What the head of the IMF can teach us about Emiratization

The head of the IMF, Dominique Strauss-Kahn, is under arrest in New York on charges of attempted rape. DSK, as he is known in his native France, was denied bail today. The judge was convinced by the prosecution's argument that it would be next to impossible to extradite him from France, and therefore he was a flight risk. So, the man who is alleged to have attempted to rape a maid in his $3,000 a night Times Square hotel penthouse, remains in a Harlem Rikers Island jail cell.

Were DSK the same in every way except that he was an American, I suspect he'd be out on bail, and back in a cushy hotel room. It is because it is difficult to extradite someone who has the means to fight it, that he remains in jail without bail. Rights can make you worse off.

I've written the same thing here about the disadvantage Emiratis face in the private sector labor market. As one example, an expat does not have labor market mobility within the UAE. Their visa is tied to the company that employs them. But Emiratis are free to change jobs, which makes firms reluctant to hire and train them. Or if the ex pat does not perform, there is nothing stopping the firm from terminating them. But firms fear that it will be difficult to fire an Emirati, so they are reluctant to hire them in the first place.

Rights can make you worse off.

A few more nights in jail, and I suspect DSK would willing give up his right to fight extradition. The trouble is, there's no way for him to make that a credible promise.

If the UAE is going to make it easier for nationals to find work in the private sector, then it's going to have to either give ex pats more rights or nationals fewer rights.

DSK reminds me of Saudi taxi drivers. You can be harmed by your own rights.

UAE rulers tuned in; increase handouts

From UAE official new agency (WAM):

President His Highness Sheikh Khalifa bin Zayed Al Nahyan has instructed the establishment of the Khalifa Fund for Enabling Emiratisation in support of the empowerment policy he has launched and in completion of the President's initiatives seeking to advance socio-economic development plans, provision of decent living means and stability to UAE citizens.

The new institution aims to provide financial resources necessary to support programmes and policies for encouraging UAE citizens to enter the private sector labour market, help them to seize job opportunities the private sector offers, and secure required funds for delivering a package of rewards towards achieving that end.

In its meeting today under the chairmanship of Vice President and Prime Minister of the UAE and Ruler of Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum, the federal cabinet reviewed the work mechanisms of the new entity, scope of its mandate and executive measures needed to start its operation as soon as possible under the supervision of the National Human Resources Development and Employment Authority (Tanmia).

The package of incentives the Fund will offer includes payment of financial privileges when a UAE citizen joins work at the private sector so as to reduce the pay gap between the public and private sectors, allocation of funds to employers to help them cover a certain percentage of the pay the national private sector employees will draw in the first year, funding part of training and rehabilitation costs of the new national employee when he joins the private sector for the first year and contribution to long and short term training programmes for national job seekers.

The Fund will also use its financial resources to advance policies and programmes aimed at creating new job offers at the local and federal levels, supporting and financing small and medium scale enterprises, and financing university specialisations that cater for requirements of the local labour market.

The Fund will act as a key contributing mechanism to leverage participation of citizens and develop the social welfare concept into a new one that enables able social assistance recipients to become a productive force contributing to the growth of the national economy. It will also serve as a mechanism for facilitating success of Emiratisation policy and programmes and increasing the share of small size businesses owned by UAE citizens in a way that generates more job opportunities.

WAM/TF

Sick notes

If a transaction is unethical why criticize the seller and not the buyer?

More to the point, isn't the problem that the behavior of employees is permitted to be disciplined by their immediate supervisor?

In an unrelated development, is it a good idea to make it next to impossible to terminate an Emirati employee?

Bad policy

Emiratis are already a tiny percentage of the private-sector workforce. Making it more difficult to terminate Emiratis will only make firms less likely to hire other Emiratis.

Addendum. The Financial Times has a franker report.

Bahrain labor market reforms

The Financial Times reports:

When it comes to labour issues, Gulf governments have a habit of talking about reform but producing little in the way of action.

But two years after a law was passed – and in the face of opposition from the business community – Bahrain has pushed through a series of increases in the price that sponsors of foreign employees must pay for their work permits.

The increases, which came into force this week, form part of a package of reforms designed to make employing Bahrainis more attractive to employers.

