Monday, October 10, 2005

Law sought to halt visa trading :: Gulf News

Dubai: The Labour Ministry is hoping to push through legislation to punish owners of bogus companies, which are used to illegally sell work visas to expatriates, Gulf News has learnt. Humaid Bin Deemas, Assistant Labour Undersecretary at the Ministry of Labour and Social Affairs, said current ministerial decisions were not enough to stop bogus companies. "At present if we can prove a UAE national owns bogus companies and is using them to sell work visas, we can halt all his company's transactions with the ministry."

Bin Deemas said he did not have available statistics on how many UAE nationals had been dealt with in this way, but said the procedure was not enough to halt the practice. "We want a law to punish this," he said. The official said there was political will to see a law through.
The fact that there are foreign workers willing to pay for a work visa tells us that those who gain admission to work in the UAE are better off than they are in their home countries. Likewise, there are companies who want to hire more workers, but are not able to get more work visas from the ministry are also willing to pay for more work visas. The buyers and sellers of work visas gain from the transaction. Where are the victims of trade in work visas?

At present, the number of work visas issued is determined by a process in which companies apply for visas and must justify the number based on the number of workers they require to operate their business. The ministry reviews the application of each company and decides the number of visas it will issue to the company. The result of this process has been that not all companies requests have been met in full. It is the approval process that has resulted in binding limits on work visas that has created the business opportunity of the so-called bogus companies to apply for work visas, giving bogus justifications for seeking the visas.

Criminalizing trade in work visas is only one way to shut down this trade. The ministry could kill off the trade in work visas in two other ways. It could raise the fee it charges for a work visa. (This is in fact what it is being contemplated for work visas for domestic help.) Or it could become less restrictive in issuing visas.

The UAE of course has a very large foreign population. Total population in the UAE is around 5 million, 80 percent of which are foreigners. Foreign workers in the UAE make up 1 percent of all workers working abroad worldwide. It is probably the case that an average UAE citizen would gain materially if even more foreigners were allowed to enter the country; but the same average citizen already believes, quite understandably, that local culture is under threat and would not support relaxing limits on work visas.

Some might object that an increase in the work visa fee would increase costs and push up prices. Clearly costs would increase, but mostly this would result in a transfer of business profits to the government that would not translate into higher prices. The reason is that businesses are currently constrained from expanding because of bottlenecks in the issuance of work visas. The increase in fees would defuse this desire to expand, but would not necessarily result in a cut in production that would drive up prices.

Either way, criminalization or increasing fees, you would be cutting into the profits of UAE nationals who own businesses.

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