UAE LABOR: EXPANDING EXPAT WORKER RIGHTS TARGETS

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 003877

SIPDIS

STATE PASS USTR FOR KARESH, ROSENBERG
STATE FOR NEA/ARPI, DRL/IL, G/TIP, G, INL, DRL, NEA/RA
LABOR FOR ILAB, A.ZOLLNER

E.O. 12958: DECL: 09/12/2015
TAGS: ELAB PREL ETRD KDEM PINR PHUM TC
SUBJECT: UAE LABOR: EXPANDING EXPAT WORKER RIGHTS TARGETS
DOMESTIC, INTERNATIONAL PRIORITIES

REF: A. ABU DHABI 1874


B. ABU DHABI 1434

C. ABU DHABI 3144

Classified By: (U) Classified by Ambassador Michele J. Sison, reasons 1
.4 (b) and (d)


1. (C) Summary: The UAE Ministry of Labor has been
proactive in changing many of the most restrictive laws and
regulations governing the expatriate labor market over the
past two months, Labor Minister Dr. Al Ka'abi told Ambassador
September 10. These changes -- including changing the
sponsorship regulations, abolishing the six-month mandatory
immigration ban, eliminating the no-objection letter, and
allowing workers who are owed back salaries to change
sponsors -- all open the labor market and permit greater
labor rights for expatriate workers in the UAE. Prompted by
the ongoing U.S.-UAE Free Trade Agreement negotiations, there
has also been increasing public discussion on labor unions.
Granting additional worker rights targets both domestic and
international labor constituencies on Emiratization
(increasing the number of Emirati nationals in the private
sector) and expanding worker rights for the expatriates who
make up 98 percent of the UAE's private sector workforce.

Labor Unions
--------------

2. (C) The Ministry of Labor (MoL) has long debated the form
and depth of a law permitting national labor unions. Instead
of creating a union law separate from the labor law as the
government had previously planned(the labor law itself is
also in the process of revision),the labor law will now
include a specific provision giving the Minister of Labor the
discretion to issue a decree allowing labor unions. Minister
of Labor Dr. Al Ka'abi explained to Ambassador on September
10 that this will allow more flexibility in language, and
will also allow the law to be passed much more quickly than a
separate law could.


3. (C) The UAEG is consulting with fellow Gulf Cooperation
Council (GCC) members Bahrain and Oman and the International
Labor Organization (Ref A) on tactics for formulating a union
law and practice that allows for the regional peculiarity of
a significant expatriate workforce (over 98 percent of the
private workforce in the UAE is comprised of non-citizens).
Like its neighbors, the UAE will allow full membership (and
board positions) for UAE citizens and some form of associate
membership for expatriate workers. Al Ka'abi noted the UAE
may follow Bahrain's example, and allow the unions themselves
to decide what form associate membership will take. This
tactic will both further empower the unions and remove the
government from the decision. Al Ka'abi noted the UAEG had
considered limiting all forms of membership to expatriates
fluent in Arabic, but had decided against this for security
reasons since, for example, some Sudanese and Egyptian
expatriates fluent in Arabic are monitored for any extremist
tendencies. (Note: National security concerns remain the
primary focus for the UAEG in formulating a labor union law
since such a large percentage of UAE residents -- over 85
percent -- are non-nationals.)


4. (C) The revised labor law, which will include the new
provision allowing the Minister the authority to allow labor
unions, is still in a draft stage. Al Ka'abi reported that
he started the informal lobbying process with other members
of the Cabinet, and said he plans to bring the law before the
Cabinet for official approval once informal consensus has
been reached (Note: The Cabinet had its first meeting this
week after the summer break.) It will then need the
signature of UAE President Sheikh Khalifa bin Zayed.