A permit for a non-Bahraini worker has risen to BD200 ($533), payable every two years. Sponsors must pay a further BD10 monthly fee on every expatriate worker and BD90 for each family member of expatriate workers.

The additional revenues are being recycled into training schemes for Bahrainis.

Reformers say the old system of fees and quotas created disincentives to employing Bahrainis. Expatriates were cheaper.

The article doesn't say, but if there has been a thorough reform, then employers would be able to fire Bahrainis as easily as expats, and expats would be able to change jobs within Bahrain as easily as Bahrainis. See my discussion here.

The UAE welfare state

Bloomberg:

All 800,000 Emirati citizens get free education and health care, and subsidized utilities. Emirati men can claim free land and no-interest loans to build homes. Other benefits include a $19,000 payment toward wedding costs.

The handouts, based on traditions of royal patronage dating back centuries to Bedouin society, now discourage citizens from working, academics say. Expatriates outnumber Emiratis and dominate fields such as banking, law and technology. The quandary for Sheikh Mohammed is how to reduce the culture of dependence without alienating his people.

``The relationship between work and income is broken,'' says Kenneth Wilson, Dubai-based director of the Economic and Policy Research Unit at Zayed University, a school for Emirati women that opened in 1998. ``That's unlikely to change until the government starts trying to give incentives to work in the private or corporate sector.''

The phrase "culture of dependency" bothers me. Suppose I inherited stock and could live very comfortably off of the dividends if I chose. Would you say I was dependent on the stock? And does it create an incentive for me to stop working? No; Bill Gates is still working plenty hard.

The UAE is a very rich country and it is only natural that the wealth owned by the government/rulers is shared with the citizens. Where economists begin to worry is when the size of the transfers creates adverse incentives. For example, suppose you get more from the government if you earn less. This cuts your incentive to work. Or suppose underpricing of utilities causes you to waste water and electricity -- there are more efficient ways to make transfers. Or suppose that government jobs are require little effort and pay much more than the private sector -- where's the incentive to choose the private sector rather than engaging in rent-seeking activities (wasta) to get a government job? Or suppose you are guaranteed a government job as long as you have any college degree -- where is the incentive to excel in college?

It's not the size of the transfers. It's their design.

The Bloomberg article goes on to suggest that the transfers buy political allegiance. If that is true then the trick to solving the Emiratization problem will be to reform the welfare system without cutting the benefits to most citizens.

Sheik Mohammed presents UAE development plan

The International Herald Tribune reports:

One of the United Arab Emirates top leaders urged the country's citizens on Tuesday to stop relying on government handouts and reduce number of foreign workers, who he said threaten national security.

During a speech, Dubai leader Sheik Mohammed bin Rashid Al Maktoum outlined a strategy that he said would make the Emirates one of the world's most developed countries — just days after The World Economic Forum identified the Gulf country the as the Arab world's most competitive economy.

His strategy called for major improvements in the country's educational and justice systems as well as reducing the dominant foreign work force that, Sheik Mohammed said, discourages Emirati citizens from taking private sector jobs.

Sheik Mohammed, who was named federal prime minister and vice president last year, said he would personally oversee the country's work force. He put the ministers of Justice, Education, Health and Labor on notice that their jobs depended on meeting his goals for improvements and their ministries would be benchmarked against international best practices.
...
The speech seemed to give the dynamic Sheik Mohammed a broader role in federal affairs, overshadowing the country's head of state, Sheik Khalifa, who sat in the audience. Sheik Mohammed called for more integration of the autonomous emirates with the federal government in Abu Dhabi, the wealthiest of the seven.

Sheik Mohammed said he wanted to reduce foreign labor and influences in a country where some 85 percent of the country's 5 million population is foreign, while moving citizens into the private sector's top posts.

He called for an immediate end to foreign labor in "marginal economic activities" and described the 300,000 illegal laborers in the country as a national security threat.

At the same time, he chastised Emirati families for hiring too many maids and domestic servants — which form 10 percent of the labor force.

"The number of domestic helpers in some families exceeds the size of the family itself," he said. "Most families maintain a number of domestic help which is beyond their actual need."

Too many able-bodied Emiratis are living off government handouts, he added.

