THE WTO AND THE GULF STATES IN 2007: WHAT DOES THIS MEAN TO THE WORLD OF LABOR AND GLOBALIZATION

Recently, I was discussing with an ex-pat from India the fact that labor laws and enforcemtn of many laws do not actually currently exist in all of the wealthy Gulf States in one form or another.

He stated that Kuwait and other Gulf states all allow a great range of inequalities in treatment of labor, in pay, in working hours, and contracts all based upon race or country of origin. I admitted that this was the case and was certainly cause for concern.

This same issue of mistreating labor was the direct cause for the March 2006 Dubai labor strikes at the world’s largest set of construction projects located currently in Dubai in the United Arab Emirates. I added, however, that most Gulf States were members of the WTO and that any state that joined the WTO had been expected to certainly introduce labor regulations in order to protect nations and international labor against unequal, unfair and dangerous treatment of local and foreign labor.

For example, on the WTO’s own website, there is an important section called “National Treatment: Treating Foreigners and Locals Equally”. This section states explicitly:

“Imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents.” Moreover, the WTO claims that the “principle of ‘national treatment (giving others the same treatment as one’s own nationals) is also found in all the three main WTO agreements (Article 3 of GATT, Article 17 of GATS, and Article 3 of TRIPS), although once again the principle is handled slightly differently in each of these.’”[1]

Many Americans are aware of the differential treatment and payment of labor in China and other Asian lands, like China, Vietnam, India, and Thailand, but there are very few Americans (except those who have traveled to the Middle East) who have pondered the treatment of labor in what is--thanks to the recent Bush Administration’s instigated oil price boom—one of the richest per capita economies in the world, i.e. the Persian Gulf States region.

QUITE APPARENTLY, those who watch over labor rights and economy in the WTO are ignoring this region very well, too.

IN MANY OF THE GULF STATES
One way laborers are abused in the GCC (Gulf Cooperation Council) is in the area of wages paid for doing equal work. Ex-patriots from the West often earn anywhere from 80 percent to 400 percent more than their Asian colleagues. GCC nationals often earn much more than that for doing the same--or even less work. Luckily, this situation is not universally true because most Gulf State nations are in the WTO, and certain multinational concerns and a few national institutions do follow more uniform payment policies—but such practices are extremely rare!

Concerning the matter of the regional inflation rate in the country and how it is kept low despite the recent oil boom, any budding economist should look at these Gulf states and marvel. Why has there been no runaway inflation in the region, especially whereas government and national citizens’ bank accounts have been enjoying positive gains due to the greater than 100-percent increase in oil prices over a three to five year period?

The obvious answer to why inflation is relatively non-existent, e.g. never higher than 3 to 4 percent in Kuwait during the recent oil price surge, is to be found easily by discussing the matter with the millions of South Asian and Southeast Asian laborers working in the Middle East. The answers for why both costs and inflation are being kept down are the result of reducing pay even as the Kuwaiti Dinar and other regional currencies grow stronger on the global markets. Further, other specific benefits are being reduced for a majority of foreign laborers. As well, those who are renewing their working contracts are too often forced to sign their new contracts in Arabic (a language they can’t read). Finally, there are various manifestations in their local labor relations which include unfriendly treatment of employees by bureaucrats, managers, and subcontractors across the region (and subcontractors in their homelands). This often forces many of these laborers to do many hours of unpaid overtime.

For example, in the country of Kuwait, the draconian trend to keep both prices and costs down is especially evident by the creation of new Bantustans for foreign labor. These buildings, nicknamed camps”, are now being created in large numbers far out in the isolated desert, simply in order (1) to cut transportation, (2) to cut housing costs, and (3) to keep laborers close at hand in the 110 to 135F degree heat in the desert’s summers.

One Filipino expatriate, named Micky, who has been forced until recently to stay in indigent housing in Kuwait City, due to family financial burdens in his homeland, was told by his employer last month that he would soon be cut off from his support network of friends and family in the country. He had received word from his Kuwaiti-owned company would no longer provide transportation to his work to his desert located factory--over an hour’s drive outside Kuwait city. From this same company, Micky was told, he would also never again receive housing or transportation allowances—unlike he had received in his original contract. Because the engineer Micky had made the mistake of renewing his contract in Arabic language, he could now be forced to lose his benefits and be arbitrarily moved into company housing way-out in the desert, where no public buses run anywhere near the workplace (or near the new company housing “camps” across from it).

Micky moaned, “From now on, I have no idea how I will regularly be able to even make it to church and visit friends once a week.” This same Filipino has a relatively important position in his firm, but receives less than 500 dollars a month now—whereas before the new cuts in benefits he had received more than 600 dollars a month. (He works for a company being run under license of one of the poorer members of the Kuwait’s royal family, the al-Sabahs.)

