Monday, September 12, 2005

The UAE Labour Market

More piffle confusion on the movement of labour front.

Workers still need to get the approval of their former employer if they want to change their jobs, unless they have worked for a minimum period of time with the first employer. Bizarrely, this length of time is determined by the level of education of the potential transferee. Post-graduate degree holders can switch after one year. Bachelor's degree holders can switch after two years. All others have to wait three years. But wait! You can override these conditions if you pay money! The conditions also do not apply under certain other conditions, such as the closure of the company due to the death of the owner, transfer of ownership of the company, non-payment of wages etc. You might think that these circumstances would automatically entitle a worker to the right to change his job, but they haven't done previously, and the onus is on the worker to prove that one of these situations applies. Employees in the Government and Free Zones are exempt.

I've said it before, I'll say it again. I don't get it. The UAE is supposed to be pro-business, encouraging entrepreneurship etc. I can understand one thing about why the labour market needs a bit of control (and I mean a bit). It has to do with the economics of hiring and training workers.

Sometimes, an employer pays to import workers. Sometimes, those workers get a bit of training. So that makes the employee a little bit more valuable in the local labour market. Therefore the employer should not have to 'suffer' if those people up and leave for better prospects or working conditions. In those cases, it would be fair to say that the employee has to complete at least one year with the original employer. And the reason for specifying 'one year' is that, by law, the employer then has to give the employee paid leave and a return air ticket to the point of origin, and that puts everybody back at square one, financially. In a case where an employer pays for additional training for an employee, then the employee can sign an agreement with the employer whereby he will re-imburse the costs of that training on a pro-rata basis if he leaves within an agreed period - I've had to do that with companies I've worked for in the UK, and I think it's perfectly fair.

So how do you stop an employee leaving? It's a tough question, I know, but I suspect it might have something to do with treating them well, paying them on time, and making them feel like their contribution is valued. It should have nothing at all to do with rules from the government.

This whole thing strikes me as being primarily aimed at controlling labour in the construction industry. As you all know, there is a stupendous amount of construction going on in Dubai. The big construction companies need thousands and thousands of workers to be able to complete a job. And a big construction company might be building several large projects simultaneously. But sooner or later, the work is done, and suddenly you have a thousand workers standing around twiddling their thumbs. Maybe there's another project starting in a few months' time. Or maybe there's a chance of another project, but you won't know until the decision is made in six weeks' time. Do you hang onto your workers in case the next job happens? Or do you let them go? The sensible thing would be to let them try to find other work in the slack time. Or rent them out to another construction company who's suddenly got a big project but can't get enough labour in for three months. But you cannot legally do that here. That flexibility doesn't exist.

So the industry is caught between a rock and a hard place - it's not easy to recruit and process a thousand guys for your next project. And I can imagine that owners of big construction companies have lobbied various government people and said 'we are in a cyclical business - we pay a lot to recruit workers and we need to be able to keep them hanging around just in case we need them', and that's how we got where we are. Don't know, just speculating.