The Gulf News coverage is here. Additional coverage by GN:

A balanced diet for sustainable growth
Call for cautious Emiratisation
Abdullah: Strategy not set in stone

Khaleej Times reports:

Shaikh Mohammed unveils federal government strategy
Khalifa lauds new strategy
Bring on the future, here’s the master plan...
Cabinet reshuffle ruled out

Unemployment in the UAE

As reported in Gulf News, according to Frederic Sicre, executive director of Abraaj Capital,

"The GCC countries need to create 100 million jobs up to the year 2020 to sustain the current rate of unemployment of 15 per cent.

"Such rates have never been achieved before by any country."

Such definitions of unemployment have never been used to measure unemployment.

The fifteen percent includes those who are not actively looking for work because the wage is below the wage they are willing to accept. That group is not unemployed, they prefer not to work at the prevailing market wage. And the 15% also includes those who would not be looking for work except that the government pays more than it needs to to fill its requirements. The government could solve that part of the unemployment "problem" by reducing the wages it pays.

The evidence is right there in other news articles from the same day (today):

* Skills shortage threatens to stall oil and gas boom
* 25pc salary increase for UAE University national professors

That is, (1) there are jobs that are going begging and (2) the government pays more than market. Thus, natural questions to ask are: why don't young GCC residents train for work in the oil and gas sector, and should we be surprised that there are queues that form for government jobs (which distorts the unemployment numbers).

McKinsey interviews Minister of the Economy Lubna Al Qasimi

Full interview here (free reg.req.). Some extracts:

The Quarterly: Many outsiders see limits on foreign ownership and the UAE's agency law as outmoded and unnecessarily restrictive. What plans do you have to change this? (Under the current system all foreign companies producing and selling goods, services, or both in the UAE must do so through a UAE-owned partner.)

Sheikha Lubna: What we've done is to launch a study looking at sectors where we believe the contribution comes solely from foreigners, or at least very little from locals. So with that in mind I think parts of the law might undergo change. Depending on the sector and the Emirate, foreigners might be allowed to hold controlling shares in these ventures. Having the agency law, however, does not mean that we have excluded all foreigners from majority ownership. The whole idea of creating the 23 free zones and special economic zones throughout the UAE was to offer 100 percent foreign ownership.
...
The Quarterly: How concerned are you about the unemployment rate among nationals and the extent to which foreigners dominate the labor market?

Sheikha Lubna: The UAE is, perhaps, the only country in the world where foreigners dominate the private sector, both as employers and employees. In almost all countries that allow immigration, the rule is that foreigners are only allowed to take up jobs when suitably qualified nationals are not available.

Expatriate workers will obviously continue to play a vital role in our economy, but it is unacceptable that 22,000 nationals are either unemployed or underemployed. The private sector therefore cannot be left unregulated. Hence the Emiratization program, which establishes a quota system for nationals in certain sectors. The strategy will only succeed in the medium to long term, though, if adequate educational and training programs are geared toward creating skills among nationals to suit the demands of the private sector....
...
The Quarterly: What are the major risks for the UAE over the next three to five years?

Sheikha Lubna: Number one is obviously the political stability of the region. Anything that happens to one of our neighbors has implications for us. We are all investors in and exporters to Lebanon, for example, so when it was brought to the ground, the efforts of the past ten years were completely demolished.

I've talked about labor in another context, but when you have such a mix of people they sometimes bring their political problems with them. So far the UAE has been very good at managing these differences, but that doesn't mean we should just take it for granted.

I don't think the price of oil will threaten the development of the UAE economy—the inflow of FDI shows it is working—but a more concerning issue is inflation triggered by the high oil prices and booming economy.

Government employees to receive 20% pay increase :: Gulf News

Link to GN.

I presume the pay increase is for two reasons: (1) to compensate for inflation which is running in the double digits, and (2) to share the windfall of higher oil prices.

A problem created is that this makes it ever more difficult to attract nationals into the private sector where wages currently are not keeping up with inflation.

The wage increase is retroactive to the start of 2007. The practice of giving retroactive pay increases poses a further barrier to attracting nationals to the private sector -- the private sector does not follow this practice.

The government has said it is concerned that so few nationals work in the private sector. Suggestion to the government: Allocate more welfare benefits through direct cash grants to nationals rather than through paying greater-than-market rates for working in the government sector.

