Saudi Arabia facing steep wage hikes due to skilled talent shortage

23 July 2018

Saudi Arabia is facing one of the steepest wage hikes worldwide in the coming years according to human capital firm Korn Ferry, with the global skilled talent shortage threatening to add a $33.6 billion premium to local payrolls by 2030.

In a series of recent reports examining the unfolding skilled talent crisis and the potential effects on the international and national economies of the studied markets, the global human capital consulting firm Korn Ferry has pegged the possible loss of productivity at a worth of nearly $8.5 trillion by 2030, with a wage premium of $2.5 trillion or more added to annual remuneration costs due to the chronic shortage of expertise – a projected talent deficit upwards of 85 million skilled workers.Total global labor deficit as a percentage of workforceThe consulting firm's analysis zooms in on the talent pool of 20 major international economies, including Saudi Arabia and the UAE, with a focus on the knowledge-intensive sectors that act as critical economic drivers – namely financial and business services, manufacturing, and technology, media, and communications (TMT) – with these industries among those that will be most greatly impacted by digital automation and the technologies of Industry 4.0.

By 2020 alone, the unrealised economic output due to international skill shortages could amount to $2.1 trillion, with Saudi Arabia accounting for $25.80 billion of that sum, and the UAE chipping in for a further $14.46 billion worth of lost productivity. And these figures, by Korn Ferry projections, will for Saudi Arabia and the UAE blow out to more than $206.77 billion and $50.55 billion just a decade later if the issue is left unaddressed.Average skilled worker wage premium by 2030With respect to Saudi Arabia, the lost productivity cost is derived from an estimated labor deficit of some 660,000 skilled workers – translating in turn to a wage premium of $10,700 by 2030; that is, the average additional cost for employers added to the base salary per skilled worker above ordinary inflation-driven rises. The $33.6 billion total bottom line impact represents a 17 percent wage hike, with the Emirates in line for a 9 percent surge of its own.

As to the specific sectors of the study, the financial and business services industry – which is noted as one of the world’s most important sectors in terms of contribution to GDP – will be the one most impacted by acute talent shortages, with the Korn Ferry report projecting a shortfall of 10.7 million skilled industry professionals globally by 2030 and a potential wage premium of over $440 billion – more than double the other primary sectors examined in the report.Impact of labor shortage on financial and business services sector by 2030As a result of this dearth, Saudi Arabia stands to forfeit nearly $15 billion in lost finance and business sector output by 2030. Meanwhile, in terms of local wage premiums, the technology, media and telecom sector of Saudi Arabia will be the hardest hit, with a $2.4 billion bonus added to the pay packets of in demand workers by the end of next decade, followed by a $2.1 billion total premium forked out by organisations operating in the local manufacturing sector.

“The new era of work is one of scarcity in abundance: there are plenty of people, but not enough with the skills their organisations will need to survive,” Jonathan Holmes, Korn Ferry Managing Director for MENA, summarised. Harish Bhatia, MENA regional director for Korn Ferry Products adds; “In the private sector, business leaders need to reimagine all aspects of talent management, employee engagement and reward schemes to better position them to retain top talent at lower wage premiums to protect profitability and business models.”

PwC partners with the Project Management Institute's Saudi chapter

21 March 2019

Professional services firm PwC has signed a three-year partnership agreement with the Saudi Arabian branch of the Project Management Institute.

Following up from its recent deal with the Emirates Institute for Banking and Financial Studies, the Middle Eastern arm of global professional services giant PwC has signed another agreement – this time with the Saudi chapter of the Project Management Institute: PMI-KSA. The three year collaboration will seek to promote and advance the project management profession in the Kingdom.

Counting some 500,000-plus members worldwide, the Project Management Institute (PMI) is a non-profit industry association for project management professionals, providing advocacy, research, education and the most widely accepted certification for more than 2.9 million professionals worldwide. Among 300 international chapters in 80 countries, PMI’s Saudi branch is one of the largest in the Middle East.

“PMI-KSA is pleased to sign this strategic MoU with a prestigious company like PwC to promote the project management profession,” said PMI-KSA President, Nabilah Al-Tunisi, who is the chief engineer for Saudi Aramco. “We aspire through this MoU and other PMI-KSA programmes to further expand the membership and awareness of the project management profession.”PwC partners with the Project Management Institute's Saudi chapterAccording to the Memorandum of Understanding (MoU) signed by PwC and PMI-KSA, the two organisations will form a partnership of “community, knowledge, technical and cultural advisory” in a number of key areas to develop the strength of the profession in the Kingdom – including collaboration on “standards, educational institutions, events and special interests”.

In a press joint statement, PwC and PMI-KSI outlined a number of objectives, including; to support and encourage the adoption of PMI standards and increase their use for KSA’s Mega Initiatives; to increase the competency of local project managers through accredited training courses; and to share and leverage knowledge gained through publications, site visits and events.”

“For decades, we have been known for our practice to help our clients with their projects from strategy through execution; as well as supporting them in realising and reaping the benefits of each phase,” said PwC Saudi Arabia Country Senior Leader Riyadh Al Najjar. “It is in our heritage of creating trust and providing advice to help public and private organisations be successful.”

Al Najjar continued: “This partnership is another restatement to this effort, only cementing our mission; and we hope that together with PMI-KSA we can continue to support our clients in the best way possible and equip our people to become the leaders of tomorrow.  Together, we can bring forth the best of our combined knowledge and experiences and make an impact in the future of project management in the Kingdom.”