's major players and affecting the quality of work, according to the Oman Society of Contractors.

The society's CEO, Salim Talib al Sheedi, told Muscat Daily that recent profit margins of local construction companies have not been encouraging. He blamed competition from firms willing to undercut major players as both labour and materials costs have increased.

“Unfair competition in the market has affected the returns of serious players and damaged the quality of work as companies are forced to compromise on quality while reducing price. Some companies are taking up jobs at lower project values just to survive, but those that do not want to compromise on the quality of work are facing tremendous difficulties, with some even forced to leave the market,” he argued.

He said that frequent changes to labour laws have increased costs and created pressure on the industry.

“All of a sudden construction companies have had to hike minimum wages and Omanisation levels, which is contributing to higher construction costs,' he said.

He also pointed to the global rise in the price of construction materials.

Al Sheedi also said that overseas companies entering into the market had an advantage over established players in the market, as they did not have the same fixed overheads.



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