Industry Updates – Q1 2015
One of the main trends we see effecting the emerging markets this quarter is the recent decline in oil prices due to the refusal by OPEC to cut production in response to an oversupply of oil.
Due to this, more Middle Eastern nations are looking to become less reliant on the revenues produced by the oil and gas sector – the backbone of their economy in recent times. The investment in other industries shows the intentions of the government developing a more diverse and stable economy.
Other factors such as the ageing population, demand for better infrastructure to support the public sector and mega events such as the Dubai 2020 Expo and FIFA World Cup in Qatar 2022 are all other factors the are positively influencing the employment rates among the emerging markets in Q1 2015.
It is predicted that the hotel and hospitalities industry will see a formidable growth in the coming years thanks to two large mega events (Dubai Expo 2020 and Qatar World Cup 2022) as well as the improving economic situation throughout the region and the world.
Such mega events have increased the demand for rooms with Qatar expected to need a further 45,000 rooms to meet FIFA World Cup capacities with 21 of those hotels expected to be completed by 2017.
Dubai has estimated the need for a further 140,000-160,000 new rooms by 2020 with a further 10,000 needed for refurbishment as well. This will see a sharp increase in work for construction companies and the need for hotel managers and other staff.
The key trend looking forward to Q1 2015 and in the next decade is the evolution of a new generation of customers, named “digital natives” by PwC in their middle east hotels report.
With a demand for mobility, flexibility and access to easy and reliable information, customers will now be more prepared and informed than ever so the need to understand the customers needs and ability to use a multitude of channels to do so should be at the forefront of hoteliers minds.
Container shipping volumes have been forecasted to grow by 5.5% year-on-year across major trade lanes in 2015, described as “relatively positive” year by the Drewry Maritime Research.
A high demand for skilled workers is a key trend emerging within the logistics and shipping industry. With this they are facing 2 challenges when it comes to hiring new talent:
- They are facing difficulty attracting talent.
- They are having difficulty with the evolution of the ideal logistics skill set.
It is predicted that the industry will see a shortage of nearly 20 million professionals in 2015, in particular, “skilled logistics managers due to their ability to spot complications and create effective solutions – all in support of the companys objectives.”
The ageing population of the entire MENA region is the main factor expected to drive growth within the MENA region over the next decade. Specifically, the MENA region is likely to witness the quickest growth of the ageing population (those people above 65) of 4.1% per annum.
This rise indicates more business for healthcare providers with the need for more medical care and more expensive health profiles than ever before.
The demand for skilled workers is high with countries looking to bring experienced practitioners from the western world to lead development of health programs at the regions newest hospitals.
The construction industry is set to experience unparalleled activity over the coming decade with over 117 major programmes planned for completion by 2030, costing an excess of US$1 trillion. This is likely to bring in a demand of 1.2 million additional labourers to deliver these programmes through to 2019.
There is expected be an average annual construction growth over the next 5 years of 6.1% with the main driver of this growth being government plans to diversify investments away from the hydrocarbons sector.
Over previous years there has been an attempt to construct ports and airports to utilize its trade benefits for exportation of goods. However, key construction and infrastructure projects heading into 2015 and beyond are expected to be in the rail sector as regions attempt to boost internal logistic capacity.
With an increase of affordable housing and social infrastructure spending by government late in 2014 it will remain a key area of investment although it is not anticipated to provide long-term high-margin returns.
Events such as Expo 2020 and the FIFA World Cup 2022 are also major events that will bring demand for work and labourers up over the coming decade.
The education sector is an industry that is being heavily invested in by regional governments. This has been highlighted by the continued support on Saudi Arabia’s recent budget report, showing it continues to spend on the education sector, despite the falling oil prices. Although this means they will likely see billion dollars in losses this year, the necessity to spend on education within the region is finally resonating.
According to a report from Al Masah Capital they believe the MENA education sector is “waiting to explode.”
Job demand for western expatriates remains high as their skills are keenly sought after with a growing preference for international, English-language curricula with 53% of parents preferring ‘western-style’ curricula according to a survey conducted by Booz and Co.
