Minimum wage has been a heated issue in the GCC for some time, with little response from some governments. Assistant editor Jamie Stewart uncovers the costs involved.
The GCC's marketing on the global stage is an example to the world. Gleaming towers stand triumphantly in photographs, and artist's renditions of forthcoming projects attract business and investment from around the world.
The value of the hands that build the GCC to the respective governments is beyond calculation. Without the manhours, without the sweat and commitment of the expatriate labour force, there would be no gleaming towers to photograph.
We monitor, we report, we publicise, we shame. That’s how we have an impact. - Joe Stork, Human Rights Watch
There may be artist's renditions, but they would remain creations of a computer program, no more than graphics spread across glossy brochure pages.
So it may come as some surprise to learn the financial value of the workforce, as governments benefit through their own refusal to adopt a minimum wage.
The methodology behind putting a value on a construction contract is convoluted. There is no set value behind the cost of labour within a project, due to the fluxuation of various other factors. However, David Savage, managing director of Al-Habtoor Leighton, one of the region's biggest contractors, provides a rough guide.
"As a rule of thumb, labour costs cover about 7 - 8% of the cost of a contract. There are also many associated costs, such as transport and accommodation. It is not just the wages. The 7 - 8% is inclusive of everything."
Quite a telling sum. A few simple mathematics present a guide as to how far the value of a contract would rise, if a liveable minimum wage was introduced.
Taking the UAE as an example, the average monthly wage of an unskilled labourer employed by a multi-national construction company is US $163 (AED600).
Assuming that the average labourer works a six day week, although many will work seven, this sets the average daily wage at around US $7 a day. This figure is in the same vein as labourers' wages on the Burj Dubai, who rioted in March 2006 over poor pay. One worker was quoted by the NGO Human Rights Watch (HRW) as saying that new workers were paid $7.60 daily.
If you define a liveable wage as one that covers the cost of living an independent life in the locality of the place of work, accounting for minimal rent and other basic expenditures, then the minimum wage would need to be set around $800 a month, or $33 a day in the UAE.
Take, for example, a hypothetical construction contract worth $100 million. If 7% of this covered labour cost, and a liveable minimum wage of $800 a month was set for the labour force, the cost of the contract would inflate to $128 million. A very substantial rise. Even more so when you bear in mind that not one dollar would constitute profit for any of the firms involved.
A minimum wage can be imposed by the home nation of the worker concerned, as India has imposed a minimum wage covering its domestic maids employed in the UAE, and the Philippines has done the same for its construction workers.
So what would be the ramifications if India was to impose a minimum wage covering its workers in the UAE? "We have looked at introducing a minimum wage for construction workers," says Venu Rajamony, the consul general of India. "But we have not taken any decisions yet. Any such move would have serious repercussions in commerce and industry."
It certainly would. The "serious repercussions" being that multinational companies, which would have been expending $100 million on a contract, would be looking at an additional outlay of $28 million, with no additional profit. The silent workforce
All workers deserve the opportunity to live an independent life, regardless of the cost. But with freedom of association and the right to collective bargaining prohibited, and the associated prohibition of free expression, how is the voice of the worker to be heard?
Organisations such as HRW do what they can, though their powers are limited. "We monitor, we report, we publicise, we shame. That's how we have an impact. Our powers are persuasion. We don't have any other powers," says Joe Stork, deputy director of the Middle East and North Africa division at HRW.
"You do have a group of people who want to work in monitoring various human rights violations. Freedom of association is important, and freedom of expression goes hand in hand."
The fact is, if the worker had an audible voice, and pressure to impose a minimum wage was heeded, then the result would be a fall in profit for the multi-nationals, and a probable slowdown in the rate of construction, and a resulting slowdown in economic growth.
Multi-nationals do have other means of providing for the workforce.
Housing workers within a labour camp, or "workforce accommodation" as the industry likes to refer to it, is one method of providing cost-efficient housing, without the need to pay a wage to cover the cost of private rental accommodation.
The minimum wage issue is prevalent across the GCC. Saudi Arabia, the UAE and Qatar do not have a set minimum wage in place.
Kuwait has a set minimum wage for public sector workers, but nothing relating to the private sector.
Oman has a minimum wage in place for Omani citizens, but not for foreign workers.
In short, construction labourers enjoy no protection from low wages in any of the GCC states.
The economic ramifications are too complex to make an accurate prediction on the effect of introducing a minimum wage, as the ripple effects would be felt across the economies of the region.
It is possible to say, however, what would not happen. If India was to impose a minimum, companies could not hire their workforce from other countries that had not imposed a minimum, due to availability issues.
Even in the current climate we consistently hear about the problems presented by the shortage of labour.
According to the UAE Indian embassy, Indian labourers account for approximately 55% of the UAE labour force.
If you were to remove this figure from the equation, the physical growth of the region would ground to a halt.
The GCC would be scarred by a raft of half-finished cities, of inadequate sky scrapers failing to scrape the sky and partially-completed, crane-infested shopping malls, abandoned to the harsh climate. The construction equivalent of the Mary Rose on a grand scale.
The labour force should have the governments of the GCC over a barrel with regard to the minimum wage. Unfortunately, due the disparity between the oil-fuelled Gulf economies and the central Asian economies which, though industrialising fast, remain predominantly agriculture based, the labour migration continues.
The modern cities of the gulf adorn magazine pages and billboards the world over, pulling in tourists, skilled workers, and the wealth that accompanies them.
It is the hands of the migrant workers that build a future for these gleaming cities.
They deserve the right to build a future for themselves.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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