TIFA - THE LABOR ISSUE

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 003270

SIPDIS

PASS TO USTR FOR CATHY NOVELLI

E.O. 12958: DECL: 09/20/2014
TAGS: ELAB ECON PGOV TC
SUBJECT: TIFA - THE LABOR ISSUE


Classified by Ambassador Michele Sison for Reasons 1.5 (b & d)

This is a joint Dubai-Abu Dhabi Cable.


1. (C) Summary: The UAEG understands that its current labor
law is a stumbling block to its goal of negotiating a FTA
with the U.S. The fact that the overwhelming majority (80-85
percent) of the population and 98 percent of the private
sector workforce is foreign, however, means labor is a
sensitive, national security matter in the UAE. Given this,
a USG decision to enter into FTA negotiations with the UAEG
would likely facilitate the UAEG,s efforts to reform its
labor law. It will also strengthen the hand of one of the
UAEG,s chief reformers, Minister of State for Finance and
Industry, Dr. Mohammed Khalfan bin Khirbash.


2. (C) Current labor law allows for collective dispute
resolution and the labor dispute mechanisms in the UAE
generally work. However, the current legislation does not
entitle workers to form or join unions. Whether settled by
the Ministry of Immigration, the Ministry of Labor, the free
zone authorities, or the courts, labor disputes are generally
resolved fairly and consistently. The UAEG is aware that its
current labor law is a major stumbling block to its goal of
negotiating an FTA and the Ambassador will be reinforcing
this in her meetings with the Minister of Labor, MinState of
Finance Khirbash, and with the MFA. The UAEG has told us
that they are revising their labor law, but that their
overwhelmingly foreign workforce raises security concerns.
End Summary.


3. (C) About 80%-85% of the 4 million people in the UAE are
expatriates as is 98 percent of the private sector workforce.
The UAE attracts a large number of foreign workers, who
continue to flow into the country, because in the UAE they
can earn a substantially higher income than they can in their
home countries.


4. (SBU) The current labor law does not entitle workers to
form or join unions, and no unions exist. However, the
government allows workers to associate freely for the
advancement of common goals and interests. In practice,
workers address grievances and negotiate disputes or matters
of interest with employers through formal and informal
mechanisms. Although the law does not grant workers the
right to engage in collective bargaining, it expressly
authorizes collective dispute resolution. The labor law also
does not address the right to strike, however, the press has
quoted UAEG officials as saying that the law does not forbid
strikes and that workers can stop working if they are denied
their rights. In practice, there have been numerous strikes
by private sector workers and organized gatherings of workers
who complained of unpaid wages to the Ministry of Labor.


5. (C) The UAE has told us that the Cabinet has approved a
proposal regarding drafting a law providing for the
establishment of labor unions. The Ministry of Labor is
currently preparing a draft law. The UAEG realizes that the
current law represents a major obstacle to their goal of
negotiating a Free Trade Agreement (FTA) with the U.S. UAEG
officials have also stressed, however, that labor is a
sensitive issue for them, given the unique demographics in
the country. Various UAEG officials have told us that they
need a positive response from the USG on FTA negotiations in
order to push through sensitive reforms and to avoid
undercutting the reformers. Over the last two days, MinState
of Finance Dr. Mohammed Khalfan Khirbash and his senior staff
have asked Abu Dhabi EconChief for a USG indication (either
via letter or public announcement) that it intends to move to
FTA negotiations. Ministry of Finance Undersecretary Khalid
Al-Bustani called EconChief to say that Dr. Khirbash was
coming under &a lot of pressure8 (to produce results) from
the federal cabinet.


