The rumours had been looming on the GCC's horizon for a considerable period of time. Business communities and labourers alike were contemplating the harsh implications of such an act. Last week, however, their fears came one step closer to reality as Bahrain's Minister of Labour, Dr Majeed Al Alawi, suggested limiting the residency of unskilled workers in the Gulf to a maximum six year term.
After explaining that the step was one of several that would limit the influx of foreign workers to the island state in particular and the GCC in general, however, Al Alawi was bombarded by criticism from the regional business community. Al Alawi said that the increasing number of foreign workers in the region "eroded the national character of the GCC states". But he wasn't alone. Joining forces was his UAE counterpart Dr Ali Bin Abdullah Al Ka'abi who said that the (3+3 law), which permits unskilled workers to stay in the country for three years and then renew their residency for the same period, would be discussed among the GCC labour ministers' council. Al Ka'abi noted that enacting this law would "protect" the UAE's "identity" and called for approval.
The question posed by many though is how would terminating the residency of one foreign worker and granting residency to another foreign worker protect this regional identity? Moreover, is a six-year residency-cap on the millions of foreign workers in the Gulf the solution to the GCC's "erosion of its identity"? Many would strongly disagree. The chairman of Galadari Investment Office, Rashid AW Galadari, responds to the claim that labourers cause an erosion of culture in the GCC by saying: "This statement is an oxymoron at best and hypocritical at worst - the status quo is that the unskilled labour pool is not in any position, even if it wanted to be, to erode the GCC's national character of the country. It is kept as far as possible out of mainstream life."
He adds that labourers mostly have no choice in housing, transport, or freedom of choice as to where they work. He believes it is the nationals' job to preserve the culture rather than place the blame on foreign labourers. He adds that the UAE should be an example to its neighbours in this respect. "The UAE is the first country from the Middle East to become synonymous with safety and peaceful attributes as well as economic prowess. The fact that we (UAE) have managed to generate so much positive PR globally shows what potential this part of the world has."
Another UAE national business executive, Mohammed Al Khammas, CEO of Al Ahli Group, shares Galadari's opinion. "The increase in the blue collar workforce does not affect the culture of the Middle East or any culture for that matter. Our cultures lack in awareness and are being diluted for other reasons beyond the labour force problem. Labour forces in the MENA region are confined to their reality of the workplace, and are not being absorbed into society and thus do not affect it at large," explains Al Khammas.
It is no surprise that chief among opposition groups is the Bahrain Chamber of Commerce and Industry, which warns that the plan might not apply to markets in the GCC and could be a threat to their stability. Businesses across the GCC did not disguise their dismay at such a proposal, saying it would create a shortage of trained staff and would have impeding effects on the labour market. Due to the strong economic boom, the Gulf has become home to millions of expatriates today with a large Indian, Pakistani and Asian population, continuously employed to work in various growing industries across the region. According to the United Nations Economic and Social Commission for Western Asia Bahrain was the fastest growing economy in the Arab World in 2006.
Construction is one of the fastest growing sectors in the Gulf state, which has a population of 708,573 (of which 235,108 are non-nationals). Sweating over billions of dollars worth of projects is a labour force of 352,000, of which 44% is non-national. More specifically, labour force by occupation can be broken down to 79% for industry, 20% for services and 1% for agriculture. One senior operations manager at a Bahrain-based construction company explained his outrage at the proposed plan and outlined why it would cause considerable harm to his business. "There are many activities carried out by companies whether it's landscaping or construction. Everyone has their own skills. This means that when the labourers are employed they master these skills over a period of time and then you cannot call them unskilled," he says.
This skill can only come about through repeated activities that labourers engage in, he adds. "When you take these labourers away and stop this development at a certain point you are taking away that formulated advantage from me and I have to start all over again with new people, which is definitely not good for the business."
Also affected by this proposal, he explains, will be the high ranking, well trained labourers. After training people for a long period of time, they are then promoted to the role of supervisor. This will become impossible to implement with such a law in place and would seriously affect construction companies across the Gulf. "This means we don't have that extendable time for future upgrading of these people. If someone works in a company for only three years, he knows and I know that he is temporary, therefore I will not plan for his future and he knows eventually he will be kicked out," he says.
Galadari agrees that the proposal will do much more damage than good. He calls it "extremely harsh" and believes that "everyone has a purpose, whether someone is building a property or pouring a cup of tea. Messing around with a system that has been with us since the beginning is definitely not a good thing."
There are two key words in the Middle East today, he says, "real estate". And with the amount of projects and construction going on, he believes it would be completely unfeasible to have these types of caps.
"On the contrary I think if we provide some sort of basic education or train them in a specific skillset then that would reflect even better on our side by offering them something which their own country wouldn't," Galadari says, adding that there is no such thing as an unskilled labourer and if any human being had a complete lack of skills then they would not be working anywhere, including their own country.
Whether the Bahraini minister is referring to the semi-skilled labour pool, more visible on the streets and in day-to-day life, Galadari believes a second glance should be given to the recent effect of the amnesty that Dubai experienced including restaurant staff, delivery drivers and car wash teams, for example.
"The numbers have been adversely affected by the departure of many people under the amnesty and everyone is complaining that the service levels that we have become used to have dropped." The proposal has further implications for companies, complicating an already complex procedure: the hiring of labourers. The operations manager in Bahrain explains that in addition to consuming a great deal of time, there is the vast amount of paperwork to fill in for immigration purposes. "It's a nightmare for everybody," he says adding, "if the cap was implemented, how much more money would it cost everybody?"
His argument is that if all the factors connected to this are taken into consideration such as services connected to labour supply, companies would pay the same amount for a shorter period of time. "For instance, if I am paying US$2000 to bring in a labourer, I will do my best to last him with me for 20 years. This decision means that your investment instead of being put into 15 or 20 years is put into three or six only. Therefore, the business return is lower."
One advantage, however, is giving more opportunities for more labourers in their countries to come and work in the region. "But we also have to think of our business," he says.
Although Al Alawi hopes that implementing the cap will solve one of the country's biggest problems; unemployment, which is estimated at 15%, many are doubtful. Blue collar work is mainly dominated by unskilled labour and shunned by nationals. Most construction companies operating in the region depend on the labour force of South and Southeast Asia.
If nationalisation is the goal, the operations manager says, then this is not the way to do it. He believes it has to start from the top, not the bottom.
"If they want to start nationalisation they have to build businesses for nationals. This has nothing to do with the labourers. It's to do with each and every single business," he says, adding that encouraging local businesses and activities is the key.
He concludes his argument by saying: "There is always a way if they [governments] can sacrifice a little bit of their money in a Swiss bank and put it into their people's businesses."
Galadari's view is "the GCC cannot have its baklawa and eat it!" He believes that the unprecedented nature and speed of the governments' plans in the region means that there will always be a need to import unskilled and semi-skilled workers. National populations are not large enough and the cultural identity in this part of the world makes it unlikely that local nationals will ever work in a truly unskilled environment, such as blue collar labourers in the construction industry.
"To build an extraordinary vision you have to start with lots of people to lay the bricks or pour the concrete, it's quite simple. Without labour there is no progress. There is not enough local labour, ergo import it from countries where there is an economic incentive to move abroad. And provide better facilities for these people so that they are not considered unnecessary eyesores," concludes Galadari. The fight is well and truly on.For all the latest business 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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