Emeritus professor of geography suggests banning seatbelts

Perhaps the Emirates should ban seatbelts in order to give drivers the incentive to drive more safely. After all, people respond to incentives.

Time:

If there's one thing we know about our risky world, it's that seat belts save lives, right? And they do, of course. But reality, as usual, is messier and more complicated than that. John Adams, risk expert and emeritus professor of geography at University College London, was an early skeptic of the seat belt safety mantra. Adams first began to look at the numbers more than 25 years ago. What he found was that contrary to conventional wisdom, mandating the use of seat belts in 18 countries resulted in either no change or actually a net increase in road accident deaths.

How can that be? Adams' interpretation of the data rests on the notion of risk compensation, the idea that individuals tend to adjust their behavior in response to what they perceive as changes in the level of risk. Imagine, explains Adams, a driver negotiating a curve in the road. Let's make him a young male. He is going to be influenced by his perceptions of both the risks and rewards of driving a car. The considerations could include getting to work or meeting a friend for dinner on time, impressing a companion with his driving skills, bolstering his image of himself as an accomplished driver. They could also include his concern for his own safety and desire to live to a ripe old age, his feelings of responsibility for a toddler with him in a car seat, the cost of banging up his shiny new car or losing his license. Nor will these possible concerns exist in a vacuum. He will be taking into account the weather and the condition of the road, the amount of traffic and the capabilities of the car he is driving. But crucially, says Adams, this driver will also be adjusting his behavior in response to what he perceives are changes in risks. If he is wearing a seat belt and his car has front and side air bags and anti-skid brakes to boot, he may in turn drive a bit more daringly.

The point, stresses Adams, is that drivers who feel safe may actually increase the risk that they pose to other drivers, bicyclists, pedestrians and their own passengers (while an average of 80% of drivers buckle up, only 68% of their rear-seat passengers do).

No mention in the article that economists have being making this argument for some time.

For another example of unintended consequences Newmark's Door points us to this essay by economist Lowell Gallaway:

The upshot of the Griggs decision was to place employers in the position of being presumed guilty of job discrimination if they used ability tests to screen applicants, unless they could prove themselves innocent by showing that the pre-employment test they used had a manifest relationship to the performance of the job in question. In the Supreme Court’s view, since cognitive ability tests appeared to have a more adverse impact on minority workers than on others, their use was presumptively discriminatory.

Duke Power had also established a requirement that applicants for most jobs had to have a high school diploma. The Court also ruled that this requirement was illegal unless the employer could prove that having finished high school was necessary to the work.
. . .
One approach [for employers] would be to turn to an alternative indicator of ability. While the Court would not accept an overt requirement for a high school diploma, nothing in Griggs prevents potential employees from including their educational accomplishments in their resumes. And nothing prevents employers from reading those resumes. Thus, employers could behave as if they were imposing an educational requirement without formally doing so.

That strategy also has its difficulties, chiefly that it might still lead to a “disparate impact” on the employment of minorities. A solution would be to have a quota hiring system for minorities and beyond that rely on educational credentials to help sort out job applicants. In effect, the cost of affirmative action hires is treated as an additional fixed cost of doing business.

It appears that many employers have pursued that strategem. What are its consequences? The answer depends on how individuals seeking employment behave. Would they become aware that employers were still quietly using education credentials? Would they observe that others with whom they were competing had greater success if they had impressive educational certificates? Given the abundance of publicity emphasizing the positive association of levels of education with employment success, it seems highly likely that they would become so aware. At least, there would develop a widespread belief that it is in each individual’s interest to acquire educational credentials – and the higher the better.
. . .
Under the old regime of ability testing, which probably did a better job of identifying workers with the desired abilities, people didn’t need to spend years of their lives and huge amounts of money just to obtain a piece of paper. Griggs played a major role in catalyzing the current mania for educational credentials.

The argument has a connection to Emiratization.

The Economist :: UAE "government's boldest move yet in its policy of Emiratization"

Quote:

The United Arab Emirates (UAE) government has given all companies operating in the country—excluding small businesses and those in the free zones such as Dubai International Finance Centre and Dubai Media City—18 months to remove expatriates employed as secretaries or human-resource managers. This is the government’s boldest move yet in its policy of Emiratisation, the process of replacing expatriates with native workers.

