Dubai Struggles to Find Cheap Labor

Ahhh… the market at work.

Thousands of foreign construction workers in the Gulf state of Dubai have gone on strike over pay and conditions.

Workers blocked roads and threw stones at police on Saturday, prompting a government threat to deport rioters.

A fall in value of the UAE dirham means workers are unable to send as much money home as they previously could.

Dubai’s economy has boomed in recent years, fuelled largely by a construction industry reliant on low-paid workers, many from South Asia.

But the emirate has been hit by a labour shortage recently as India’s own economic boom has offered an alternative source of jobs.

Dubai’s foreign workers are demanding higher pay and improved housing as they work on prestige projects such as the Burj Dubai - set to be the world’s tallest building.

Analysts say it is time for the authorities to consider a minimum wage.

Why?  The developers who are paying low wages are already suffering for it.  They can’t get workers and their projects are being delayed.  This labor shortage is already forcing up wages.  Why create an artificial floor for wages when the market is already pushing wages up?  On the flip side, the low wages they have been paying fueled an economic boom where workers came from thousands of miles away because even if the wages were low by our standards, they were dramatically higher than in their home countries.  This allowed them to work and send money home to their families (legally, I might add). 

Dubai’s growth in the past couple of decades is a prime example of what can be accomplished when capitalism is allowed to work. 

1. the low wages they have been paying fueled an economic boom

   Huh?  That logic may be true in some places, but the ‘boom’ in Dubai has a lot to do with petroleum dollars seeking higher returns.

   Posted by dad29 on October 29, 2007 at 0710 hrs




2. >>This labor shortage is already forcing up wages.<<

   Where in the article does it say that?

   Posted by on October 29, 2007 at 0825 hrs




3. dad29,

   You are exactly correct.  I should have said “contributed to” or something, but that’s what you get when I hammer out a post before heading to work.  Oil money and an aggressive effort by them to diversify their economy into tourism, conventions, trade city, and general playground for the rich are other powerful factors.

   wbman,

   It doesn’t, but that’s the natural result when demand outstrips supply.

   TTFN

   Posted by Owen on October 29, 2007 at 0830 hrs




4. True, but it doesn’t seem to be working in Dubai: the workers are striking and the government is threatening to deport them.

   Posted by on October 29, 2007 at 0840 hrs




5. True, but it doesn’t seem to be working in Dubai: the workers are striking and the government is threatening to deport them.

   Right… Government always seems to find a way to keep free markets from working… Its a sort of self-perpetuation.  If they didn’t step in, people would see that free-markets to work.. That wouldn’t be good for government and its growth.

   Posted by on October 29, 2007 at 0945 hrs




6. wbman

   Upon reading the article (instead of your quote) it is stated they are only threatening to deport rioters.  Not strikers.

   Posted by on October 29, 2007 at 0951 hrs




7. The economy in the UAE is free as long as the prime beneficiaries of economic activity are locals. All businesses outside of free trade zones must have a local majority stake at least on paper.

   In the city I lived in there was a successful bakery started up by an Indian. He had a local who backed the venture and took little interest in the business until it started to boom. The guy who busted his butt to get that business up and running was then deported and local guy took it all over.

   Unlike here in the USA the threat to deport is serious. In ‘92 there were riots in Al-Ain and the police & army cordoned off the rioting section of the town and rounded everyone up and took them to a camp setup in the desert. Then they went over everyone’s paperwork. Rumor has it like some 10,000 or so Pakistanis were sent back to Pakistan. No such numbers for Bangladeshis, Indians, Filipinos, Egyptians, etc.

   Posted by Marcus Aurelius on October 29, 2007 at 1018 hrs




8. One big problem in Dubai is workers being treated like indentured servants.  The government has started to crack down on unscrupulous worker brokers.

   Posted by on October 29, 2007 at 1117 hrs




9. John,

   We’ll see about that.

