National and foreign staff will not be on par - official :: Gulf News

As sometimes occurs, without acknowledging each other, there's a conversation taking place between the Khaleej Times and the Gulf News. Following up on KT's stories of the past few days, here and here, GN says wage parity between Emiratis and expats is not what the Ministry of Labour has in mind:

Dr Khalid Al Khazraji, Undersecretary in the Ministry of Labour and Social Affairs, said some reports claiming the government would soon introduce a new mechanism to curb nationality-based quotas and treat nationals and expats at par in terms of wages are not accurate.

Speaking to Gulf News he said: "I explained that the 'cost of hiring' nationals will be equal to expatriates and not that wages will be equal. It is not accurate that wage will be equal."

Rather, the Cabinet is considering a system of fees (and fee reductions) that would raise the cost of hiring nonnationals among those firms that that do not hire nationals.

He said that a Cabinet approved draft law breaks down companies into three categories A, B and C.

"Those who employ nationals and abide by labour laws of diversifying nationalities and no nationality exceeds 30 per cent would pay the lowest fees and be placed in category A. They also do not have to pay the bank guarantee. Those who have abided by labour laws to a lesser extent and no nationality has exceeded 74 per cent will be placed in category B."

He said those least abiding by labour laws and regulations will be placed in category C and will pay the highest fees. He said: "This is what I meant by the 'cost of hiring' nationals and non-nationals will be in par because we are placing companies in different categories. A private company can no longer claim that it is cheaper to hire an expatriate than a national. It will be cheaper based on the company's performance and how seriously it has implemented labour laws but not based on nationality."

Such a plan moves in the direction I have been advocating. Without saying so, its effect would be to remove minimum quotas on the percentage of nationals a firm must employ, and replace them with rewards for hiring nationals and higher government fees for hiring nonnationals."

Returning to GN and it's quotation on the minister:

"A private company can no longer claim that it is cheaper to hire an expatriate than a national. It will be cheaper based on the company's performance and how seriously it has implemented labour laws but not based on nationality."

As the staff at Tanmia are well aware, implementation of such a fee structure requires a sophisticated up-to-date information system. The government will need to know not only how many non-nationals a firm employs, but must also need to know the number of nationals a firm employs. The existing sponsorship system can serve as a source of reliable information on the employment of nonnationals.

Tracking nationals is trickier. There is the pension system - nationals working in the private sector are members of the government pension system - which could be used. However, it would rely on the national reporting his or her employment status and job changes to the pension authority in a timely fashion. Then there is the issue of whether the various agencies are open to sharing their information, and the technical issues of merging the data.

In short, implementation of the rules envisioned will be nontrivial. And, the history of failure to implement rules makes future implementation of new rules more difficult; rules are most easily implemented when there is a general belief that they will be implemented. See: self-fulfilling prophecy.

UPDATE July 17: Khaleej Times story on the fee structure is here.