The UAE's Dh1 trillion ($270 billion) construction industry is likely to be hit by an amnesty declared by the government for illegal workers.

The illegal workers, who constitute 20 per cent of the 1.5 million construction industry workforce, have been given a three-month reprieve to legalise their status or leave the country without penalty, said a report.

With the imminent exodus of more than 300,000 illegal workers from the construction sites, the industry will face a shortfall of skilled and semi skilled workers, said the Khaleej Times report.

Many of the construction industry giants fear this could lead to a subsequent delay as well as an escalation of project costs, it said.

"The move, aimed at regularising and streamlining the expat labour sector will severely hit several construction companies and sub contractors who have been heavily dependant on lower-priced illegal labour force," it quoted an industry source as saying.

The shortage is expected to be temporary as the industry expects the concerned government departments to be lenient with the issue of new visas to facilitate redeployment of the required workers from overseas, ther report said.