Monday, May 01, 2006

Annual rate of growth in the expat labor force in the UAE: 17 percent

Gulf News:
The number of expatriate workers in the UAE was 2,738,000 in 2005. The number is a 17 per cent increase over 2004.
That's a big number. It tells you that the Ministry of Labour does not make it difficult for a firm to bring in expat workers.

Demand for labor in the UAE has increased. But the UAE is a small player in the worldwide labor market. So an increase in demand translates into an increase in employment with little if any upward pressure on wages. (Exceptions to the rule would include narrow job categories such as experienced construction managers.)

Translation: The UAE faces a highly elastic, if not perfectly elastic supply of labor from abroad. There is a vast army of workers who would be glad to come to the UAE at terms that represent an improvement over salary and working conditions in their home country.

Thus, if wages and working conditions are to improve in the UAE the laws of economics tell us it will be because wages and working conditions improve in the countries where the UAE recruits labor. This is happening in places like India where economic liberalization has triggered a growing economy. But it is not in other countries. The UAE has other countries to turn to for cheap labor.

Ironically, the Indian miracle has also contributed to the growth in the world demand for oil that has resulted in the increase in the UAE's oil revenues.

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2 Comments:

Blogger grapeshisha said...

Another great deduction, Sir.

However, was expecting a tibute to JKG, linking Dubai to "the Affluent Society" or something similar!

10:18 AM  
Anonymous Googler said...

Yup, but you do need basic labor laws in the UI. Other rich countries such as the US and Canada do much better for the legal migrants. But right now it is pretty cool for the UAE as they have huge capital (both within and from abroad) and a cheap south asian labor force to exploit.
The UAE society is a hypocritical one. Even though the poor form such a huge section of the population, they almost wish the do not exist.

4:49 PM  

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