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In a bold new step, the UAE has announced that it will begin drafting a new labour law allowing collective bargaining and the formation of trade unions.

These two new rights remain illegal in the country for now, but growing unrest among mainly South Asian expatriate labourers and both local and international media attention on the issue have prompted a change in Abu Dhabi’s attitude.

The move comes after a string of other moves to improve labour market conditions for the country’s estimated 4.25m labourers, 52% of whom are Indian. One such was a ban implemented in Dubai on working during the hottest hours of the day in summer. But this ban was largely ignored, with both Abu Dhabi and Dubai developing at break-neck speed and contractors sometimes keen to get the work done fast and cheap. Many workers were not even aware such a ban existed.

At the same time, the Emirati authorities deny that the labourers on which the construction industry depends are poorly treated.

It is expected that the new law will be drafted in the coming months and passed by the end of the year.

Quoted by global media, UAE Minister of Labour Ali al-Kaabi said, “Labourers will be allowed to form unions. We’re going to have one union, with separate representatives for the construction, fishing, agriculture and other industries. The law will control how strikes will be conducted. It will outline rights, the dos and don’ts. There will be a labour representative, who will be our point of contact.”

This change has come in the wake of a report by the US-based Human Rights Watch. The report was very critical of labour practices in the UAE, saying that unrest among the workers is in large part due to poor living conditions, wage shortages and dangerous working conditions.

Of course it is the contractors themselves who see to the conditions their employees labour under, and Abu Dhabi has been increasingly penalising companies that withhold wages.

On April 19, the Ministry of Labour also warned firms that failure to abide by safety standards for their workers or to submit quarterly reports covering work-related injuries and accidents will result in heavy penalties and even closure. Firms are also required to immediately report any injury or accident occurring while their workers are on duty, although many firms tend to argue that providing insurance offsets the need for stringent safety rules.

There have also been reports of abuse as the labour laws give no right of residence to foreign labourers. If the job they are hired to do ends, they usually must leave the country. Some are even forced to give their passports to their employers upon arrival, and therefore leaving can be difficult.

Unlike Dubai, Abu Dhabi has seen no major protests, but has seen some strikes and sit-ins.

Some other measures were also introduced in 2005, such as compulsory health insurance for foreign labourers, paid by the employer, and also covering dependents of the worker for primary health care. This will also reduce the burden on public emergency rooms in the Emirates, which have been overwhelmed by expatriates seeking treatment.

Employers have also used insurance in the past as bargaining chips to get labourers to accept lower pay or other disadvantageous working conditions.

The move was also welcomed by local insurance companies.

The ministry is also getting ready to launch a national “Safety at Work” campaign beginning on April 28 to raise awareness among labourers about safety conditions. Material in Arabic, English, Urdu and Persian will distributed and there will be a series of lectures on the subject during the campaign.

As Abu Dhabi continues its efforts to improve working conditions in the country overall, it is clear that other sectors of the economy can benefit. Greater disposable income or other benefits for employees may also allow more of the money labourers earn to stay in-country, rather than being sent out to family members back home. Often 95% of a worker’s pay check is currently repatriated. In the UAE alone the expatriate workforce sent some $4bn out of the country in 2004.

Whichever way you slice it, labour reform will benefit everyone, even if it may squeezes profit margins a little to begin with.

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