US embassy cable - 03ABUDHABI2274

UNCLAS ABU DHABI 002274 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR NEA/ARP, NEA/RA, DRL AND EB/CBA 
STATE PASS OPIC/OPIC INTERNATIONAL POLICY DEPARTMENT 
FOR VIRGINIA GREEN AND CONSTANCE SHINN 
AMEMBASSY TUNIS HOLD FOR FSI: OLIVER JOHN 
USDOC FOR 4530/ITA/MAC/ONE/DGUGLIELMI, 
4520/ITA/MAC/ONE/CLOUSTAUNAU, 
4500/ITA/MAC/DAS/WILLIAMSON, 
3131/CS/OIO/ANESA 
 
E.O. 12958: N/A 
TAGS: ELAB, PREL, PHUM, PGOV, SOCI, CVIS, TC 
SUBJECT: (SBU) INHERENT CONTRADICTIONS OF THE UAE 
LABOR MARKET 
 
 
1. (SBU) In a recent address to the Indian Business 
and Professional Group, UAE Labor Undersecretary 
Khalid Al-Khazraji said all the right things. First, 
he confirmed that the UAE will continue to import 
multiethnic labor, primarily from the Indian 
subcontinent (something that no doubt went down well 
with his hosts), but added that the UAE would seek to 
diversify away from over reliance on any one labor 
source. He went on to say that the government would 
require higher educational qualifications for visa 
recipients and generally make work permits more 
difficult to obtain for unskilled workers. Second, Al- 
Khazraji reiterated the government's commitment to 
increasing employment for nationals in the private 
sector -- sixty percent of whom are under the age of 
23 and will be entering the labor market in the near 
future.  Al-Khazraji estimated that 10,000 nationals 
would graduate and enter the work force this year and 
he expected that all would find jobs -- without the 
sort of coercive nationalization programs for the 
private sector prevalent in other GCC countries. 
 
2.  (SBU) Yet, despite Al-Khazraji's focus on a policy 
of importing "high value" skilled expatriate labor, 
the reality is quite different.  Last year, the UAE 
issued 330,000 work permits -- a six percent increase 
from the previous year -- and most were for low-skill 
construction and maintenance jobs (45% went to 
Indians). Though the UAE has heavily publicized an 
amnesty encouraging illegal laborers to leave the 
country, and trumpets its future economy as being 
cutting edge high-tech and modern, it continues to 
remain heavily dependent upon low-wage, unskilled 
workers. 
 
3.  (SBU) With regard to increasing the number of 
Emiratis in the private sector, there is a clear and 
abiding divergence between what nationals expect and 
what their skills can reasonably command in an open 
economy.  To its credit, the UAEG has opened a number 
of colleges of higher technology to develop a more 
sophisticated national workforce, focusing more on 
developing useful skill sets in young Emiratis rather 
than forcing private employers to hire nationals. 
However, Emiratis who seek jobs in the private sector 
expect starting salaries of 8,000-10,000 dirhams a 
month (? $2100-$2700) upon graduation in a society 
where they pay no taxes, and receive free health care, 
car benefits, and housing subsidies (a comparable U.S. 
wage would be $50,000-$60,000). Given their lack of 
experience and higher salary demands, businesses 
understandably prefer to hire better educated, more 
seasoned expatriates willing to work harder for less 
money and who can more easily be fired if thing don't 
work out. No matter how good a job the UAE does in 
training its people, it is distinctly unlikely that 
their salary expectations will ever be reached in the 
marketplace absent government intervention. 
 
Albright