Labor Strike Over Unpaid Wages

C O N F I D E N T I A L DUBAI 000005 SIPDIS DEPARTMENT FOR NEA/FO NEA/ARP/BMCGOVERN DRL/IL CAVEY E.O. 12958: DECL: 2020/01/24 TAGS: ELAB PHUM PGOV EFIN KTIP AE SUBJECT: Labor Strike Over Unpaid Wages REF: DUBAI 1365 CLASSIFIED BY: Jennifer Gavito, Political/Economic Chief, U.S. Consulate General, Dubai; REASON: 1.4(B),(D) ¶1. (C) Summary: On December 22, 60 Robust Contracting Company staff employees went on strike over three months' unpaid wages. This is the third known labor strike in 2009 (reftel). Representatives from the Ministry of Labor (MOL),Dubai Police, and National Committee to Combat Human Trafficking arrived at Robust's Green Community project site approximately two hours after the strike began and Robust worked out an agreement with these UAEG officials on a payment schedule. However, full payment had not been made and as of December 27 Robust staff and laborers were not working. Robust currently is not enrolled in the UAE Wage Protection System (WPS),which has been initiated by the Ministry of Labor to protect worker wages (septel). End Summary. ¶2. (C) On December 28, Poloff met with Robust Contracting Company's General Manager Farid Kawmi and Managing Director Riad Kawmi to discuss Robust employees' strike over three months of unpaid wages. Kawmi told Poloff approximately 60 staff employees went on strike. Press reports that 900 workers were on strike was inaccurate, he maintained. However, due to the staff strike, manual laborers stopped working as well because there were no staff employees to direct them. Kawmi told Poloff that representatives from the Ministry of Labor, Dubai Police, and National Committee to Combat Human Trafficking arrived at the Green Community Project approximately two hours after the strike began and in response to a call from staff to police and press seeking publicity. Kawmi expressed disappointment that the staff did not come to him first to discuss their frustrations. During the meeting with UAEG representatives, Robust agreed to pay the staff two months salary by December 28, two months salary by January 28, 2010, and the final back payment by February 28, 2010. Robust made a partial payment December 27, but Kawmi was not sure Robust will be able to pay employees the two months salary by the December 28 deadline as Robust was relying on money from its Green Community project's client Union Properties. (Note: Laborers who receive about AED 950 (USD 260) per month, were paid for October, but have not been paid since. Their salary payments have been delayed two weeks for the last five months. End Note.) -------------- Under Financial Stress -------------- ¶3. (C) Robust has been under financial stress. It has not received payments for two projects totaling AED 40 million; both are in arbitration. Kwami said that while Union Properties, the property developer for whom Robust is delivering service, has always made its payments on time, these have been insufficient to make up for the losses Robust suffered from escalating material prices during Dubai's real estate boom, and the more recent impact of the financial crisis. Kawmi explained to Poloff that staff had not been paid their salaries because Robust had been in negotiations with Union Properties and unable to get additional credit. Union Properties has now agreed to give Robust a loan to finish the Green Community project due in July 2010 and to pay staff salaries. ¶4. (C) Comment: The MOL has become more aggressive in stepping in early to advocate on behalf of the UAE's massive expatriate labor population. The UAE has implemented its new Wage Protection System (WPS) in part to track delinquent payments, but Robust is not yet compliant with the WPS decree. While the MOL took positive action to end the strike and mediate an agreement between the company and its workers, the incident highlights the ongoing impact of Dubai financial crisis on those who can least afford it. End Comment. SIBERELL SIBERELL