Secret Dubai had this to say:

There's only one way to describe the latest episode in the proposed emiratisation of secretaries, an embarrassing climbdown. After ruling that all expat secretaries - public and private sector - would be sacked and replaced with locals, and that expat secretaries would not be allowed get around this by changing job titles, we then learnt that probably only half of foreign secretaries would be replaced. Then we learnt that it wouldn't apply to small businesses. And now we learn that expat secretaries will be able to stay on under new job titles.

How did such an appalling mess come about? The usual stunning fusion of arrogance and ignorance. First someone figures out that: "most unemployed UAE nationals were secondary school graduates between the ages of 15 and 24". Next it's probably presumed that secretarial positions are low-skilled (because most of them are low-paid: "Indian lady on husband's/father's visa" being the usual job ad) so would therefore suit school leavers. Then it's presumed that all unemployed people actually want to work (in any country, there are plenty of dole bludgers far happier to sit on their arses if generous welfare is available). Finally it's presumed that unemployed UAE nationals actually want sectretarial positions.

Now we read "The Ministry of Labour has submitted a memorandum to the Cabinet proposing that companies which do not wish to replace expatriate secretaries with UAE nationals can opt to pay a Dh60,000 yearly fee." If there was a climbdown, it didn't last long.

In the end, though, this means of Emiratization does not make sense - Secret Dubai has articulated this well - so I expect it will go the way of nevermind sooner rather than later. See these other nevermind examples. Halfbaked ideas collapse under their own light weight, just like halfbaked cakes. You might think quick decisionmaking enhances your reputation for decisiveness, but you'd be wrong.

Ending labor market segmentation :: Gulf News

Quote:

The paper [by the National Human Resources Development and Employment Authority, Tanmia] suggested measures to reduce segmentation in the labour market, lift restrictions on the mobility of both foreign and national workers, enhance the productivity of nationals and strengthen links between education systems and the labour market.
...
The paper also proposes abandoning previous policies set to overcome unemployment as they encouraged "paper emiratisation."

I look forward to seeing more details, especially on lifting of restrictions on labor market mobility.

Here's something to ponder:

Another finding showed unemployment was five times higher in low-income households than wealthier ones, which Tanmia says contradicts the belief that unemployment among nationals is voluntary.

It's true that, all else equal, greater wealth means it takes a higher wage to induce you to accept a job. But is all else equal? It could be that the government income support is greatest to low-income households, and it is reduced considerably as your income increases. Such a policy increases the wage required to induce a low-income household to accept a job.

Latest Emiratization drive

Khaleej Times: "The UAE has announced a ban on issuing employment visas to expatriate male/female secretaries. The ban also applies to more than 20,000 expatriates working at present in secretarial jobs. Their labour contracts and cards will not be renewed once expired, according to a ministerial order issued on Saturday by Dr. Ali Abdullah Al Kaabi, Minister of Labour."

Gulf News: "Emiratisation of the human resources managers and secretaries posts will create thousands of jobs for UAE nationals, said Dr Ali Bin Abdullah Al Ka'abi, Minister of Labour. Al Ka'abi also said the companies must abide by the decision fixing minimum salaries for UAE nationals. The decision says that if the UAE nationals are not paid as per the monthly-wages criteria set Dh5,000 for post-secondary school certificate holders, Dh4,000 for secondary school certificate holders and Dh3,000 for those below secondary school education the private companies employing them will not meet the quota criteria."

I wonder what the definition of secretary is. I wonder what the daily hours are. I wonder if companies will make do without as many secretaries. I wonder if companies will be allowed to hold the replacements to the same standards in terms of hours and performance as the persons they replaced.

Govt depts not serious about emiratisation: Labour official :: Khaleej Times

Quote:

On the reasons for the negative picture, he said, was retirement at an early age, which many nationals had resorted to over the previous two years. A great number of UAE citizens had quit government posts and opted to start business after availing bank loans, he observed.

I'm not sure the government is not engaged in a housecleaning aimed at tempting less qualified nationals out of government jobs in order to make way for younger nationals who are better prepared. Perhaps, too, the government is making it more difficult to hold on to your government job while spending much of your time running a private business.

UAE nationals in the workforce - views aired

Khaleej Times reports. The indented material below is from the article.

