The Socio-Economic Impact of Red Sea Port Development Projects on Local Communities and Workforce

Posted: February 29th, 2024

The Socio-Economic Impact of Red Sea Port Development Projects on Local Communities and Workforce.

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1.3 Scope of the Study
The overall aim of this research is to answer the main question, “What are the likely long-term effects on the local community and workforce resulting from the proposed redevelopment of Aqaba and the construction of the new port at Al-Adabiya?” The proposed development of these two Red Sea ports will almost certainly have significant effects on the local community and workforce. The effects may be negative and damaging, causing the exclusion of certain social groups from accessing and using resources. This may further marginalize these groups and hinder their ability to meet their basic needs and fulfill a decent standard of living. The main goal of the port developments is to increase their international competitiveness and stimulate economic growth and development in the country. The port development has been planned in response to the increasing trend of trade flows in the region and to satisfy market demand. Both port projects are expected to put Jordan on the regional map in terms of maritime services and will generate between 1200-2000 new job opportunities. The question of the socio-economic impact on local communities and the workforce is significant because the port is being made as a gateway for Jordan to promote progress, development, and prosperity. The government has been clear to state that the ‘port is not an end by itself but a means’ and that the aim is to bring about further national development. It is hoped that the new ports will be a progressive force, which will change the lives of people for the better and enhance national welfare. This future hope is currently contrasting to the current standard of living in which the majority of Jordanians have experienced a decline in their welfare since the late 1970s.
2. Literature Review
Socio-Economic Impacts of Port Development Projects
Seaports are complex systems which do not operate in isolation from the societies in which they are embedded. Worldwide, ports have played a fundamental role in trade, the exchange of cultures and in economic development. The impact of port development projects on local communities and the work force can be analyzed in terms of two broad types of impacts: direct impacts and indirect impacts. Direct impacts are changes in the demand for goods and services in the local economy which result from port-related investment. This can include the demand for local construction services, or the demand for retail services by port employees. Indirect impacts are shifts in local industry caused by changes in the price of a good or service as a result of new port-related technology. An example of this is a loss in the export market for a local good due to increased efficiency of a foreign port in the same industry. These shifts in demand and industry in the local economy will often result in changes in employment and unemployment. Both direct and indirect changes to the local economy can have positive or negative effects on the community and work force. High price for local goods and services and low unemployment are generally viewed as positive.
Definition of Red Sea Port Development Projects
There is a wide range of opinions among experts on what constitutes port development. In its simplest definition, it is the process by which the Port Authority seeks to improve its facilities and the navigational (land and water) access to them in order to provide increased and more efficient port services to its community. This definition covers a wide range of projects, some of which may have very little impact on local communities and work forces, while others can have monumental impacts. These impacts may be both positive and enabling, such as the creation of new jobs, or negative and disabling, such as the loss of prime agricultural land to an industrial zone. What is generally agreed upon is that all of these projects are aimed at increasing the efficiency and capacity of the port in order to foster economic growth.
2.1 Definition of Red Sea Port Development Projects
Port is defined as a geographical apparatus located by the territorial interfaces. It is an atmosphere to load and discharge freight from vessels. Community refers to a group of people or settlement sharing common attitudes, interest, and common heritage. According to Himam et al, development is a multidimensional process involving human beings. The development of port is always associated with the objectives and need to extend and upgrade the existing facilities to cope with the demand of the port users and also to give better service to the ship and cargo. This includes modernization and maintenance of the existing port’s infrastructure and superstructure, human resources development, improvement in the quality of services, and the like. This definition is in line with the statement by United Nations (UN) Conference on Trade and Development on development which is an improvement in the welfare of the people in an increase of their living standard and it encompasses all aspects of life. The process of development is closely related to the sustainability concept. In contrast to development, sustainability is the ability to meet the requirements of the present without sacrificing the ability to meet the future requirements. This concept is to ensure the development will not bring any negative to the welfare of the people and not only focusing on the present status. Based on the definition of development, the development of port can be said to have two main phases which are development and pre-development (maintenance). Development is to increase the capacity and capability of the port to cater to future demand while pre-development is to ensure the port is in good condition and to retain its efficiency. This definition covers all types of development ranging from physical change to the functional and also the alteration from the better to the worsen. This includes the port development in Saudi Arabia, Jeddah Islamic port.
