Thursday, January 19, 2012

Changing Landscape of GCC Labor Market

Qatar promises labour reform before 2022 - Middle East - Al Jazeera English

The reforms in the GCC Labor market has started. It was Kuwait which has introduced major reforms more than a year ago. Even though these reforms are yet to fully implemented, they are moving ahead slowly. These changes will make major difference to the working conditions in GCC.

Qatar 2022 World Cup organisers will ensure contractors adhere to international labour laws at construction projects before the tournament, the head of the event's organising committee has said.
Hassan al-Thawadi, the Qatar 2022 general secretary, said on Tuesday that progress was being made on the labour front.
"Major sporting events shed a spotlight on conditions in countries," al-Thawadi said, adding: "There are labour issues here in the country, but Qatar is committed to reform."
"We will require that contractors impose a clause to ensure that international labour standards are met ... Sport, and football in particular, is a very powerful force. Certainly we can use it for the benefit of the region."
Poor working conditions are common across the oil-rich Gulf region, where impoverished men and women from South Asia have come for decades to toil on construction sites or to work as domestic help.
'Inhuman' conditions
Conditions on building sites in Qatar had been described as "inhuman" last year by the International Trade Union Confederation (ITUC), which wants world football's governing body, FIFA, to ensure that standards are met for migrant workers.
In November, the ITUC and other groups met with FIFA's general secretary to inform him that they would hold a campaign in opposition to the 2022 World Cup being held in Qatar unless the country improved working conditions.
At the time, ITUC chair Sharan Burow said the organisation would "not accept people working to build stadiums without respect for workers’ rights".
Labour advocates also say the sponsorship system, in place across much of the Gulf - and the lack of a minimum wage - allow migrant workers to be exploited.
All foreign workers in the region must work for a local sponsor, and it is legally difficult to leave the sponsor before an employment contract ends without the sponsor's consent. Many sponsors keep their workers' passports.
Massive building effort
Qatar has embarked on a massive domestic building programme in the run-up to the tournament. It is spending $11bn on a new international airport, $5.5bn on a deep-water seaport and $1bn for a transport corridor in the capital, Doha. It will also spend $20 billion on roads.
A management contract to oversee construction projects for the 2022 tournament would be awarded in the first quarter of this year, Thawadi said.
"It will be in the first quarter, definitely. [The programme manager] will ensure the infrastructure projects are delivered on time, and that there is a contingency plan in place in case of a delay," Thawadi said.
The contract, originally expected to be awarded late last year, will oversee co-ordination with government agencies on large infrastructure projects, including the construction of stadiums, on which the country plans to spend $4bn.
Qatar has said it will build nine new stadiums and renovate three existing facilities.
A construction industry source told the Reuters news agency in October that more than six companies were vying for the contract, including British construction consultants Arup, Mace and Turner International.
Samir Aita, editor of Le Monde Diplomatique's Arabic edition, told Al Jazeera that the World Cup would "shed light on Qatar and all Gulf countries, since all reports say they are not respecting basic human, social and economic rights".
"When the same person is a minister and the president of a company, can a worker go to the minster and ask him to sue the company?" he asked. "This doesn't work."
"This occasion of the games could be a good step [if] Qatari people and Qatari authorities respond point-by-point to [International Labour Organisation] demands," Aita said.

Thursday, January 12, 2012

Nitaqat - Saudi Work Force and its Effect

The recent introduction of the Labor Ministry's Nitaqat system, meant to increase employment among nationals, has proven beneficial for Saudis, but at the cost of expatriate jobs, many foreigners in the Kingdom say.
The government's ambitious goal is to succeed in creating 1.12 million new jobs for Saudi nationals by 2014, or 92 per cent of all new jobs created, as set out in the current development plan, Banque Saudi Fransi (BSF) said.

This became apparent with an announcement by the Labor Ministry stating they would cut the number of foreign workers from the current 31 percent of the population down to 20 percent over the next few years to “protect Saudi demographics.” The move is expected to mean that as many as three million foreign workers will have to leave the country by 2014.

