Wednesday, July 27, 2005

Signs of strain in implementation of new labor fees :: KT
Fees regarding demographic balance of companies


Khaleej Times spoke to a cross-section of office managers, and they were unanimous in saying that there was a huge drop in the number of expatriates seeking issuance or renewal of labour cards or even new employment visas.

"We have witnessed a drop of almost 70 per cent in client numbers in the past two days," a manager of a typing office said, adding that people refrain from conducting any of the said transactions when they discover that it could cost them around Dh2,500 against the Dh500 they used to pay earlier. "Some of them even say that they will quit their jobs," he added. A manager of another office said: "We are sitting idle here with most of our clients refraining from conducting any of the transactions." A third one said: "Due to the fee hike, the country will end up with that many people staying illegally or without valid work permit."

Mahir Hamed Ali Al Aoobed, Director of RAK Labour Department (RLD), said the fee had been increased as a means to punish errant companies, which don't maintain cultural and nationality balance among its employees. "It is one of the tools the ministry put into effect to strike a demographic balance," he said.

Emphasis added.

I note that officially these fees are levied on the firms, not the workers. Students of economics know that it doesn't matter who a tax is levied on; that result does not change even when the firm simply tells the worker he or she is responsible for paying the fee. When the firm transfers responsibility, the analysis proceeds as if the fee was officially levied on the worker.


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