6. (C) In an effort to see about the how the UAEG deals with
workers, disputes in actual practice, Dubai PolEconoff met
with several labor attaches from labor exporting countries on
September 18. Vicente Cabe, Labor Attach at the Philippine
Consulate General, told PolEconoff "the (labor dispute
resolution) system in the UAE generally works." The
Philippine Consulate estimates there are 200,000 Filipinos in
the UAE, with over 60 percent in Cabe's consular district of
Dubai and the Northern Emirates. Cabe said he dealt with two
different categories of labor dispute cases: housemaids, who
are not covered under the UAE labor law and which are handled
by the Ministry of Immigration (MoI); and other workers,
mainly unskilled and semi-skilled, whose complaints are
handled by the Ministry of Labor (MoL). Cabe, who showed an
excellent grasp of the UAE's labor dispute resolution
processes, said his team dealt with 300 to 500 cases of each
type per year. Cabe said that almost all housemaid cases were
settled at the MoI level, never going to court. The MoI in
effect instructed employers to pay, thus ending the dispute.
The MoL, on the other hand, tried to mediate disputes, with
Public Relations Officers (trained attorneys) reviewing the
documentation and speaking to both sides of the dispute. In
Cabe's experience, about half were successfully mediated and
half were referred to the courts. Most court cases were
resolved within a few months, and their judgments were about
the same as those recommended by the MoL. In the rare
particularly thorny situation, the Consulate or the Embassy
sent a letter to the authorities, resulting in swift and
effective action.


7. (C) Cabe said a separate category of labor problem he
dealt with involved undocumented workers -- less than 10
percent of Filipino workers in the UAE -- who have no legal
rights under the labor law. Sometimes an employer would hire
a Filipino on a 3-month visit visa, and then refuse to pay.
In those situations, Cabe said that the Consulate was able to
bring pressure to bear on employers because they, too, were
violating the law. He said the MoL had the power to heavily
fine and shut down businesses employing workers illegally,
and it was willing to do so.


8. (C) The Bangladeshi and Pakistani Consulate Generals were
much less likely to raise issues to the UAEG, but tried to
resolve problems directly with the employers. Kamrul Ahsan,
Bangladesh Consul General, told Dubai PolEconoff that about
60 percent of the 300,000 Bangladeshis lived in Dubai and the
Northern Emirates. He said that when workers came to the
Consulate with labor problems, they insisted they did not
want to file a complaint but simply wanted the assistance of
the Consulate in getting their back wages. Ahsan and his team
contacted employers directly to try to reach a settlement.
(Note: Ahsan seemed not to have a good handle on how the
labor dispute process worked.) Ahsan said that the labor
situation in Dubai was better than that in the Northern
Emirates. He reserved special praise for Dubai's free zones,
which fairly resolved labor disputes in-house through its own
mechanisms. He also complimented the local papers for their
increasingly extensive coverage of labor disputes.


9. (C) For his part, M. I. Jawed, Welfare Counselor at the
Pakistan Consulate General, told Dubai PolEconoff that he and
his staff usually contacted the employer, often an Indian or
Pakistani about disputes, and were usually able to reach an
amicable settlement. With over half the UAE's 500,000-plus
Pakistanis in his consular district, he said the Consulate
was able to draw on the assistance of a "Pakistan
Association" in each emirate. While admitting that the UAE
"had some problems" with labor conditions, Jawed said the
system worked "pretty well." He added that these days he was
focusing his efforts on getting more skilled, rather than
unskilled, Pakistani workers to come to the UAE.


10. (C) Comment: Post will continue to work with the UAEG to
stress the importance of moving quickly on bringing the labor
law in line with international standards. We believe that,
as in many areas, the actual practice in the UAE has evolved
beyond the law. The Ambassador will be raising this subject
with Dr. Khirbash, officials at the MFA, and with the
Minister of Labor. For their part, UAEG officials are
looking for a formal response that the USG intends to
negotiate a FTA with the UAE. If that happens before the
October 4-5 TIFA Council meeting, it will give a necessary
boost to Dr. Khirbash,s efforts to push reforms that we want
and to get the right interagency team to Washington. End
Comment.
SISON