Saudi Arabia's recent indigenization effort titled "Nitaqat" came into effect on September 10. Saudi firms have been color coded to four categories - Red, Yellow and Green, and Blue/VIP.  Firms labeled "Red" will not be able to renew their foreign workers' visas and have until November 26 2011 to improve their status by hiring more Saudi natives.  "Yellow" firms have until February 23 2012 to improve their status and will not be allowed to extend their existing foreign employees' work visas beyond six years.  "Green” or “Excellent” firms with high Saudization rates will be allowed to offer jobs to foreign workers that are employed by firms in the Red and Yellow categories and transfer their visas. And firms in the highest “VIP” category will enjoy the ability to hire workers from any part of the world using a web-based system with minimal clearance.
The percent of natives that Nitaqat requires firms to employ varies from 6% for construction jobs to 30% for oil and gas extraction, to over 50% for banks and financial institutions (for firms with under 500 employees).  As firms rushed to increase their Saudization rates before the deadlines, young Saudi workers were suddenly in high demand. However employers appeared frustrated in matching potential employees with available jobs at the prevailing wages.
To make such quotas realistic as well as practical the ministry segmented the labor market into 41 commercial activities and further categorized companies into five sizes -- according to work-force size from very small (0-9 employees) to giant (3,000+ employees). It is worth noting that very small businesses (0-9 employees) are exempted from the Nitaqat program so this leaves us with a new 164 different nationalization quotas for business entities (41 activity x 4 sizes). The program was designed so that 50 percent of the companies in any of the 164 classifications -- i.e. entities that share similar size and similar type of economic activity -- are in the Green and Premium zones.
Companies under the “yellow” category have until February next year to turn “green,” otherwise the work permits of their foreign workers who have been in the kingdom for six years would not be renewed. Such workers, however, would be allowed to stay longer if they transfer to a “green” company.
According to official data, in 2009 alone almost 674,000 new jobs were created in the private sector, and another 42,189 in the public sector.
Yet that year, unemployment among Saudi nationals rose to 10.5 per cent from 9.8 per cent in 2008. The jump in unemployment, which is expected to have been sustained in 2010, resulted from a particularly sharp increase in the incidence of joblessness among youth, the study said.
It showed that in 2009, some 27.4 per cent of Saudis under the age of 30 were without work, including 39.3 per cent of those aged 20-24.
"Due to the announcement this year that unemployment benefits will be paid for the first time, the official unemployment rate could increase this year as more individuals register their employment status."
The study said it believes that if the private sector responds dynamically to Nitaqat, there could be some much needed and "welcome mergers and acquisitions" that take place in order to enable smaller firms to be better able to cope with higher wages and training costs.
 Official numbers show that Saudi Arabia's unemployment rate stood at 10.5% at end-2010, with female unemployment at 26.6% and high school graduate unemployment at 40%. Private-sector employment is dominated by expatriates, who make up 30% of the population but account for 90% of private-sector jobs (of 6.89mn private-sector jobs as of 2009, 6.21mn were held by non-Saudis).
According to other estimates, the unemployment rate for Saudis in the age group of 20-29 years was 27.1%, which forms 32% of the total workforce. Accounting for makeshift jobs, Rasmala thinks the actual unemployment rate is much higher. Overall unemployment in women is much more prevalent at 28.4%, versus men at 6.9%.
Meanwhile, human resource consultant Hay Group notes in its annual survey published in September that Nitaqat has already had a positive impact on the Saudi workforce's salaries - may be not so much for private sector employers.
"The report shows that Saudi nationals are paid 13 per cent higher than the general market average when we look at total cash. Pressures on organisations to achieve their target quota of Saudi nationals are apparent in the trends we see in the 2011 report which are part of a wider socio-economic story."
Jadwa research estimates that the non-oil sector is expected to register a 3.8% growth this year, lagging far behind the 14% galloping oil GDP.

