Dubai is suffering from labour unrest as thousands of workers are protesting poor working conditions and low wages in strikes that could pose a threat to the emirate's building boom.
Beginning on October 28, strikes took place at construction sites at the Jebel Ali industrial zone and at the Burj Dubai, slated to be the world's tallest building. Demands included better working conditions, increased wages, better transportation to construction sites and improved housing. Thousands of workers took to the streets in protest, some throwing stones when police tried to disperse the crowd.
Authorities quelled the protests by ordering ministers and construction firms to review worker salaries. The government announced the creation of a joint salary reviewing committee, which will be made up of labour ministry officials and construction company representatives. There has also been some discussion of setting a minimum wage.
However, questions remain about the longevity of the protests if changes are not made soon. Strikers did not agree to return to the Burj Dubai until a deal was reached with officials from the ministry of labour on November 2. Humaid bin Deemas, the assistant undersecretary of the labour ministry, told local press the government delegation agreed to address workers' grievances with regards to accommodation and their transport to and from the construction site.
Dubai's construction sector has been spurred by large amounts of liquidity and credit, investment from oil-rich neighbours and a non-unionised workforce. A huge labour force is required to keep up with projects and an estimated 500,000 expatriates work in the construction industry. Foreign labour has been drawn primarily from India, Pakistan, and Bangladesh. Many come to Dubai hoping to send money back to their families. However, costs of living in the emirate have skyrocketed in recent years and labourers are often left with little or no money to send home.
"The costs of living here have increased so much in the past two years that I cannot survive with my current salary," Rajesh Kumar, a worker from the southern Indian state of Andhra Pradesh who earns less than $150 a month, told local press.
Industry insiders have said they feel that the authorities are acting appropriately to address labourers' needs, but change cannot take place overnight.
"These are isolated events and the concerned authorities are taking the proper steps to improve conditions to prevent this from happening in the future," Samir A Arab, marketing director at the investment group Merchant Bridge's Dubai office, told OBG.
In the meantime, fewer workers are coming to Dubai, raising questions of where the labour force needed to keep construction moving apace will come from. In addition to rising costs of living, labourers have been faced with a declining real income, even if prices were stable. The emirate's dirham is pegged to the dollar, which has taken a plunge in recent years.
The Indian majority in particular has less incentive to come to the emirate, given the improving situation back home. India's economy is flourishing and there is now more opportunity and less pressure to leave to find work. The dollar's slide with regard to the Indian rupee provides further incentive for workers to remain in India.
In June the government offered a "no questions asked" one-way ticket home in an attempt to counteract illegal immigration, but has since been overwhelmed with more than 280,000 requests to leave. The amnesty programme left many contractors scrambling to find enough labourers for their projects.
With over 390 projects valued at over $430bn, Dubai's construction boom is certain to continue, though serious changes are needed to ensure there is a labour force to meet the demand.