Opening the Labor Market
--------------

5. (C) The Ministry of Labor and Social Affairs has been
proactively changing many of the most restrictive laws and
regulations governing the expatriate labor market over the
past two months. The primary goal behind these changes is to
close the financial gap between employing expatriates and
local workers. In the past, local workers have been
significantly more expensive for companies since they
received higher salaries, medical and pension benefits. They
also were frequently less qualified, but had the freedom of
movement to change jobs. Expats, on the other hand, were
better skilled, but essentially locked in place by the strict
sponsorship transfer regulations (Note: A visa sponsor is
legally the expat's employer) and the six-month immigration
ban if they changed sponsors without a no-objection letter
from their original employer. Al Ka'abi explained that
closing the gap between expats and locals in the private
workplace will help increase UAE penetration of the private
sector, and meet domestic political priorities of
Emiratization (increasing the percentage of UAE citizens in
the private sector - Ref B). It will also help reduce the
unemployment rate of UAE citizens. Allowing greater mobility
for expatriates, and raising the cost of expat labor through
such mobility and higher fees for MoL transactions (meant for
the companies, not individuals),the UAEG hopes to equalize
the playing field for citizens.


6. (C) These changes substantially increase worker rights in
the UAE, and thus address international political concerns by
bringing UAE labor laws closer to an international norm.
Collectively these changes give much greater mobility to
expatriate workers, by giving them more freedom to change
employers without fear of labor or immigration consequences.
Major changes announced in the past two months include:

-- Allowing sponsorship transfer for all workers, although
there remain restrictions for some types of workers (Ref C)
-- Eliminating the six-month immigration ban for workers who
change sponsors
-- Eliminating the corresponding no-objection letter that was
previously required for a worker to change employment
-- Allowing workers who are owned three months of unpaid
salaries or more to change sponsors, even if they do not meet
the other requirements for sponsorship transfer
-- Increasing company fees for failing to cancel, change, or
renew a worker's labor permit.

Civil Service Law
--------------

7. (C) The labor law governs only private employment in the
UAE, which accounts for about 2.1 million workers. There are
an additional 2 million workers not covered by the law, the
majority of whom are government workers. Most UAE citizens
prefer to work in the public sector, since these jobs require
fewer hours, have better pay and benefits, and no
accountability or performance reviews. Al Ka'abi noted that
he would like to see the civil service law changed as part of
the broader labor reform movement. Changing the civil
service law would give broader accountability, and require
employees to perform the services for which they are being
paid. He noted that the civil service law and the opacity of
finance and funding are the "handcuffs" of the UAE's attempts
to reform.

Possible Change of Weekend?
--------------

8. (C) Al Ka'abi also mentioned that the UAEG is considering
switching from the current official Thursday-Friday weekend
to a Friday-Saturday weekend to bring it more in line with
the international business community. While there are
several key leaders and groups in favor of this move
(including Abu Dhabi Crown Prince Mohammed bin Zayed, Dubai
Crown Prince Mohammed bin Rashid and the Dubai banking
community),there remains resistance to the change from some
prominent Cabinet members, most notably Sheikh Hamdan bin
Rashid Al-Maktoum, the titular Minister of Finance and
full-brother to Dubai Crown Prince Mohammed bin Rashid
Al-Maktoum, said Al Ka'abi. (Note: Al Ka'abi indicated there
has been a strain in the relationship between the two
brothers.)

Comment
--------------

9. (C) Although many of the recent labor changes are couched
in the language of domestic political priorities --
particularly Emiratization -- the reality is that worker
rights are moving ahead in the UAE. By opening the market to
freedom of movement for workers, the UAE is normalizing both
the wage scales and the number of workers needed to meet the
demands of a free market economy. The removal of the
six-month immigration ban also removes the fear that workers
can be deported at their employer's whim. The UAE has
demonstrated it is slowly moving toward compliance with
international labor standards (and with the standards
required for negotiation and ratification of a Free Trade
Agreement). More broadly, Al Ka'abi has made significant
progress in convincing the ruling leadership and his Cabinet
colleagues of the need to create a more open labor market
that satisfies both international and domestic labor
priorities.
SISON