   What you describe is a common problem with Middle East Job recruiters (and in fact every now and then I hear stories of corrupt agencies recruiting for work in the West). Not so much with those looking for workers from the West, but it was not uncommon to hear stories of people from India, the Philippines etc being promised high paying jobs in their chosen profession and then arriving to find themselves essentially forced to work at something quite different.

   Most employers in the Middle East hold onto the passports of their employees making it much harder to split from a bad situation.

   As far as deporting only rioters and not strikers I would not be so sure. One quick way to get booted was to strike or work in union with your colleagues to get better working conditions/pay etc. A friend of mine wrote a letter to her management in concert with colleagues to try to get an incompetent and dishonest colleague removed, she was nearly sacked and sent home.

   Posted by Marcus Aurelius on October 29, 2007 at 1135 hrs




10. As far as deporting only rioters and not strikers I would not be so sure.

    I was merely commenting on the text as stated.  I’m not intimately familiar with Dubai, so I couldn’t offer an opinion on what the reality is, though it sounds like you have some first hand knowledge.

    Anecdotally I would echo your comment that

    The economy in the UAE is free as long as the prime beneficiaries of economic activity are locals. All businesses outside of free trade zones must have a local majority stake at least on paper.

    I have a friend working in Dubai right now and he says the same thing.  If you are native to Dubai you have it made. Its boom-town.  Anyone else has to find a native partner.

    Posted by on October 29, 2007 at 1141 hrs




11. John,

    Understood you are commenting on an article and I am passing on my skepticism in the claims made.

    I spent six years in the UAE. If you bop on over to Blogger Beer and search for “Marcus in Arabia” or Al-Ain, UAE, Dubai and you can find a series of posts about all of that.

    Posted by Marcus Aurelius on October 29, 2007 at 1151 hrs




12. BTW,

    Most nations require local majority stakes in businesses.

    Posted by Marcus Aurelius on October 29, 2007 at 1154 hrs




13. This is not a free market.
    If workers knew the conditions they had too endure they would not be there.
    Because of the UAE’s currency tie to the USD workers who were paid a meer $6.00 per day!! (Yes per diem) they are not able to send money home to feed their families. There are reports of suicides or ‘accidents’ on site in order that the families can claim workers comp.
    This in a country where rank opulence and decadence is a by word.
    Just another world consequence of a failed foreign policy? here?

    Posted by on November 05, 2007 at 0827 hrs




14. Dave,

    You are not completely correct.

    A woman I knew told me she earned more as a secretary in the UAE than many doctosr in the Philippines.. I witnessed first hand many people even on those meager wages sending money home. I also hung out with some Pakistani tailors and they managed to make it.

    Yeah, not everyone drives a lexus (or has a car period) or has 50” LCD HDTVs but they do okay.

    Yes, there are unscrupulous employment agencies trolling the labor markets for the desperate in India, Pakistan, Bangladesh, the Philippines, Egypt etc. Something else I saw firsthand. That is often the problem, and Indian college graduate from an engineering program may be promised a good engineering job when he arrives in Dubai but then finds himself out in the desert with shovel digging ditches (this is literally true at least the bit about manual ditch digging).

    Remember low cost of labor often translate into lower cost of basics. Over here, my wife and I go out for Indian and shell out $30.00+ for our meal. In the UAE the same dinner would set us back about $10.00 (or so). 

    The pay Dave quotes is in line with what I saw in the UAE. The pay scale in the UAE was based one’s passport as well as the job (the pay quoted is what waiterts, store clerks, maids, laborers would get) and one’s qualifications.

    Posted by Marcus Aurelius on November 05, 2007 at 0906 hrs




15. In the city I lived in there was a successful bakery started up by an Indian. He had a local who backed the venture and took little interest in the business until it started to boom. The guy who busted his butt to get that business up and running was then deported and local guy took it all over.

    Posted by link building on March 11, 2008 at 0713 hrs