Interestingly, some businessmen remain critical of the current emiratisation process alleging that a large number of UAE nationals are not serious about doing the jobs offered to them.
. . .
Raja Al Gurg, Chairperson of Dubai Businesswomen Council, ... said, "We need to chalk out a mechanism to encourage nationals to be serious when it comes to taking up jobs. Large numbers of nationals are not serious at all...they take up a job and then simply quit few days later."

Nationals are wealthier than expats. Under standard economic assumptions about human preferences, when you are wealthier you will have a higher reservation wage - that is, you demand a larger reward for joining the labor force. Employers are motivated by profit, and for workers of the same quality employers will offer the same nondiscriminatory pay. The compensation offered attracts the number of workers the firm requires. As it happens it is below the reservation wage of most nationals.

There was also some similar criticisms at yesterday's meeting dealing with the country's 'educational output' — not being compatible with the requirements of the labour market.

True. The output of government schools for nationals needs improvement, and, in general, it is inferior to the output of private schools. In my judgment, government expenditure per pupil is sufficient. The trouble comes from two major factors.

The first is that schools are mismanaged and/or have are subject to government rules and regulations that often make the job of school principles and teachers more difficult.

The second factor is weak incentives. Too often a young national's future has little connection to merit, to how well he or she does in school. This is not a problem schools can solve, but it does constrain what schools can achieve with the raw material - students - they are given.

Brigadier Saeed bin Beleilah, Director-General of Dubai Naturalisation and Residency Department (DNRD), said: "As long as employment directors at banks are not UAE nationals, the emiratisation process will remain a cosmetic one; nationals are given jobs with low salaries or the percentage of nationals employed would be tampered with in league with some companies that are assigned to carry out certain jobs".

That's a long sentence. Let's start with the last bit, "percentage of nationals employed would be tampered with in league with some companies that are assigned to carry out certain jobs." He is referring to one of the ways that employers game requirements to have a certain minimum percentage of their employees be nationals. One way to get around the rules is to take some tasks that would have been insourced and to outsource them. Would requiring firms to have HR Directors who were nationals create an effective policing mechanism to prevent gaming of the emiratization rules? I doubt it.

Requiring firms to have HR directors who were nationals would not mean nationals would be offered higher salaries. Senior management still sets salaries, not the HR director, and senior management defines what authority the HR director has. In the extreme case the formal HR director position would become a token, and the company would have a shadow HR director running the show. Besides, all private employers in the UAE have majority national ownership. That is a convenient fact to omit. If the owner is a national what difference will it make if the HR director is a national? Especially if the HR director is a member of the family.

Obaid Al Jaber, Chairman of the Board of Directors of Al Jaber Group, highlighted the problem of nationals' employment and their inclination to switch to other companies after getting the necessary training. Unlike expatriates who find it difficult to change their sponsorships, nationals can switch jobs easily.

Mr. Al Jaber echoes a point of view I have frequently expressed here at The Emirates Economist. The inequality of job change rights between nationals and expats works to the disadvantage of nationals. For the same compensation and same quality of work, employers will prefer to hire the worker who has less freedom to walk away from his or her contract with the employer. It is the government that has created the preference firms have for expats.

Reacting to criticism voiced during the meeting against the skyrocketing fees imposed by the ministry last year, the Labour Minister said only erring firms felt the pinch. "Companies committed to the rules concerning nationalities and nationalisation do not actually pay high fees and are exempt from the bank guarantee," he stated. He said the number of violations was "shocking". Fines collected, he pointed out, amounted to Dh153 million last year.

Part of the reason for the large amount of fines collected is that there was a change in enforcement of existing rules. Firms were accustomed to violating the rules and did so. They were surprised when the ministry began to enforce its own rules. We can expect firms to adjust by finding ways around the rules.

What this last quote also points to is that there are a load of rules and regulations regarding labor. Too many to have a vibrant labor market. But not enough, evidently, to prevent private sector employment from being over 95% expat. Indeed, as I pointed out above, the rules are part of the explanation of the 95%.

Groups inciting worker protests :: Gulf News

Quote:

Dubai: The Permanent Committee of Labour Affairs in Dubai warned that an organised section of workers is deliberately provoking fellow workers to protest against their conditions even though such issues can be resolved through other means, says Emirates Centre for Strategic Studies and Research (ECSSR).
. . .
It seems that an organised systematic method of provocation exists.