Despite literacy and numeracy remaining the building blocks of the educational content, the need for “expert thinking” and “complex communication” has grown in demand; so a rise in demand for specialist teachers within the science and foreign languages sector is a trend we are likely to see in 2015.
The metals and mining sector is forecasted to remain stable through 2015 despite slower growth and the prospects for lower commodity prices. Depreciation of key mining economies such as the Australian Dollar, South African Rand, Brazilian Real, Russian Ruble, and Canadian Dollar relative to the US dollar has provided relief on costs allowing producers to keep supply high even as prices fall. Key issues going forward include focus versus diversification and how low prices must fall to drive excess supply out of the market.
However, if you are looking for a job within the mining industry you can expect to see some opportunities arise throughout the region, particularly within the January-March time frame.
According to a survey asking many of the worlds leading HR professionals, they report an employment outlook of +5% worldwide in the mining industry.
One of the leading gold market commentators Martin Murenbeeld has predicted the price in Gold to increase going into 2015 with increases from an average of just over $1,200 in the first quarter it is expected to rise above $1,300 by Q2 2016. He believes that the gold market may be finally turning with the price “potentially overshooting the upside.”
In a rather tumultuous Q4, the oil and gas industry has seen a major reforecast of its initial predictions. Oil prices have plunged in Q4, due to OPEC’s inability to cut production in response to a global oversupply of oil.
With OPEC looking to control oil prices, the stronger exporters, namely Saudi and UAE are doing what they can to bring balance back to the market but a lack of cooperation from other producers outside OPEC as well as some other outside factors is the leading cause for the continued drop in oil prices.
With the price of Brent Crude dropping from $115 per barrel to nearly $60 per barrel within 6 months, many exporters have been hurt by the recent drop in prices. However the main players, UAE, Saudi, Qatar and other gulf nations look to remain stable despite the recent price fluctuations.
The direction of the oil prices heading into 2015 look to hinge on a number of factors that have developed over the initial weeks of 2015. Factors including the disjointed economic growth in major economies, volatility of OPEC output and potential supply demand shocks that both of these could produce. It is forecasted that oil prices could fluctuate between $50 per barrel and $80 per barrel in Q1 and 2015. While most analysts believe it will bottom out at some point, there remains uncertainty as to when this will prevail.
Within a lot of the emerging markets, many companies look to fill vacancies with employees from more mature markets such as London, New York, Hong Kong and Singapore. If you are working in financial services in one of these locations and considering a move to one of the emerging markets, 2015 looks to be a prosperous year.
If you are living in Singapore as well, this seems to be the market recruiters are looking to source talent from the most. They are targeting Singapore with 23% market recruitment, New York and London following closely at 21% and Hong Kong’s procurement sitting at 16%.
Furthermore, as an expatriate, recruitment professionals have cited particular skills, such as western education and experience, specific regulatory knowledge and particular knowledge of the local financial services authority as desirable traits in a candidate.
Key skills and areas companies are looking to improve upon in 2015 are cost reduction, lean efficiencies, laying foundation for further growth, Business process improvement and system implementation. With an eye towards the current digital trend, it is no surprise that many financial executives have indicated they will increase digital spending aiming to improve their online presence, website and online banking experience.
Engineering jobs may have been hard to come by during the recent economic downturn.
Generally, engineering professionals tend to stay at their positions for longer than in other sectors and the turnover rate of positions and companies is much less frequent than other professions globally.
Like any position, the main avenues for job growth rely on replacement or economic growth. However, with replacement happening less frequently in engineering than other industries, economic growth is a pivotal factor in which engineering positions rely upon; one of the main reasons why engineering jobs (in some cases) have been scarce of late.
However, with the economy growing in the past two quarters, the strong pipeline of infrastructure projects on the horizon for the region and many Middle Eastern governments looking to build their investment portfolios away from solely oil, projections indicate an increase in job opportunities are around the corner.
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