Time to leave?
Most industries that have flourished in the Gulf region have relied for a large part on the efforts of an expatriate workforce. The region's maritime industry is no exception. With many roles in the Middle East's shipyards, agencies, freight forwarders, and ports being filled by expatriates the fortunes of the industry is tied inextricably with their desire to remain in the region.
Up until quite recently finding and attracting staff has been comparatively easy. Many people from Europe and India have been lured by an attractive lifestyle and the bonus of a tax-free income, and many more have traveled from all over the world to find better paying jobs.
However, with the exception of Kuwait, which jumped ship in May last year, the GCC currencies are pegged to a plunging US dollar. The effect this had had on expatriate salaries, much of which is repatriated to home nations, has been devastating. Many people have chosen to stop sending money back home in the hope that the exchange rates will improve, but for some this is not an option with families and mortgages often reliant on wages paid here in the Gulf.
The maritime sector is booming throughout Asia, Europe, the US and Africa, so luring talented staff here is naturally becoming harder, and with it, more expensive.
With huge port expansion underway in Thailand, China, and Djibouti and of course India, the opportunity to work closer to family will become more and more attractive to many of the skilled workers who man the ports and ships in Qatar, the UAE and Saudi Arabia to name but a few.
Whilst the civil service in the UAE has been awarded a 70% pay rise to cope with the inflationary effect the dwindling dollar has had, such a gesture is impossible for private firms. Salary demands will be at the top of many employee agendas in January, and companies will have to stretch to meet these or face a recruitment nightmare.
The challenge of meeting these demands will differ depending on where many of your staff are recruited from, but make no mistake, the wage demands will be very real as the prospect of return gets ever more appealing.
While the door has been left open for Gulf nations to revalue or sever their pegs, policymakers at last month's Doha summit tried to insist that the issue had not been on the agenda. For many looking for a glimmer of hope that things would soon improve this was devastating news.
Aside from the challenges that meeting salary demands in 2008 will pose, the weak GCC currencies will have a hugely negative effect on much of the proposed developments that the regional maritime sector has been so keen to trumpet.
Much of the specialist equipment deployed in Middle Eastern ports is procured from manufacturers based in Asia and Europe. The investment required purchasing cranes and container handling equipment is a substantial one. As access to cheap capital dries up from traditional borrowers financing these investments will become a much more expensive proposition.
Reducing costs and becoming more efficient will become an absolute necessity in 2008 across all maritime sectors. The advantages of operating in the region are still there, and ambitious and well-run businesses will no doubt ride out this crisis.
The party may be over, but companies that play the start to the year right will reap huge rewards when the economy bounces back in our favour.