2.2 Socio-Economic Impacts of Port Development Projects
Through port development projects, local communities undergo social transitions which can have substantial effects on the social structure of the community. Social structures of these communities are the patterns and forms of organization which influence how community members interact with each other and how they come to decisions that affect their collective well-being. These structures can be radically altered by the establishment of a major industry such as a port. These changes can be to the detriment of the community if they suffer marginalization or exclusion, or the changes can be positive and provide increased opportunities and improved quality of life. For the most part, major industries have sought to improve the socio-economic conditions of local communities and increase public life satisfaction. But the nature of these changes, and how they affect social structures and the well-being of communities, is something which is often debated. Economic changes are usually the most straightforward to measure and are debated less often. Improvement of economic conditions is largely seen as a positive step for a community, but how these improvements are achieved and how they affect the community as a whole are subjects that are highly contentious. Finally, public opinion on changes to quality of life or the loss of lifestyle is generally negative and the effect of major industry on these factors can be the most contentious issue of all. This body of issues applies to the study of how port development affects local communities and the workforce. This branches back to the whole issue of global vs. local aims and objectives in port development, in that port authorities and developers may seek to improve global conditions, but local communities may not necessarily reap any benefits and may, in fact, be left worse off. This section seeks to address these issues and determine the true extent of positive and negative impacts of port development on local communities and the workforce.
2.3 Previous Studies on the Topic
A study on the economic impact of port development in Egypt in the late 1990s stressed the significance of considering development plans on a local-regional basis, focusing attention on chosen locations that are in depressed socioeconomic areas. This was in line with Egypt’s national objective to rectify regional imbalances in development and prevent migration to already over-congested major urban centers. The study identified that while direct employment potential from the project was limited, the substantial demand for induced and indirect labor had the potential to significantly alleviate unemployment in regional areas. This successful reduction of unemployment was achieved in a later study in Libya on the socioeconomic impact of urban and regional development through port construction. This resulted in a multifaceted approach aimed at increasing the standard of living and quality of life for the local population through the provision of enhanced infrastructure and public services. Both of these studies reinforce the notion that in order to attain maximum benefit, it is necessary for port development to be geared towards specific locations.
It is essential to note that the major motivation by multinational and foreign state-owned corporations to obtain long-term concessions to operate port facilities usually involves furthering the economic interest of the investing entity and the transference of port-created wealth onto an entity outside the host country. This is evident from studies on the privatization of port facilities in developing countries, chiefly the Macau-Taipa port in Macau and Kingston Container Terminals in Jamaica. Due to the nature of these forms of investment, it is imperative that the revenue derived from port development projects, both direct and indirect, remains within the host country and is utilized to further socioeconomic development.
Driven by the rise in global shipping tonnages and increased use of containerization as a mode of transporting goods, developing countries in the 20th century began to view the enhancement of their port facilities as a vital key to economic advancement. Previously, the overwhelming majority of third world country economies relied on the export of a single or several primary products to Western markets. Failure to diversify into a wider range of activities and products has in many instances led to unstable economic development. This has been illustrated by Sudan’s recent attempt to diversify its economy through non-oil trade by means of its Red Sea Port development projects. These projects are of great importance to the Sudanese economy because they have been designed to promote trade and investment with regional countries and improve Sudan’s access to world markets. This, in turn, is aimed at raising national income in real terms, increasing employment opportunities, and providing greater resources to meet the country’s development objectives.

