Era of cheap migrant labour may be ending for the Gulf

The unprecedented infrastructure building boom in the Gulf region may lead to shortage of migrant labour, warn experts. While Qatar has mega projects lined up in preparation for FIFA World Cup 2022 in an estimated $200bn-plus spending drive, Dubai’s successful bid for the World Expo 2020 will boost project spending in the UAE.

In Saudi Arabia, the biggest economy in the Gulf, projects worth $790bn are in progress or being planned.

According to business-intelligence publication Meed, the total value of Gulf projects that are being planned, or already underway, is nearing $2.46tn, more than 150% of the combined gross domestic product of the Gulf Co-operation Council.

Since the 1970s, millions of mainly low-skilled workers from Asia have helped drive rapid economic growth in the Gulf countries. But this model is unlikely to be sustainable, warns the International Monetary Fund.

A comparatively low wage growth is now starting to make the Gulf less attractive to workers from South Asia and elsewhere.

Mohamed Jindran, managing director of a recruitment firm in the UAE, which has about 4mn migrant workers, says unskilled workers in the UAE earn on average around Dh750 a month, the same rate as six years ago. Skilled workers’ wages are above Dh900, a Reuters report said last June. “Companies will have to go back to the drawing board and rethink pricing if they want workers for these projects,” Jindran said.

Rapid growth of Asian economies means workers can now get almost double the wage rates on offer in the Gulf back home. That was highlighted in an exclusive column for Gulf Times last October by Arno Maierbrugger, editor-in-chief of www.investvine.com. Qatar may have to pay more to lure in skilled or at least semi-skilled workers, rather than just unskilled helpers, from Thailand, he said.

Human rights groups say Gulf governments need to introduce labour market reforms. Incidents like a strike by thousands of migrant workers at Dubai’s biggest builder Arabtec last May threatens to disrupt the Gulf’s construction boom.

Setting a minimum wage, standardising employment contracts and organising an outreach campaign in the home countries of workers on ethical recruitment can help improve the conditions of migrant workers and prevent exploitation, said Ray Jureidini of Qatar Foundation’s Workers Welfare Initiative in a lecture recently in Doha.

Qatar, for sure, is leading by example. The Ministry of Labour last October asked international law firm DLA Piper to study conditions of workers in Qatar amid a global smear campaign to discredit the country. Reports suggest the much-anticipated findings of the study will be published soon.

Qatar has admitted it may not all be rosy with migrant workers, who make up some 94% of the total workforce in the country, according to a 2012 study by the Qatar National Research Fund. But the country has invited independent global experts to assess its labour camps and is doing all it can to ensure the dignity of migrant workers.

Gulf countries now should take advantage of the oil windfall to finance labour market and intellectual property reforms to invest in human capital. Longer-term, no country can afford to build a sustainable development model on migrant labour to drive economic growth. More so in the case of the Gulf, where expatriate workforce accounts for an estimated 88% private sector jobs.