September 04, 2007
Incentives and Accountability in Gulf Labor Markets
If the penalty for shooting someone was a $12 fine, and a warning that repeat offenders might lose access to firearms, what would happen? The murder rate would shoot up. We rely on incentives and disincentives to promote or dissuade against all sorts of things, from charitable giving to compliance with the law.
Now consider the way the Gulf's millions of expatriates are employed. Their visas are sponsored by individual nationals or companies that are majority-owned by Gulf citizens. Expatriates cannot change jobs without the permission of their sponsors, receive no minimum wage, and are forbidden from bargaining collectively. Whatever workplace safety laws do exist to protect them often go unenforced. Employers often treat them shabbily, building squalid labor camps for them in which they often sleep 12 or more in a room. They go unpaid for months on end. (Al Jazeera English recently ran a two-part documentary called Blood, Sweat, & Tears on their conditions, which you can view online. Conveniently, it was set in Dubai, rather than AJE's home of Qatar, an equally bad offender).
Eager to fend off bad publicity, governments have recently responded to international criticisms of these practices. They have started to increase inspections of labor camps, and disallowed companies that severely mistreat their workers (or fail to pay them) from obtaining new visas. Small fines have also been levied. There has even been a limited attempt to name and shame companies breaking labor laws, focusing on foreign-owned firms, and those owned by a handful of small national businessmen. But many of the worst offenders are powerful- they include members of royal families- and are essentially off-limits. Furthermore, naming and shaming is of little use against very small companies and in preventing the abuse of housemaids, another major problem in the region.
A more meaningful solution must involve the following elements:
First, there needs to be a major increase in the number of labor inspections in order that widespread violations of existing laws do not go unreported. Workers should also be able to report abusive employers or poor living conditions to these inspectors in their own languages. This should be combined with mandatory training for both workers and employers about workplace laws.
Second, there need to be serious penalties for companies that violate labor laws. Right now, UAE companies that ignore rules giving workers a 2½ hour afternoon break during July and August are fined $2700, a fine that doubles and triples for second- and third-time offenders. Given the vast scale of the construction projects involved, many companies prefer to pay these small fines rather than slow down the pace of work. For the fines to have a meaningful effect, they should be in the order of this much per worker.
Third, governments need to make the owners and managements of companies that violate laws accountable for their actions. This involves sentencing at least a token number of individuals to jail time, and publicly reporting on the same.
Without the right incentive structures, governments can continue to claim that they are really not doing anything wrong and that it is employers who are breaking laws, but these claims simply will not hold water.
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I am afraid what the Gulf expatriates need are more than better incentive structures. They need a shift in mentality. The fact is what Gulf countries are doing now to improve conditions is not driven by a real desire to change things for the better, but simply wanting to please international watch dogs and western governments.
When the Gulf starts to realize that it needs to treat its expatriates with respect, then they will begin by changing the laws that produce virtual indentured servitude and widespread abuse.
There is no respect for expat's rights in the Gulf whatsoever. Even when the law provides some minimal protection, the system fails to deliver because of the sheer weakness of the employee vis-a-vis the employer. And they see nothing wrong in that at all.
Posted by: tigermarks at September 4, 2007 04:24 PM
Workers should also be able to report abusive employers or poor living conditions to these inspectors in their own languages.
I am not sure this is a realistic proposition given language diversity among labourers. Even in developed markets this is not necessarily the case.
Posted by: The Lounsbury at September 4, 2007 05:22 PM
"rules giving workers a 2½ hour afternoon break "
Can I get one of those rules here in my advanced country?
Yes, yes, I know we're talking about construction laborers in Dante's Third Circle degree heat, but still. . . .
Posted by: matthew hogan at September 4, 2007 07:22 PM
now the siesta was one of the finest Iberian inventions, lately I've heard multinationals are doing away with it. Shame.
Isn't the problem also that governments themselves have little incentive to treat expat workers well? I mean, it's basic exploitation, mildly better than slavery. Why ruin a profitable setup?
tigermarks: Yes, they are driven by wanting to please the West, but you can't just will into existence a change in mindsets, especially given the benefits citizens derive from the current system. Thus, you work with what you have.
Klaus: Western pressure is the short answer. Dubai, Doha, and Manama crave positive Western attention (tourists, dollars, and respect) and will be hard-pressed to maintain a positive image if human rights groups keep highlighting their more treatment of foreign workers. The more they grow and succeed, the larger these problems become, and the greater the number of criticisms drawn. Thus the effort to clean up the worst excesses.
L: You don't need to hire a division to translate Igbo in Muscat, but there are almost certainly enough workers who speak Hindi, Urdu, Pastho, Telegu, Punjabi, and Malayalam (but not English or Arabic) in a place like the UAE that the government could hire a few full-time staffers speaking these languages and willing to act as interpreters.
Posted by: dubaiwalla at September 5, 2007 12:32 AM
The very fact you just cited six languages (of course Urdu and Hindi are effectively one, so I'll say 4-5) tells me it's not a terribly reasonable standard mate. In developed countries that sort of standard raises howls of protest.
Start by putting up unreasonable standards, and you get nowhere.
Posted by: The Lounsbury at September 5, 2007 06:29 AM
By the way, a usage note, typically expatriate refers to white collar staff, not to labour per se. I note that not to be snotty but rather because for me first reading this engendered confusion.
Posted by: The Lounsbury at September 5, 2007 06:31 AM
Ah, the semantics of indentured servitude.
Posted by: matthew hogan at September 5, 2007 10:01 AM
ah, but no. White collar staff generally can fuck off without the same issues as a labourer.
Posted by: The Lounsbury at September 5, 2007 12:14 PM