Saudi Arabia’s Construction Sector Faces Talent Shortage Amidst Global Activity

Saudi Arabia’s construction sector remains among the most active globally, with over 5,200 projects worth $819 billion. However, a shortage of skilled labor and rising costs of materials like diesel, steel, and cement are straining timelines and project quality—highlighting the urgent need for workforce development and cost management strategies.

Based on the most recent Global Construction Monitor from the Royal Institution of Chartered Surveyors (RICS), Saudi Arabia leads the globe in building activity; nonetheless, a serious lack of competent and unskilled personnel is hindering this unheard-of development.

One of the highest countries worldwide, Saudi Arabia showed a stunning construction activity reading of +72 percent in Q4 2023 according to the monitor. Driving this spike with an eye-watering +82 percent activity level are infrastructure and public works projects. Like NEOM, the Kingdom’s slate of “giga-projects is driving ravenous demand for workers and building materials.

Industry respondents in the Q1 2024 Global Construction Monitor survey indicate that this frenzy of projects is generating both several major difficulties and opportunities. Labour shortages are a main concern raised; regular references to a “shortage of skilled manpower” and trouble “finding the right caliber of staff” highlight this. One Dammam respondent said, “Major skills shortages” are hurting the industry.

Beyond only staffing shortages, others felt there were more basic competency problems among current employees. “Some are not competent to do their jobs,” a Dammam respondent said, “many lack proper planning skills and fail to engage in Front-End Loading planning, which is essential for effective project management.”

The scarcity of unskilled labour is significant, with more than one-third of companies seeing difficulties in recruiting general labourers, as reported by the RICS monitor. Additional identified challenges encompass escalating expenses, with a respondent from Riyadh cautioning that “the increasing costs of diesel, steel, and cement will impact unit rates.” Another individual from Riyadh stated that localisation regulations mandating the utilisation of national resources had an influence.

Nonetheless, the flourishing construction activity was perceived as an opportunity by certain individuals. A respondent from Riyadh stated, “The substantial transfer of trades from neighbouring GCC countries, attributed to the volume of work, enhances the non-oil exports of KSA.” The establishment of entertainment facilities was emphasised as having a beneficial impact on the enhancement of the construction market.

To match the RICS monitor’s rate of output growth, however, 77 percent of industry professionals say they lack workers.

With around $1.1 trillion in mega-projects either in development or planned, innovative solutions to the manpower shortage will be crucial to keep Saudi Arabia’s newly acquired global reputation as the construction capital.