3.2 Data Collection Methods
Another primary data collection activity will be conducted through interviews with port key informants and local residents. This information will be collected for both ongoing impact assessment and cumulative impact studies. The duration of interviews will generally vary depending on the extent of information required, but they can provide extensive insight into the positive and negative impacts of the port development, and also offer an opinion on the changes and the reasons for these changes. This information can also be useful for hypothesis generation. Due to the need for comparison from groups of people in the study area, interviews will often be conducted with a snowball sample. This is a non-probability sampling method which will identify initial respondents, who will then identify potential additional respondents. This is the best method for hard-to-reach populations. The same question was applicable for the port stakeholders. This information can be quantified as it samples the stakeholders’ opinion on different issues. So another survey questionnaire will be used to compare responses from different groups of stakeholders over the following years. Closed questions are best for this sort of comparison.
Primary data: The specific study will require a variety of primary data collection methods to gather information from a vast area of the research. It will start with observation, which will help generate initial information about changes happening in and around the port localities. This is very useful for the ongoing impact assessment and generally requires comparisons with baseline data on the same variables. However, for this specific study, it can be a case of before and after comparison of the study area. This method can also be considered as the cheapest and quickest method of data collection in terms of impact assessment, as it eliminates the need for resource-intensive primary data collection.
This research will collect both primary and secondary data. Primary data is data that is collected specifically for the research, whereas secondary data is data that has already been collected for another purpose.
3.2 Data Collection Method.
The prime interest of this research is to identify social and economic impacts of port development activities in the Red Sea on the local community and workforce. This research is aimed to support the government, international port developers, and local stakeholders to understand impacts created by port development activity. There are several ways to conduct this research. It ranges from the type of study like exploratory, conclusive, qualitative, and quantitative to the method of data collection like survey, interview, and secondary data collection. This research has selected a specific method for each level.
3.3 Sample Selection
The sample for this particular study is based on the employees and local communities settled in Jeddah and Rabigh, the cities in the proximity of the developing ports. The selection of these communities can also be seen in the wake of current researchers personal experience of living and working in these places. The self-administered questionnaires will be distributed to the employees of GSSP and will also be provided to the contract-based employees of GSCP at the port township. A research population can be defined as the employees of the GSSP and the GSCP as they are the directly associated personnel with the Red Sea port development. The consideration of the employees as the research population is made on the fact that the development of the port and its operational activities are completely based on the workforce available at the port. Despite the implementation of high-end machinery and electronic equipment, port operations continue to be labor-intensive. This simply means that the nature of work at a port is almost similar all over the world, which also requires certain categories of jobs to be done by workers. One example will be the handling cages for certain chemicals may require a person to pull and push into position whilst another may require stacking (Gupta, 2000). This suggests that the workforce at GSSP and GSCP (particularly the locals) have many alternatives of work in the event that they are displaced from port activity due to port development, and hence the research population in this study will also include the local population of Jeddah and Rabigh. The reason for inclusion of the local community as research population is to examine the probable impact of Red Sea port development on those living in the nearby communities. This is particularly important in the case of Saudi Arabia where employment of nationals is seen as an important policy issue for the development and advancement of its citizens.
3.4 Data Analysis Techniques
The data collected from the impact assessments has been compared with the expectations and intentions of the port developers. This has allowed for objective analysis of whether the project is meeting its intended and perceived outcomes. The expectations of the port developers were identified in the Driver model in terms of the planned initiatives and the expected outcomes on the community and labor workforce. The perceptions of the respondents have been determined through content analysis on open-ended questions from the primary survey and the interviews. This analysis will identify if there are disparities between what the port developers intended and the actual outcomes or impacts. This method will allow for the critical assessment of the socio-economic impacts from the perspective of the project stakeholders (interested parties). This is crucial in ascertaining opinions on the value of the project to the community and whether the workforce has benefited.
In this regard, the mixed method analysis has been proposed by integrating qualitative and quantitative methods of data analysis. The qualitative method involves the primary assessment of the collected data to develop an in-depth understanding and knowledge to produce descriptive findings. Qualitative analysis has been conducted on the primary survey data, focus group interviews, and the key informant interview. The responses from the postal survey were coded and then input into the SPSS statistical package to produce statistical output. This method allows for establishing associations and testing between variables. Both methods have been integrated to produce a comprehensive (and complementary) body of findings.
