US embassy cable - 04ABUDHABI3270

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 003270 
 
SIPDIS 
 
PASS TO USTR FOR CATHY NOVELLI 
 
E.O. 12958: DECL: 09/20/2014 
TAGS: ELAB, ECON, PGOV, TC 
SUBJECT: TIFA - THE LABOR ISSUE 
 
 
Classified by Ambassador Michele Sison for Reasons 1.5 (b & d) 
 
This is a joint Dubai-Abu Dhabi Cable. 
 
1. (C) Summary: The UAEG understands that its current labor 
law is a stumbling block to its goal of negotiating a FTA 
with the U.S.  The fact that the overwhelming majority (80-85 
percent) of the population and 98 percent of the private 
sector workforce is foreign, however, means labor is a 
sensitive, national security matter in the UAE.  Given this, 
a USG decision to enter into FTA negotiations with the UAEG 
would likely facilitate the UAEG,s efforts to reform its 
labor law.  It will also strengthen the hand of one of the 
UAEG,s chief reformers, Minister of State for Finance and 
Industry, Dr. Mohammed Khalfan bin Khirbash. 
 
2. (C) Current labor law allows for collective dispute 
resolution and the labor dispute mechanisms in the UAE 
generally work.  However, the current legislation does not 
entitle workers to form or join unions.  Whether settled by 
the Ministry of Immigration, the Ministry of Labor, the free 
zone authorities, or the courts, labor disputes are generally 
resolved fairly and consistently.  The UAEG is aware that its 
current labor law is a major stumbling block to its goal of 
negotiating an FTA and the Ambassador will be reinforcing 
this in her meetings with the Minister of Labor, MinState of 
Finance Khirbash, and with the MFA.  The UAEG has told us 
that they are revising their labor law, but that their 
overwhelmingly foreign workforce raises security concerns. 
End Summary. 
 
3. (C) About 80%-85% of the 4 million people in the UAE are 
expatriates as is 98 percent of the private sector workforce. 
 The UAE attracts a large number of foreign workers, who 
continue to flow into the country, because in the UAE they 
can earn a substantially higher income than they can in their 
home countries. 
 
4. (SBU) The current labor law does not entitle workers to 
form or join unions, and no unions exist.  However, the 
government allows workers to associate freely for the 
advancement of common goals and interests.  In practice, 
workers address grievances and negotiate disputes or matters 
of interest with employers through formal and informal 
mechanisms.  Although the law does not grant workers the 
right to engage in collective bargaining, it expressly 
authorizes collective dispute resolution.  The labor law also 
does not address the right to strike, however, the press has 
quoted UAEG officials as saying that the law does not forbid 
strikes and that workers can stop working if they are denied 
their rights.  In practice, there have been numerous strikes 
by private sector workers and organized gatherings of workers 
who complained of unpaid wages to the Ministry of Labor. 
 
5. (C) The UAE has told us that the Cabinet has approved a 
proposal regarding drafting a law providing for the 
establishment of labor unions.  The Ministry of Labor is 
currently preparing a draft law.  The UAEG realizes that the 
current law represents a major obstacle to their goal of 
negotiating a Free Trade Agreement (FTA) with the U.S.  UAEG 
officials have also stressed, however, that labor is a 
sensitive issue for them, given the unique demographics in 
the country.  Various UAEG officials have told us that they 
need a positive response from the USG on FTA negotiations in 
order to push through sensitive reforms and to avoid 
undercutting the reformers.  Over the last two days, MinState 
of Finance Dr. Mohammed Khalfan Khirbash and his senior staff 
have asked Abu Dhabi EconChief for a USG indication (either 
via letter or public announcement) that it intends to move to 
FTA negotiations. Ministry of Finance Undersecretary Khalid 
Al-Bustani called EconChief to say that Dr. Khirbash was 
coming under &a lot of pressure8 (to produce results) from 
the federal cabinet. 
 