AMERICAN COMPANIES AND FRANCHISES IN THE GULF

Meanwhile, American companies are also represented in Kuwait, and they don’t necessarily share their wealth much better with workers either. Let’s take the example of the Chili’s Bar & Grill restaurant franchise out on Gulf Road in Kuwait. This franchise in Kuwait is owned by a large local food conglomerate called Al-Ghunaim Trading Co. Ltd. In Kuwait city, this trading group owns and runs more than fifty restaurants and coffee shops, including my Texas’ favorite, Johnny Carinos’ Country Italian .

This particular Chili’s branch in Kuwait is the biggest gross-earner of all the Chili’s restaurants on planet Earth, and this franchise has been in this enviable position for several consecutive years. Nonetheless, many of the Chili’s workers this past year complained of being forced monthly to work up to 40 or 50 hours of forced overtime without compensation each month. (This is an amount above the approximately 200-hours a month they were originally contracted for). Meanwhile, these same employees were living in substandard housing, often with water outages in part of the buildings--both mornings and evenings--on several floors for up to a week at a time. (Naturally, water is extremely important for health and hygiene. Isn’t it?) In short, aside from the benefit of housing and health insurance, the Chili’s service personnel and cooks earned between 400 and 600 dollars a month (and that is for completing a 48-hour workweek as subcontracted when they had originally signed up for their jobs back in the Philippines).

Last December 2005, a concerned colleague of mine, Dr. Samuel, met with the manager of the Chilis’ restaurant and with an official from the large food service conglomerate, Al-Ghunaim to discuss these issues. The firms’ representatives claimed that they were treating their workers better than almost all the other companies in the city. In general, my colleague agreed to this statement, but he also stated that he knew of several coffee shops and a few other restaurants (several owned by Lebanese conglomerates) which paid their employees better than their conglomerate did. Moreover, Dr. Samuel said that the main grievances of the workers he had met were the unpaid overtime and the threats or mistreatment from management. Apparently, one Arab manager had threatened the Chili’s chefs from Asia that if a steak (costing here more than 21 dollars) was sent back to the kitchen for any reason, the cost of the full 21 dollars would come out of their wages. Further of concern was the conglomerate’s mistreatment of workers who had resigned—a fact which should be indicting to the firm’s image, but does tend to keep labor costs down as employees find it hard to jump ship.

At least five workers who resigned in the past year at this Chili’s were not allowed to get jobs with other company’s, even after working a year of their contract. These workers were also forced to pay back their Kuwaiti visa fees despite the fact that Chili’s was at fault for not paying them their earned overtime income for many months, possibly due to bad book keeping and bad scheduling. Meanwhile, although it is illegal in Kuwait officially, the entire year Chili’s management kept all their employees’ passports from them, i.e. preventing them from even seriously looking for other work. [2] Finally, none of these workers were paid fully their contracted wages at the end of their contract. They were simply shipped back home with little ceremony, with little notice, and with less than 90 percent of their earned wages in hand.

ANOTHER INTERNATIONAL COMPANY
In February 2006, two other Filipinos, whom I know personally and who were working as technicians for Kuwaiti subcontractors of the local franchise of Korean-owned LG Appliance company. These two also were (too) quickly and unfairly shipped home. This was not done because these employees complained but because they simply sought better pay after finishing their two-year contract. These Filipino workers had already received much better offers from other Kuwaiti firms. All they needed to do was to have their visas transferred—a process that usually takes two weeks to a month. However, instead of giving the Filipino technicians the customary month at the end of their contract to find a new job and change visas, the local LG franchise spitefully canceled their visas and made them leave the country on 48 hours notice—again not giving them their visas in hand till the last minute! It was an obvious threat to the LG franchisee’s remaining employees to not try and get better pay.[3]

The wages are so low here in the Middle East as compared to what the market could bare that for some positions, employers in Kuwait and subcontractors in their home country circumvent Kuwaiti labor control limits on recruiting certain types of low-skill service workers, especially from Asia, by fraudulently recruiting the incoming labor to do higher skill-level jobs than the Kuwaiti employers actually intend to employ them in. For example, my friend Micky found a female Southeast Asian in a computer store working the floors as a sales women. She was terribly unhappy as she was (and had been hired as) a computer engineer, and her training and educational background were going to waste on the sales floor.