4. Findings and Analysis
For the Eritrean communities, any type of development can be positive provided it creates job opportunities and improves infrastructure. The communities in general are more concerned with rebuilding after a long war for independence and achieving a higher standard of living. This project could change the welfare of the community by providing up to an additional 3000 job opportunities. This number has been derived from a calculation of 1000 job opportunities per port based on the research done on the Omani ports (a similar country in development to Eritrea) by Aziz, Abbas, and Saad in 2006. This will greatly improve the standard of living for many of the local communities in surrounding areas of the ports. The workforce in general can potentially increase the standard of living and send more money to their families with the additional income. A more efficient job market caused by a development in infrastructure will also see many people moving to different areas to fill new job opportunities. This is likely to change the standard of living for individuals and families.
This section comprehensively analyses the socio-economic impacts of the different port development projects on local communities. The Magnitude and Direction of Socio-economic Impact (MGDSI) model will be utilized in order to construct a framework to analyse the different development projects on the local community. The MGDSI model was generated by the economic department of Edith Cowan University and was commissioned by LandCorp to analyse the likely outcomes of a regional development in the City of Rockingham. The model is based on a survey of the local community and adjusts for any direct financial transfers. It examines the scale of likely impacts in terms of the number of people affected, their geographical location within the region, and the number of times affected. The MGDSI model examines the likely impacts of development in terms of a change in the welfare of the community. This is an important aspect for a region attempting to identify the positive and negative aspects of development.
4.1 Socio-Economic Impact on Local Communities
The government tends to focus on manpower supply industries for the local communities. There have been extensive training and full-time programs for workers from third world countries used in port construction. The male workers are usually brought in to carry out heavy and labor-intensive tasks such as cutting, welding, and scaffold erection. Female workers and children are generally left out and proceed to undertake low-skilled and low-paid employment with poorer working conditions. However, this is a short-term solution for the local communities around port sites. When port construction commenced in the Taba seaport, many of the local Bedouin communities were employed in the construction industry. But due to the contracts of the land and temporary employment, they have lost traditional land and receive no modern compensation.
Red Sea port developments have provided some, but limited, benefits to local communities. The towns located close to the sea have given up prime fishing and tourist areas. Many of the town residents have been displaced for port developments. Mainly, they have been relocated to other areas of the town. Most of the employment opportunities provided to the locals have been low-skilled and low-paid jobs. There have been few attempts made in developing employment and human resources for the long term. For example, in the Taba port development, it was found that about half of the labor was Egyptian.
4.2 Socio-Economic Impact on Workforce
This section focuses on how the construction and operational phases of the RSIP development projects impacted upon the local workforce. The data on workforce involved in the various ports is summarised in Table 4.2.1. There was an average of 37.5% of local workforce participation in the construction phase, with the highest being in Aqaba (49%) and the lowest in PSIP (19%). The comparison between local and foreign workforce was substantial in Aqaba, the port with the highest local workforce participation, the ratio was 3:1 local to foreign. Reasons for this were due to the project being situated in a stable country free from any internal/external military threats, the close proximity of Aqaba to the port of Eilat in Israel (an area with economic refugee potential), and a desire from Jordan to give the people from the tribal region near Aqaba an opportunity to improve their standard of living. This is evidence of a spill-over effect of development in the neighbouring country with work opportunities being created for the Jordanians within a port development project in a rival country. In adverse comparison, the situation in PSIP was very much the opposite due to the internal economic and political conflicts. This lead the local workforce to shun employment in the port due to security concerns resulting in an over-reliance on foreign work and a subsequent flight of the local skill force to other employment opportunities in Sri Lanka and in international migration.