6. (C) In an effort to see about the how the UAEG deals with 
workers, disputes in actual practice, Dubai PolEconoff met 
with several labor attaches from labor exporting countries on 
September 18.  Vicente Cabe, Labor Attach at the Philippine 
Consulate General, told PolEconoff "the (labor dispute 
resolution) system in the UAE generally works."  The 
Philippine Consulate estimates there are 200,000 Filipinos in 
the UAE, with over 60 percent in Cabe's consular district of 
Dubai and the Northern Emirates. Cabe said he dealt with two 
different categories of labor dispute cases: housemaids, who 
are not covered under the UAE labor law and which are handled 
by the Ministry of Immigration (MoI); and other workers, 
mainly unskilled and semi-skilled, whose complaints are 
handled by the Ministry of Labor (MoL). Cabe, who showed an 
excellent grasp of the UAE's labor dispute resolution 
processes, said his team dealt with 300 to 500 cases of each 
type per year. Cabe said that almost all housemaid cases were 
settled at the MoI level, never going to court. The MoI in 
effect instructed employers to pay, thus ending the dispute. 
The MoL, on the other hand, tried to mediate disputes, with 
Public Relations Officers (trained attorneys) reviewing the 
documentation and speaking to both sides of the dispute. In 
Cabe's experience, about half were successfully mediated and 
half were referred to the courts. Most court cases were 
resolved within a few months, and their judgments were about 
the same as those recommended by the MoL. In the rare 
particularly thorny situation, the Consulate or the Embassy 
sent a letter to the authorities, resulting in swift and 
effective action. 
 
7. (C) Cabe said a separate category of labor problem he 
dealt with involved undocumented workers -- less than 10 
percent of Filipino workers in the UAE -- who have no legal 
rights under the labor law. Sometimes an employer would hire 
a Filipino on a 3-month visit visa, and then refuse to pay. 
In those situations, Cabe said that the Consulate was able to 
bring pressure to bear on employers because they, too, were 
violating the law. He said the MoL had the power to heavily 
fine and shut down businesses employing workers illegally, 
and it was willing to do so. 
 
8. (C) The Bangladeshi and Pakistani Consulate Generals were 
much less likely to raise issues to the UAEG, but tried to 
resolve problems directly with the employers.  Kamrul Ahsan, 
Bangladesh Consul General, told Dubai PolEconoff that about 
60 percent of the 300,000 Bangladeshis lived in Dubai and the 
Northern Emirates.  He said that when workers came to the 
Consulate with labor problems, they insisted they did not 
want to file a complaint but simply wanted the assistance of 
the Consulate in getting their back wages. Ahsan and his team 
contacted employers directly to try to reach a settlement. 
(Note: Ahsan seemed not to have a good handle on how the 
labor dispute process worked.)  Ahsan said that the labor 
situation in Dubai was better than that in the Northern 
Emirates. He reserved special praise for Dubai's free zones, 
which fairly resolved labor disputes in-house through its own 
mechanisms. He also complimented the local papers for their 
increasingly extensive coverage of labor disputes. 
 
9. (C) For his part, M. I. Jawed, Welfare Counselor at the 
Pakistan Consulate General, told Dubai PolEconoff that he and 
his staff usually contacted the employer, often an Indian or 
Pakistani about disputes, and were usually able to reach an 
amicable settlement. With over half the UAE's 500,000-plus 
Pakistanis in his consular district, he said the Consulate 
was able to draw on the assistance of a "Pakistan 
Association" in each emirate. While admitting that the UAE 
"had some problems" with labor conditions, Jawed said the 
system worked "pretty well."  He added that these days he was 
focusing his efforts on getting more skilled, rather than 
unskilled, Pakistani workers to come to the UAE. 
 
10. (C) Comment:  Post will continue to work with the UAEG to 
stress the importance of moving quickly on bringing the labor 
law in line with international standards.  We believe that, 
as in many areas, the actual practice in the UAE has evolved 
beyond the law.  The Ambassador will be raising this subject 
with Dr. Khirbash, officials at the MFA, and with the 
Minister of Labor.  For their part, UAEG officials are 
looking for a formal response that the USG intends to 
negotiate a FTA with the UAE.  If that happens before the 
October 4-5 TIFA Council meeting, it will give a necessary 
boost to Dr. Khirbash,s efforts to push reforms that we want 
and to get the right interagency team to Washington.  End 
Comment. 
SISON