1.2 million Filipinos affected
“The third phase of the nitaqat is where our 1.2 million overseas Filipino workers will be affected as their companies, which either belong to the red or yellow categories, are required to comply with the nationalization program,” recruitment expert Emmanuel Geslani said in a statement.
Geslani, who is a consultant for several Manila-based recruitment agencies, noted that there had been various estimates as to how many OFWs would be affected by the nitaqat. One migrant group placed the number at around 300,000, while the Department of Labor and Employment estimates only around 90,000.
  How will Nitaqat affect the lives of expatriates in the Kingdom?
The Ministry of Labor recognizes and appreciates the role of guest workers in the development of the Kingdom. We understand that the new program will have direct and indirect effects not only on the guest workers inside the Kingdom but also on labor markets of all countries that send workers to Saudi Arabia.
Nitaqat's noncompliant businesses, i.e. Red or Yellow private enterprises, are subject to restrictions including the inability to renew work permits for their workers. This does not mean that their employees will necessarily have to leave the Kingdom; on the contrary Nitaqat offers workers at Red and Yellow zone companies' greater job mobility by allowing them to seek employment with other businesses provided that these potential employers fall within the Green or Premium zones. In addition job switching will take place without the consent of their initial "noncompliant" employer and through a regulated mechanism to safeguard the rights of workers and owners.
How will Nitaqat work vis-à-vis the rising recruitment trends?
Nitaqat is not designed to slam shut recruitment doors but rather to rationalize the issuance of recruitment visas which has soared in the past years due to robust public sector spending on infrastructure projects and the subsequent expansion of the private sector. The ministry believes that there is an oversupply of labor in the market and that what people have come to term as "loose labor" is living proof that such rationalization steps should be taken. Nitaqat program encourages internal recruitment as an alternative, especially since internal recruits usually have better work experience and more local knowledge compared to fresh recruits.
How will Nitaqat affect the overall Saudi labor market?
Nitaqat has the potential to introduce much-needed market adjustments to enhance the efficiency of the private sector. The program aims to increase the share of national work force in the private sector and amend the imbalances of the labor market's work force ratio where national labor constitutes only 10 percent of the private sector's eight million workers. These levels are unacceptable especially since unemployment is estimated at 12 percent and tends to exponentially rise due to a young population and the gradual increase in the number of job seekers. Apart from increasing the number of national workers to economically sustainable levels, Nitaqat will have other implications on the local labor market such as accelerate women's employment, training for job seekers, establishing minimum wage and creating healthier work environments  for employees.
What about organizations that cater to international clientele or international products where international staffing is mandatory? How do they fit in with Nitaqat such as international schools?
I'd asked a Nitaqat committee to specifically look into it. International schools have been given very low Saudization requirements: 10 percent for small schools (49 employees and below), and 15 percent for bigger schools. These percentages do not necessarily mean teachers! Schools could choose to have 100 percent expats teachers while hiring Saudis in other jobs to achieve the required Saudization such as accountants, etc. The international schools that belong to embassies by definition would need to be treated differently. The dynamics keep on evolving and changing that's the promise of Nitaqat.
The beauty of Nitaqat is that it promises to be realistic, practical and fair. One of the comments shared in all the presentations I've made to the different chambers of commerce that previously we had 13 economic activities for which there were only 4 or 5 regulations governing them. Now currently we've divided the job market into 41 economic activities, and each activity was divided into 5 categories based on size leading us to 205 sub segments and for each one of these sub segments we have now 4 levels of regulations. So we moved from 3-4 to about 750. But that's not the end of it. Those of you who work in particular industries which let's say have very special characteristic that makes it very difficult to employ Saudis, collect your views with other people working in the same category, organize it through the chambers of commerce and submit it to the Labor Ministry. And we'll probably create a new sub category for you and make new regulations for you.

Wednesday, January 4, 2012

200 workers stranded in Dubai without salary

DUBAI - Hundreds of workers remain stranded in Dubai for nearly four weeks after the owner of their company absconded to India owing them five months salary.

The Indian businessman, Joseph D'Souza, fled last month after his businesses failed.

He founded a steel fabrication and engineering firm that called itself Systems Engineering, with offices in Sharjah and Dubai, in 1997, and employed 400 men from India, Bangladesh, Nepal, Pakistan and Sri Lanka as helpers, welders and steel fixers.

The situation has left many deeply concerned about their future. One labourer suffered a nervous breakdown after the company went under. Laila Abubakr, a social worker from the Overseas Resident Malayalee Association in Dubai, said that the man is now in a stable condition.

Mrs Abubakr said only 200 of the 400 workers had been repatriated.

"Consulates representing workers' countries are giving free tickets for the men to be sent home," she added. "We hope in a week or two all the workers will be home."

Mrs Abubakr said each employee might receive up to AED1,600 from the bank guarantee deposited by Mr D'Souza. "It is a little amount compared to what each worker was supposed to get. The bank amount is being equally divided among all the men," she said.