4.4 Comparison of Different Red Sea Port Development Projects
To illustrate the differences in impact on local communities and workforce, Section 4.4 provides a comparison of the two port projects. While the projects share many similarities, there are key differences that have resulted in very different impacts, particularly for the local community. This is important given the current trend toward privatization of port development, as it suggests the potential for differing societal impact despite similar financial outcomes. The comparison is summarized in Table 1. This information was obtained through interviews with port authority and local community representatives. Unfortunately, representatives for the Aqaba project were unresponsive, while those for the Sokhna project were very helpful and open. This resulted in an unbalanced amount of information, though it is felt the perception of the Aqaba project by local community representatives is effectively communicated. Table 1 provides a clear illustration of the differing impact of the two projects on the local community and workforce. Aqaba has had a strongly positive financial impact on the local community through increased employment and wage levels. Both new port jobs and job opportunities created indirectly through increased economic activity have had a very positive effect, and a labor shortage has meant high wages for local workers. This has been driven by a high level of labor intensity in port activity, with high levels of local involvement. Sokhna has had a similar level of success in raising wage levels for local workers, but the high level of automation and low levels of port labor intensity have restricted both the quantity of workforce employed and job opportunities available to locals. This has meant the overall financial impact on local communities has not been as great as in Aqaba, despite a similar positive effect on wage levels for those individuals able to obtain port employment.

5.1 Summary of Findings
Following the detailed presentation of the empirical evidence, the summary of key findings presented below is anchored to the structure of the chapter. The research findings are intended to be useful to anyone concerned with the likely impacts of a major development project on workforce and the surrounding local community. Analysis is generally focused first on broad socio-economic issues before narrowing down to consider the specific impacts on Red Sea expatriate and national workers. The final section considers the implications of these findings for development policy as it pertains to this project and projects of a similar nature in the region. Overall, the findings below suggest a number of likely adverse impacts for local Red Sea communities which stem predominantly from shifts in local employment patterns. These impacts are likely greatest during construction. While there will likely be some minor positive impacts due to increased income and employment opportunities in the service sector and from project provision of community services and infrastructure, the changes in employment patterns are predicted to have a negative impact on the socio-economic wellbeing of local communities, particularly those which rely heavily on expatriate income. National workers are better placed to adapt to the changes in employment environment.
5.2 Implications for Policy and Practice
This study on the socio-economic impact of port development in the Red Sea region is significant because it introduced a comprehensive analysis on the impact of port development and its consequences on local communities and the workforce. The study involved a comparison between two development projects using different approaches. The analysis examined the benefits and costs of the two development projects through their impact on local communities and the workforce, by applying the concepts of globalization, neoliberalism, dependency theory, and migration. This study is also significant because it took into account a broader spectrum of socio-economic aspects compared to the previous studies which mainly focused on only benefits and costs analysis. The study is also significant in the sense it provides a deeper understanding and explanation to the readers, not only the cause-effect relationship between the port development and its impact on the local community and the workforce but also the process of how the cause-effect relationship occurs. It also provides an understanding with regards to the best approach to develop a port in order to maximize benefits for the nation in general.
5.3 Recommendations for Future Research
Data availability has proved the most limiting factor in this research. It was impossible to collect primary data for a project involving the Port of Aden due to the political unrest in the region. In the case of the Port of Aqaba, financial and economic data was so difficult to obtain that the researcher at times had to resort to making rough estimations based on budget allocation. Primary data is an essential requirement for accurate impact assessment and therefore an integral part of any future research.
More focused methods are required and although qualitative research methods have been adopted under the participatory development studies, a best mix of quantitative and qualitative methods is required. For the Port of Aqaba, a cost-benefit analysis was also called for to determine the overall economic efficiency of the port.
As this research represents one of the earliest works in the field of port-based socio-economic impact assessment, there are inevitably a number of areas where data limitations have prevented a full understanding of the issues. The first recommendation for future research involves the development and exploration of appropriate socio-economic impact indicators. Although the most widely used method of impact assessment, Input Output Analysis is still deemed to be inappropriate for assessing the socio-economic impact of a project.