Recently, the Kuwaiti government set a minimum-wage of about 120 dollars a month for maids in Kuwait. It is also required that these maids receive one-full day off from work each week. Finally, the foreign-recruited maids are supposed to have breaks every day. Nonetheless, recent increases in abuses of maid in Kuwait has led the Indian Embassy in May 2006 to decide to open a home for maids, i.e. for them to escape to when in need. The Philippine Embassy also provides such assistance to its people. On occasion, several different countries in South Asia have banned altogether allowing their women to go abroad as maids to the Persian Gulf because suicides of maids and their suffering are not unknown here. On the other hand, it is also claimed that “while attention has focused on the failure of countries like Saudi Arabia to prevent or prosecute abuses, the de facto complicity of the countries that send their women abroad has largely escaped scrutiny.”[4]

One of the deaths in April 2006 in Kuwait was an Indian woman who fell three stories at the home she was working at as a maid at. This women had come to Kuwait two months earlier with a contract to work as a home nurse, for which she was qualified, but upon her arrival this women was made a housemaid instead. Her family in India has asked for a full-investigation into the woman’s treatment in Kuwait.

Finally, as an example of how many lives are affected by the poor pay and working conditions in Persian Gulf states, Amy Waldman wrote last year in the New York Times: “Nearly 600,000 Sri Lankan women are housemaids, migrating mostly to the Persian Gulf's petro-lubricated economies, trading the fecundity and community of Sri Lankan villages for the aridity and high-walled homes of the Arab world. Behind those walls the women risk exploitation so extreme that it sometimes approaches ‘slavery-like’ conditions, according to a recent Human Rights Watch report on foreign workers in Saudi Arabia.” [5]

WHAT COULD THE MARKET BARE?
It needs to be asked by a critical world community what could the local Persian Gulf labor market bare, in terms of wages and workers rights, at this juncture in the regions economic-developmental history if the WTOs fair market labor regime was actually practiced?

I firmly believe that if the WTO and the powerful states of the world would focus their attention on these Middle Eastern Gulf states as much as they focus on China and Latin America, the market would react fairly and many of the employers and labor control agencies in the region would do their jobs better—i.e. treat their workers better. Without media and some international regime for workers behind it, the pattern of wages for the majority of workers in the Persian Gulf will remain as mediocre as it currently is in China and Latin America.

Currently, labor unions are now legal for foreigners in Kuwait and will soon be so in the neighboring states. Saudi Arabia, for example, fully wishes to join the WTO and will need to strengthen worker rights legislation. The problem is that the (1) implementation of those rights, (2) the guarantees and the enforcement of those rights, and (3) the glare of media and world community need to be brought together. They need to coordinate better and not put up with this current sort of non-level playing field, even if it leads to inflation as the workers at the bottom finally get paid well and treated well within a wealthier market.

In short, the message from the Middle East is the same that all Americans other concerned peoples in our global economy need to internalize. On the one hand, we need to follow through in developing and refocusing the WTO’s practices in enforcing labor rights and equal treatment of labor. On the other hand, we need to bring legal remedies when wealthy states in the WTO--like wealthy UAE, Saudi Arabia, Qatar or Kuwait--do not allow labor’s wages to be free and fairly received, contracted, and earned by the workers—regardless of their homeland, passport, or race.

Further, workers must actually be empowered to organize and demand that the legal labor rights be applied and enforced. In the global economy of today, there is no need for the U.S. and its WTO colleagues to promote a race to the bottom in their own countries where the economy and peoples could and should do better. Labor unionists and other concerned global players and citizens should quickly warn those countries who are soaking up billions in the Bush-Oil-Boon to chip in and raise the standards for labor for all, i.e. the world should not look away as workers are discriminated against and unfair labor-cost advantages are manipulated within wealthy and emerging markets.


NOTES

[1] “Understanding the WTO Basics”, http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm#mfn

[2] Illegally keeping passports is officially discouraged by Kuwaiti government labor officials in numerous local newspapers, but it is a rampant problem. It is also against all international agreements. Yet, thousands and thousands of passports are kept by Kuwaiti and UAE firms with the claimed fear that some poor laborer will flee the country with a hoard of stolen goods or moneys. (There is also likely the fear that employees will change jobs faster than employers would like.)

On the other hand, the hoarding of passports is also certainly a matter of class here in the Gulf states of the Middle East. Those earners who are in well-paid positions at good companies and who earn at least 1200 dollars a month are generally exempt from having their passports held—regardless of their homeland. On the other hand, ex-pats from North America, Australia, or Europe almost never have their passports held by firms in Kuwait.

However, this is not the case in Saudi Arabia, where even many Europeans and Americans find their passports held by the contractors or employers. In contrast, nationals of Saudi Arabia naturally do not have their passports withheld.

[3] A recent SMS from the Philippines indicates that at least one of the Filipinos sent back by the LG franchise so abruptly has been blackballed and is having trouble getting a visa to return at all to Kuwait to work.

[4] “Sri Lanka Maids Pay Dearly,” http://www.penelopes.org/Anglais/article.php3?id_article=1407

[5] Ibid.