You know what? This analysis is off target. Consider:

1. "such issues can be resolved through other means" if there is the government will to do so. That will has been lacking. Laws without enforcement are meaningless.

2. It's not easy to organize large groups to work for the common good of the group. You have to really motivate them to become a coalition. Consider the serfs of Russia as an example. Or the Iraqi people under Saddam.

3. You can't provoke unless the perception of injustice exists, and it is easiest to create the perception of injustice if injustice is the reality. Provocation (symptom) is being confused with the illness.

So what has motivated the workers to act as one? What "groups" are really "provoking" them?
Answer: Their malfeasant employers:

Item, same day's Gulf News: 'Construction companies flouting health and safety regulations'

Item, next day's Gulf News: Worker wages battle for years to get wages

The UAE's decades long failure to create effective enforcement of labor contracts has planted the seeds. Here is the bitter fruit, facilitated by having masses of workers sleep in worker enclaves:

"the huge worker accommodation have been producing leaderships that can speak on their behalf and can incite them to protest, whenever needed," said ECSSR.

"This is not confined to a particular company but has become a phenomenon in many companies, which could be due to the emergence of labour organisations working behind the scenes," said ECSSR.

"Such a scenario can be dangerous, if it surfaces, which we hope will never happen," it said.

Yes, let's hope. Hope solves problems.

Speaking of problems, several of you have asked why The Emirates Economist has not opined on the news that the UAE will have a 3,000 dirham per month minimum wage for nationals who have dropped out of high school. I've been slow to post on the subject because, unlike other labor stories (see above) this one has no consequences. None. Even if the government enforces the minimum wage. Unemployed nationals already are unemployed because they have declined to accept job offers that exceed 3,000 dirhams a month; going on government welfare or the welfare of your extended family is simply too tempting.

Note, I am not even taking the classical economics position that raising the minimum wage causes firm to reduce employment. Even if firms are forced to make nationals offers you'll find few nationals will accept offers at 3,000 dirhams a month.

I may be proved wrong, but I don't see this minimum wage having any effect at all. It's a diversion. It's a sop. It's all more Emiratization talk, but not action.

Get back to me when the minimum wage is raised to 10,000 dirhams per month and I will tell you what I think then. That will have consequences and they won't be pretty. If your problem is that your people are not taking education seriously, why would you want to confirm to them that they can get ahead without education?

DERA winners honoured :: Khaleej Times

Quote:

DUBAI — Under the patronage of Shaikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance and Industry, the Department of Economic Development and Zayed University honoured six winners of the Dubai Economic Research Award (DERA) at a glittering event held at Madinat Jumeirah, Dubai.
. . .
The top prize of Dh50,000 was awarded to Dr. Hugo Toledo, of the American University of Sharjah, for his research entitled 'An exposition of the problems and prospects of Emiratisation.'

Hugo Toledo is a fellow colleague in The Department of Economics, School of Business and Management. He earned his doctorate in economics at Auburn University and was a banking executive in Bolivia before joining AUS in September 2001.

His prize-winning paper can be found here.

New UAE job-switch rule 'in place for weeks' :: Gulf News

Due to a change in job-switching rules for expats it just got easier for Emiratis to find work in the private sector.

Job mobility for expats just got a big shot in the arm in the UAE. The article reveals just how far the UAE has to go to remove the government-created obstacles to job changing in the UAE.

As I have started so many times over the last year, the virtual inability of expats to change jobs is one of the things that creates such an unlevel playing field for Emiratis seeking employment in the private sector. Pity the poor Emirati who cannot make the same "promise" to the firm to be committed not to change jobs.

Thanks to Hugo Toledo for the link to the GN article.

Welfare system kills entrepreneurship :: Gulf News

Quote:

A senior member of a leading business group, Kanoo, on Wednesday criticised "forced nationalisation" of jobs in the GCC, saying such policies were not helpful for private sector growth.
. . .
He said he was against Gulf welfare policies extending to provide guaranteed jobs to citizens.

"A welfare system kills entrepreneurship," Kanoo said, adding that welfare policies should be used to build educational and healthcare infrastructures rather than provide "handouts" in the form of jobs.