US embassy cable - 05ABUDHABI3877

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 003877 
 
SIPDIS 
 
STATE PASS USTR FOR KARESH, ROSENBERG 
STATE FOR NEA/ARPI, DRL/IL, G/TIP, G, INL, DRL, NEA/RA 
LABOR FOR ILAB, A.ZOLLNER 
 
E.O. 12958: DECL: 09/12/2015 
TAGS: ELAB, PREL, ETRD, KDEM, PINR, PHUM, TC 
SUBJECT: UAE LABOR:  EXPANDING EXPAT WORKER RIGHTS TARGETS 
DOMESTIC, INTERNATIONAL PRIORITIES 
 
REF: A. ABU DHABI 1874 
 
     B. ABU DHABI 1434 
     C. ABU DHABI 3144 
 
Classified By: (U) Classified by Ambassador Michele J. Sison, reasons 1 
.4 (b) and (d) 
 
1.  (C) Summary:  The UAE Ministry of Labor has been 
proactive in changing many of the most restrictive laws and 
regulations governing the expatriate labor market over the 
past two months, Labor Minister Dr. Al Ka'abi told Ambassador 
September 10.  These changes -- including changing the 
sponsorship regulations, abolishing the six-month mandatory 
immigration ban, eliminating the no-objection letter, and 
allowing workers who are owed back salaries to change 
sponsors -- all open the labor market and permit greater 
labor rights for expatriate workers in the UAE.  Prompted by 
the ongoing U.S.-UAE Free Trade Agreement negotiations, there 
has also been increasing public discussion on labor unions. 
Granting additional worker rights targets both domestic and 
international labor constituencies on Emiratization 
(increasing the number of Emirati nationals in the private 
sector) and expanding worker rights for the expatriates who 
make up 98 percent of the UAE's private sector workforce. 
 
Labor Unions 
------------- 
2. (C) The Ministry of Labor (MoL) has long debated the form 
and depth of a law permitting national labor unions.  Instead 
of creating a union law separate from the labor law as the 
government had previously planned(the labor law itself is 
also in the process of revision), the labor law will now 
include a specific provision giving the Minister of Labor the 
discretion to issue a decree allowing labor unions.  Minister 
of Labor Dr. Al Ka'abi explained to Ambassador on September 
10 that this will allow more flexibility in language, and 
will also allow the law to be passed much more quickly than a 
separate law could. 
 
3. (C) The UAEG is consulting with fellow Gulf Cooperation 
Council (GCC) members Bahrain and Oman and the International 
Labor Organization (Ref A) on tactics for formulating a union 
law and practice that allows for the regional peculiarity of 
a significant expatriate workforce (over 98 percent of the 
private workforce in the UAE is comprised of non-citizens). 
Like its neighbors, the UAE will allow full membership (and 
board positions) for UAE citizens and some form of associate 
membership for expatriate workers.  Al Ka'abi noted the UAE 
may follow Bahrain's example, and allow the unions themselves 
to decide what form associate membership will take.  This 
tactic will both further empower the unions and remove the 
government from the decision.  Al Ka'abi noted the UAEG had 
considered limiting all forms of membership to expatriates 
fluent in Arabic, but had decided against this for security 
reasons since, for example, some Sudanese and Egyptian 
expatriates fluent in Arabic are monitored for any extremist 
tendencies.  (Note: National security concerns remain the 
primary focus for the UAEG in formulating a labor union law 
since such a large percentage of UAE residents -- over 85 
percent -- are non-nationals.) 
 
4. (C) The revised labor law, which will include the new 
provision allowing the Minister the authority to allow labor 
unions, is still in a draft stage.  Al Ka'abi reported that 
he started the informal lobbying process with other members 
of the Cabinet, and said he plans to bring the law before the 
Cabinet for official approval once informal consensus has 
been reached (Note: The Cabinet had its first meeting this 
week after the summer break.)  It will then need the 
signature of UAE President Sheikh Khalifa bin Zayed. 
 
