The hands that build the UAE for just $7.60 a day

Minimum wage has been a heated issue in the GCC for some time, with little response from some governments. Assistant editor Jamie Stewart uncovers the costs involved.

The GCC's marketing on the global stage is an example to the world. Gleaming towers stand triumphantly in photographs, and artist's renditions of forthcoming projects attract business and investment from around the world.

The value of the hands that build the GCC to the respective governments is beyond calculation. Without the manhours, without the sweat and commitment of the expatriate labour force, there would be no gleaming towers to photograph.

 

There may be artist's renditions, but they would remain creations of a computer program, no more than graphics spread across glossy brochure pages.

So it may come as some surprise to learn the financial value of the workforce, as governments benefit through their own refusal to adopt a minimum wage.

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The methodology behind putting a value on a construction contract is convoluted. There is no set value behind the cost of labour within a project, due to the fluxuation of various other factors. However, David Savage, managing director of Al-Habtoor Leighton, one of the region's biggest contractors, provides a rough guide.

"As a rule of thumb, labour costs cover about 7 - 8% of the cost of a contract. There are also many associated costs, such as transport and accommodation. It is not just the wages. The 7 - 8% is inclusive of everything."

Quite a telling sum. A few simple mathematics present a guide as to how far the value of a contract would rise, if a liveable minimum wage was introduced.

Taking the UAE as an example, the average monthly wage of an unskilled labourer employed by a multi-national construction company is US $163 (AED600).

Assuming that the average labourer works a six day week, although many will work seven, this sets the average daily wage at around US $7 a day. This figure is in the same vein as labourers' wages on the Burj Dubai, who rioted in March 2006 over poor pay. One worker was quoted by the NGO Human Rights Watch (HRW) as saying that new workers were paid $7.60 daily.

If you define a liveable wage as one that covers the cost of living an independent life in the locality of the place of work, accounting for minimal rent and other basic expenditures, then the minimum wage would need to be set around $800 a month, or $33 a day in the UAE.

Take, for example, a hypothetical construction contract worth $100 million. If 7% of this covered labour cost, and a liveable minimum wage of $800 a month was set for the labour force, the cost of the contract would inflate to $128 million. A very substantial rise. Even more so when you bear in mind that not one dollar would constitute profit for any of the firms involved.

A minimum wage can be imposed by the home nation of the worker concerned, as India has imposed a minimum wage covering its domestic maids employed in the UAE, and the Philippines has done the same for its construction workers.

So what would be the ramifications if India was to impose a minimum wage covering its workers in the UAE? "We have looked at introducing a minimum wage for construction workers," says Venu Rajamony, the consul general of India. "But we have not taken any decisions yet. Any such move would have serious repercussions in commerce and industry."

It certainly would. The "serious repercussions" being that multinational companies, which would have been expending $100 million on a contract, would be looking at an additional outlay of $28 million, with no additional profit.
 

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