To build a better Dubai, start with the labour force

Mishaal Al Gergawi

• Last Updated: May 14. 2008 4:57AM UAE / May 14. 2008 12:57AM GMT

It is fashionable, almost compulsory in conversation nowadays, to discuss the bubble that is Dubai. Whether you believe its ever-increasing rate of expansion is a good or a bad thing, it is impossible to deny that at the ground level there is a crisis. A crisis that is both ethical and administrative, and one with the capacity to create significant legal and economic repercussions in the near future.

This problem that we’ve come to identify as a crisis thanks to the local media — and one that the Indian external affairs minister has raised during his current visit to the UAE — is the ongoing and recurrent delays in payment to construction workers in Dubai. This is simply a great injustice being put upon those people and it must stop.

These labourers come here to work out of need not want. Believe me, most of them would rather be back home with their families — it’s not like they hang out at Starbucks after they get off work anyway! And yes, obviously, their compensation here is substantially higher than they would receive in their home country, which is why they are here.

Yet you hear people saying: “They are so lucky they are here; it’s not like they are hungry or cold, and they will get their pay eventually.” So let’s see if your average corporate executive would forgo his or her pay for a few months till their employer lands a major account — would they feel they were lucky to be fed and housed?

These construction workers are important to the economy, but because they are weak and there are many of them, it does not mean we should allow their exploitation by greedy contractors, even if they are short of funds. This is exactly what’s happening at the moment.

Companies with weak balance sheets underbid for contracts and once they are awarded the respective project they hire cheap labour. The only way they can pay them is by waiting until they themselves receive their phased payments. So you have a classic “chicken and egg” situation: workers are exploited and made to work temporarily for free (with the threat of being sent home if they complain), which means that for accounting purposes, the employment costs can be carried over to the next payment phase.

Contractors push the term “temporary” as far as they possibly can. Developers, after some haggling, usually agree to the arrangement. Everyone is happy, except the worker — and the eventual property purchaser, who discovers that the construction quality of their new premises is poor because while the labourers were at work, their families at home were going hungry for four months.

Where does the responsibility for all this lie? First and foremost, with the contractors for breaking the terms of the employment contracts with their workers. Second, are the developers, for hiring the contracting firms without conducting any meaningful checks on their financial health beyond the existence of a performance bond. Third is the Government, for not introducing guidelines to the ever-expanding contracting industry, which allows the companies responsible to tarnish the reputations of all.

Fourth, the embassies of the countries that supply the labour for turning a blind eye. Fifth, the media, for running only general stories on the subject instead of conducting a name and shame campaign. Sixth, us, the buyers, for only considering the price and payment plan and not enquiring into the history behind our purchase.

The surge in infrastructure and real estate development in Dubai — contrary to sceptics and critics — is entirely in line with migration trends to the city and consistent with its goal of positioning itself as a service and leisure hub for the region, and shows its appeal as a place to both live and visit. However, we need one of the existing public entities to take up the task of regulating the construction industry in a way that will ensure that quality is improved without affecting the speed with which the new buildings are erected.

This may very well warrant the establishment of a task force comprised of representatives of the Ministry of Labour, the Immigration Department and the Road and Transport Authority (RTA) to exclusively focus on such issues. There would be two mandates. First, it would review all current contractors’ standing and — if need be — penalise them by way of a points-based system quite similarly to the driving licence system.

Second, and most importantly, after such a review is conducted, it must embark on the task of forcing the many smaller and undercapitalised companies to merge to form stronger, more efficient and financially healthier businesses. This would allow these companies to grow and expand regionally — and UAE-based developers are already growing faster than those in the rest of the region.

The rationale is simple; larger and more professional firms can pay their workers better and in a more sustainable way. This is what will ensure the rights of everyone in the construction business.

We might not be living in a bubble, but without the kind of regulatory authority I advocate — one that will penalise corner cutters, reward quality and innovation, and facilitate the emergence of regional leaders — we may well be living in a tower whose ever-increasing height may not be sufficiently supported by its foundations. We all know the ending of that story.

Mishaal Al Gergawi is a graduate of the American University in Dubai and CERAM European School of Business. He is the CFO of Emrock Aggregate and Mining