By Robin Wigglesworth in Abu Dhabi
On the outskirts of Dubai, far away from the glass and stainless steel ziggurats of banks and hotels, Indian, Bangladeshi and Pakistani workers stumble out of their buses as they return home to Sonapur after a 12-hour shift at various ostentatious developments in the city.
Silently they enter one of the sprawling ghettos of labour camps that is home to more than 100,000 blue-collar servants and workers. Wet work clothes are slung limply over the rails and the ground is moist with raw sewage escaping from the rusty pipes on the ground.
In spite of appearances, conditions and pay for the millions of manual workers in the United Arab Emirates have actually improved in recent years, but the global financial crisis threatens to unravel progress made in labour reforms as the credit crunch hits the real estate and construction industry in the Gulf.
Several projects have been delayed or are being “reviewed” but major construction companies contacted by the Financial Times say that they are not laying off workers. However, Mohinder, overseer of a leafy but old and decrepit labour camp, says several companies in the emirate have already started shipping large numbers of Indian workers back home.
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With debt markets parched and the price of oil tumbling, many projects across the Gulf will be delayed or cancelled and experts say even some government-affiliated projects are in danger.
The problem is particularly acute in Dubai, the previously booming commercial hub of the UAE. It is weighed down by the large debts of the government and state-affiliated companies.
“We are very worried,” says Nada Al-Nashif, the International Labour Organisation’s regional head for the Arab states. “The slowdown in the construction industry is definitely going to have an impact on employment . . . Things look bleak for the next year at least.”
Arabtec, the United Arab Emirate’s largest construction firm, is looking to hire more workers to complete its large orders backlog, but its chief executive, Riad Kamal, says the market is “softening”.
“Developers are reassessing their plans,” says Mr Kamal. “I’m aware that some people have lost their jobs and it’s too early to say whether new projects can absorb them.”
There are nearly 3m Indians, Bangladeshi and Pakistanis in the UAE, the majority of whom are manual and construction workers, according to Human Rights Watch.
Though manual workers only earn 3-5 dirhams an hour, they make up the highest proportion of construction companies’ costs and their jobs are particularly vulnerable due to the lack of employment protection.
Some workers at Sonapur – which means “place of gold” in Hindi – say they have already been told to either take a near 40 per cent pay cut or be sacked, so many have gone home.
The fallout will not be confined to the UAE, experts warn. The return of hundreds of thousands of young, male workers to their home countries at a time of great economic turmoil could also intensify domestic labour market stresses.
Human rights activists fear the economic downturn will exacerbate Gulf companies’ sometimes patchy record of paying workers on time. UAE manual workers have rioted in the past due to poor treatment, paltry wages and tardy payment, most infamously at the construction site of Burj Dubai, the world’s biggest tower.
“It’s possible that unscrupulous cash-strapped companies will just close up shop and abandon their workers in the UAE without the [mandatory end of employment gratuity] or the return ticket,” says Bill Van Esveld, a researcher at Human Rights Watch. “This has happened in the past.”
Anwar Gargash, minister of state for foreign affairs, says the UAE has the means to deal with a potentially rapid exodus of manual labourers as the credit crunch continues to drain the construction industry of funding.
“Obviously, we have the mechanisms in place to deal with labour demands. We would have to make sure that wages are paid and that any return in labourers is done in an orderly and legal way,” Mr Gargash says.
He adds it is “premature” to consider government intervention as a means to prevent developers’ financial dire straits leaving low-paid construction workers out of pocket or marooned and unemployed in the UAE. However, he reiterates that the country takes its reputation very seriously.
“You have to understand the philosophy, which is that the government will do everything within reason to make sure this situation does not change our record on labour,” he says. “We do not have 100 per cent success on labour issues, but we are working very hard so we can continue to develop responsibly.”
