Is the time of labour reforms upon us?

With the possible introduction of a minimum wage, coupled with a worsening labour shortage, Construction Week looks at the debate for the instigation of labour reforms.

New rules: is an increase in salary
New rules: is an increase in salary

A major strike last week by Arabtec workers on the Burj Dubai has prompted the UAE Ministry of Labour to launch an urgent review of workers' salaries.

The review will involve collaboration with all construction companies and will be carried out within the next two months.

The move could mean the introduction of a minimum wage.

If the UAE wants to retain workers,it will need to implement this with the utmost urgency.

"This is the first time the ministry has decided that an increase in salary is a must for construction workers," BS Mubarak, labour consul, Indian consulate, told Construction Week.

"The workers were promised a rise in their salaries within two months, and no company would be able to pay less than the sum decided upon."

Mubarak added that a basic minimum salary of US $163 (AED 600) has been suggested, but that the final amount would be decided on only after consultation with construction companies.

But is a minimum wage the solution to the problem?

"There has never been a more pressing time than now to implement a minimum wage," said Ani Ray, country head of contracting company, Simplex Infrastructure.

"If the UAE wants to retain workers, it will need to implement this with the utmost urgency. Firstly, the cost of living in Dubai has gone up. Secondly, because of the recent drop in currencies pegged to the US dollar, workers' salaries have been reduced by around 15%, with more reductions expected in the future.

"And lastly, the Indian economy is attracting workers back home. Without the lure of a good minimum wage, it's going to be very difficult to find workers for projects here."

Ray added that with the introduction of a minimum wage, companies could incorporate the extra $160 per worker into their 'input costs' when tendering for a project.

"Take the material costs for example - the industry got over that fairly quickly. Contracts were changed and amendments were made; why should it be any different when it comes to workers?"

A source from Murray & Roberts, who wished to remain unnamed, added: "Even if the cost is passed on to the client or construction companies take out a sum of say $270 per worker from their profits, either way, it could be feasible considering the good that will come out of it."

But some contractors don't feel that a minimum wage is the only answer to the ongoing problems.

"I think the industry should be self-regulated," said Derek King, divisional manager for Dutco Balfour Beatty.

"Things like payment on time and living conditions must be controlled; but there is no point in bringing in a minimum wage if it is not enforced. I strongly believe that legislation and enforcement have to go hand in hand.

"Also, I don't think wages are the sole reason for strife in the labour camps in Dubai. People living there are as concerned about hygiene, washing facilities, transport quality and reliability and having enough leisure time. I don't think the minimum wage is the solution to all these problems. We need a more holistic approach to the issue. Eventually the companies which offer poor wages and conditions will lose out because they will not be able to
attract workers."

According to Kez Taylor, managing director of ALEC, which has a workforce of 7,500, implementing a minimum wage would have a huge impact on many projects.

"I do think the major problem in our industry is a lack of conformity between companies. Conformity in wages is not necessarily a bad thing as long as these wages are set at a fair and reasonable rate for both parties. But as well as making sure that wages are the same, other things need to be regulated too."

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Construction Week - Issue 767
Sep 01, 2020