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Wed 23 Feb 2011 12:00 AM

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More than a job’s worth

Does UAE employment reform go far enough for the construction industry?

More than a job’s worth
RAMPING UP: workers can now terminate their contracts after serving for two years.

One of the biggest stories that PMV covered last month was a
worker riot at a labour camp in the Al Quoz district of Dubai. At first, the riot
was blamed on New Year celebrations getting out of hand, but then more details began
to emerge that told of deep rooted animosity from the workers against the regime
they were employed by.

For a chaotic couple of days there were a series of conflicting
reports. A security guard was first reported as killed, which was later confirmed
as injured, trying to break up a brawl between workers.

It became clear that heavy handed tactics by the security guards
caused the workers to retaliate and a fight escalated that was to allegedly involve
2,000 workers. It was also alleged that the workers destroyed furniture, buses and
windows. In the aftermath workers and the camp management revealed that workers
had been angered by systematic mis-treatment at the camp. The security guard’s action
had been the last straw.

Although when contacted by PMV, the HR company that runs the
camp told the magazine that there had been a “little management problem” and that
had been resolved after a three-day protest in which the workers refused to work
and police were called in. “Little management problem” may have been  a case of putting it mildy.

A few days later 5,000 Bangladeshi workers began a peaceful protest
and refused to return to work for the building giant Arabtec. Under current Bangladeshi
law, the Bangladesh Consulate demands a minimum wage of Dhs750 per month for housemaids
before it allows them to work for companies in the UAE. Arabtec’s workers are holding
out – the protest was still on-going as PMV went to press – for a rise of about
Dhs200 (to between Dhs1,000-1,200 depending on their role) so they can cover their

living costs.

Both incidents have exposed the flaws in a system that may have
been paying but also left many bereft of a suitable way to live or protect their
rights, or a mechanism to air any grievences without controvening contracts or breaking
the law. Changes to employment law in the UAE suggest that at last this is being

You couldn’t move without tripping over a piece of labour reform
last month in the UAE. Expanding worker rights and boosting local participation
in the private sector.

Certainly the wave of legislation will introduce greater flexibility
in the employment market, improve productivity, protect worker rights, and help
it reach its long-stated aim of improving local participation in the private sector.
These are reforms so wide-spread and wide-ranging that it could take months for
the full ramifications for PMV companies. It is clear, however, that labour and
capital-intensive operations with high levels of imported employees are going to
feel the effects as much as anyone.

Firstly there was the end of the no objection certificates (NOC)
which prevented workers from moving jobs without their employer’s consent.
Following the example set by Bahrain
in 2009, workers in the UAE who have been in a job for two years can now move with
just a stamp from the employment ministry.

Job contracts will now have to be renewed every two years not
three. While some have bemoaned the move as a way of introducing stealth taxation
(the lower term means that visas, work permits, etc will have to be renewed and
paid for on a more frequent basis), it also means that employees who were missing
out on end-of-service payments under the previous three-year term can now get paid.
If there is a breach of contract or employees are not getting their wages, meaning
that if the employer has committed a violation, the employment ministry needs to
be informed and interfere to end the contract between them, and “if the employee
commits any violations they will suffer a year-long work ban”.

The days of workers being beholden to their contracts with their
employees are nearing an end. And more flexibility for the workforce is a good thing
for employers concerned

with finding committed and
experienced workers.

More controversially a new framework has also been unveiled with
a three-part ranking system for UAE firms based on points such as diversity,
salary payment, ccommodation standards and compliance.

To secure an ‘A’ rank, firms must pay graduates a base wage of
Dhs12,000 per month, medium-skilled works Dh7,000 per month and low-skill workers
Dh5,000 per month. The scheme is designed to boost Emiratisation policies – and,
as a result, at least 15 percent of the workforce in ‘A’ companies must be Emirati,
a figure that rises to 20 percent at senior or management level.

Category B companies must have at least 25 percent of
workers from different
countries while any black points given to category C – the lowest rating – will
be in place for a year, the official said.

When you consider the labour intensive nature of most transportation,
plant and construction companies, the changes could have a profound
and expensive effect on PMV companies. With so-called low skilled workers being
classified as having a secondary school dimploma, the proportion for many companies
will be a workforce that is well above the  80% limit of ‘unskilled’ workers.

“How this works for big construction or transportation companies
remains to be seen, and we believe it will only be a requirement if a company wants
to attain a certain band. This needs to be confirmed,” pointed out Insider Emirates.

Incorporating Emirati participation has been a thorny
subject for some time but
higher numbers of UAE nationals in the private sector is a necessity says Tamer
Amer of Black Cat
Engineering & Construction.

“Nationalisation is no longer an option, it is a necessary initiative,”
he says. “We need to examine a strategic approach that encourages the opening of
the communication channels between the private industry and policy makers. In fact,
short and long-term programmes need to be developed to engage the private industry
in identifying the gaps and developing solutions that benefit the private employer,
the local national and sustain growth.”

It is beyond doubt that the UAE’s emiratisation policy reform
address the issues of getting well-educated nationals into well-paying or rewarding
jobs in the private sector.

It is debatable how they could be successfully applied the plant,
machinery, and vehicle sectors. It is impractical to expect an influx of graduates
to start working on sites or machinery.

However companies could greatly benefit from employing young
and forward thinking local talent at a junior management level but it is highly
unlikely that they will be on the top of the list in reforms creating stronger links
between education and employment.

The construction sector may contribute 8.6% to GDP but employs
47.5% of the foreign manpower, according to Labour Ministry statistics. It is not
percieved to be an attractive propostion as the public sector or the more prestigious
parts of the private sector such as oil and gas and the financial sector for young
UAE jobseekers.

According to Paul Dyer, a specialist in labour issues at the
Dubai School of Government, eliminating the quota system altogether would be a more
radical but better option in the long run. He uses Bahrain as an example of how this could

“Emiratis were hired only to keep with the quota system,” he
said. “There is a lot of reliance on low-skilled labour here. Firms will need to
rethink this. In the long term, firms have to be efficient with the employees they
have, careful with whom they bring in to make good use of it. In this context, reform

is right.”

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