(SBU) INHERENT CONTRADICTIONS OF THE UAE

UNCLAS ABU DHABI 002274

SIPDIS

SENSITIVE

STATE FOR NEA/ARP, NEA/RA, DRL AND EB/CBA
STATE PASS OPIC/OPIC INTERNATIONAL POLICY DEPARTMENT
FOR VIRGINIA GREEN AND CONSTANCE SHINN
AMEMBASSY TUNIS HOLD FOR FSI: OLIVER JOHN
USDOC FOR 4530/ITA/MAC/ONE/DGUGLIELMI,
4520/ITA/MAC/ONE/CLOUSTAUNAU,
4500/ITA/MAC/DAS/WILLIAMSON,
3131/CS/OIO/ANESA

E.O. 12958: N/A
TAGS: ELAB PREL PHUM PGOV SOCI CVIS TC
SUBJECT: (SBU) INHERENT CONTRADICTIONS OF THE UAE
LABOR MARKET



1. (SBU) In a recent address to the Indian Business
and Professional Group, UAE Labor Undersecretary
Khalid Al-Khazraji said all the right things. First,
he confirmed that the UAE will continue to import
multiethnic labor, primarily from the Indian
subcontinent (something that no doubt went down well
with his hosts),but added that the UAE would seek to
diversify away from over reliance on any one labor
source. He went on to say that the government would
require higher educational qualifications for visa
recipients and generally make work permits more
difficult to obtain for unskilled workers. Second, Al-
Khazraji reiterated the government's commitment to
increasing employment for nationals in the private
sector -- sixty percent of whom are under the age of
23 and will be entering the labor market in the near
future. Al-Khazraji estimated that 10,000 nationals
would graduate and enter the work force this year and
he expected that all would find jobs -- without the
sort of coercive nationalization programs for the
private sector prevalent in other GCC countries.


2. (SBU) Yet, despite Al-Khazraji's focus on a policy
of importing "high value" skilled expatriate labor,
the reality is quite different. Last year, the UAE
issued 330,000 work permits -- a six percent increase
from the previous year -- and most were for low-skill
construction and maintenance jobs (45% went to
Indians). Though the UAE has heavily publicized an
amnesty encouraging illegal laborers to leave the
country, and trumpets its future economy as being
cutting edge high-tech and modern, it continues to
remain heavily dependent upon low-wage, unskilled
workers.


3. (SBU) With regard to increasing the number of
Emiratis in the private sector, there is a clear and
abiding divergence between what nationals expect and
what their skills can reasonably command in an open
economy. To its credit, the UAEG has opened a number
of colleges of higher technology to develop a more
sophisticated national workforce, focusing more on
developing useful skill sets in young Emiratis rather
than forcing private employers to hire nationals.
However, Emiratis who seek jobs in the private sector
expect starting salaries of 8,000-10,000 dirhams a
month (? $2100-$2700) upon graduation in a society
where they pay no taxes, and receive free health care,
car benefits, and housing subsidies (a comparable U.S.
wage would be $50,000-$60,000). Given their lack of
experience and higher salary demands, businesses
understandably prefer to hire better educated, more
seasoned expatriates willing to work harder for less
money and who can more easily be fired if thing don't
work out. No matter how good a job the UAE does in
training its people, it is distinctly unlikely that
their salary expectations will ever be reached in the
marketplace absent government intervention.

Albright