Opening the Labor Market 
------------------------- 
5. (C) The Ministry of Labor and Social Affairs has been 
proactively changing many of the most restrictive laws and 
regulations governing the expatriate labor market over the 
past two months.  The primary goal behind these changes is to 
close the financial gap between employing expatriates and 
local workers.  In the past, local workers have been 
significantly more expensive for companies since they 
received higher salaries, medical and pension benefits.  They 
also were frequently less qualified, but had the freedom of 
movement to change jobs.  Expats, on the other hand, were 
better skilled, but essentially locked in place by the strict 
sponsorship transfer regulations (Note: A visa sponsor is 
legally the expat's employer) and the six-month immigration 
ban if they changed sponsors without a no-objection letter 
from their original employer.  Al Ka'abi explained that 
closing the gap between expats and locals in the private 
workplace will help increase UAE penetration of the private 
sector, and meet domestic political priorities of 
Emiratization (increasing the percentage of UAE citizens in 
the private sector - Ref B).  It will also help reduce the 
unemployment rate of UAE citizens.  Allowing greater mobility 
for expatriates, and raising the cost of expat labor through 
such mobility and higher fees for MoL transactions (meant for 
the companies, not individuals), the UAEG hopes to equalize 
the playing field for citizens. 
 
6. (C) These changes substantially increase worker rights in 
the UAE, and thus address international political concerns by 
bringing UAE labor laws closer to an international norm. 
Collectively these changes give much greater mobility to 
expatriate workers, by giving them more freedom to change 
employers without fear of labor or immigration consequences. 
Major changes announced in the past two months include: 
 
-- Allowing sponsorship transfer for all workers, although 
there remain restrictions for some types of workers (Ref C) 
-- Eliminating the six-month immigration ban for workers who 
change sponsors 
-- Eliminating the corresponding no-objection letter that was 
previously required for a worker to change employment 
-- Allowing workers who are owned three months of unpaid 
salaries or more to change sponsors, even if they do not meet 
the other requirements for sponsorship transfer 
-- Increasing company fees for failing to cancel, change, or 
renew a worker's labor permit. 
 
Civil Service Law 
------------------ 
7. (C) The labor law governs only private employment in the 
UAE, which accounts for about 2.1 million workers.  There are 
an additional 2 million workers not covered by the law, the 
majority of whom are government workers.  Most UAE citizens 
prefer to work in the public sector, since these jobs require 
fewer hours, have better pay and benefits, and no 
accountability or performance reviews.  Al Ka'abi noted that 
he would like to see the civil service law changed as part of 
the broader labor reform movement.  Changing the civil 
service law would give broader accountability, and require 
employees to perform the services for which they are being 
paid.  He noted that the civil service law and the opacity of 
finance and funding are the "handcuffs" of the UAE's attempts 
to reform. 
 
Possible Change of Weekend? 
---------------------------- 
8. (C) Al Ka'abi also mentioned that the UAEG is considering 
switching from the current official Thursday-Friday weekend 
to a Friday-Saturday weekend to bring it more in line with 
the international business community.  While there are 
several key leaders and groups in favor of this move 
(including Abu Dhabi Crown Prince Mohammed bin Zayed, Dubai 
Crown Prince Mohammed bin Rashid and the Dubai banking 
community), there remains resistance to the change from some 
prominent Cabinet members, most notably Sheikh Hamdan bin 
Rashid Al-Maktoum, the titular Minister of Finance and 
full-brother to Dubai Crown Prince Mohammed bin Rashid 
Al-Maktoum, said Al Ka'abi. (Note: Al Ka'abi indicated there 
has been a strain in the relationship between the two 
brothers.) 
 
Comment 
------- 
9. (C) Although many of the recent labor changes are couched 
in the language of domestic political priorities -- 
particularly Emiratization -- the reality is that worker 
rights are moving ahead in the UAE.  By opening the market to 
freedom of movement for workers, the UAE is normalizing both 
the wage scales and the number of workers needed to meet the 
demands of a free market economy.  The removal of the 
six-month immigration ban also removes the fear that workers 
can be deported at their employer's whim.  The UAE has 
demonstrated it is slowly moving toward compliance with 
international labor standards (and with the standards 
required for negotiation and ratification of a Free Trade 
Agreement).  More broadly, Al Ka'abi has made significant 
progress in convincing the ruling leadership and his Cabinet 
colleagues of the need to create a more open labor market 
that satisfies both international and domestic labor 
priorities. 
SISON