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Qatar introduces new labor reforms

Sep 14, 2020

Qatar has recently introduced labor reforms that could prove beneficial for the country’s long-term development. Having come under the spotlight due to the FIFA World Cup that it is due to host in 2022, Doha has received criticism regarding human rights and living standards of foreign migrants working there.

Announcing a nondiscriminatory minimum wage and doing away with some of the control sponsors have over employees under the prevalent kafala system, Qatar is not only setting new labor standards to attract more foreign workers, but it is also the first Gulf Cooperation Council (GCC) state to announce such drastic reforms.

Removing the main kafala limitation, the Ministry of Administrative Development, Labor and Social Affairs (MADLSA) announced that going forward,  an employee will not require a no-objection certificate (NOC) from his employer before changing jobs; instead, a one-month written notice would be required in the contract for the first two years, and then a two-month notice after the second year ends.

Usually, this exit permit would become an impediment for foreign migrants looking for well-paid jobs more suited to their skills. After these reforms, employees can afford to be more ambitious. Being reliant on expat workers in the private sector, Doha is trying to build a stable worker base.

According to Ali bin Ahmed Al Kuwari, the Qatar Minister of Commerce and Industry, “You don’t want people who for whatever reason want to leave their employer or whose services are no longer required; you don’t want them to just pack up their luggage and jump on an airplane.” Around 95% of Qatar’s workforce is comprised of foreign migrants, who also constitute around 90% of its total population.

Notably, acquiring a more permanent and highly skilled workforce was also one of the goals of Doha’s National Vision 2030.

The Qatar Chamber of Commerce has also announced a platform for local recruitment to create more human resources.

Having implemented basic monthly wages of around $274, MADLSA has announced an extra provision of $137 for accommodation and around $82 for food in case these are not included in the employees’ contract. These new laws will come into force after six months of publication in the official gazette.

According to Doha’s Minister of Labor and Administrative Development Yousuf Mohamed Al Othman Fakhroo, “It is the first minimum wage of its kind in the Middle East and will provide extra income to thousands of workers and their overseas dependents at a critically important time for families around the world. Because of the change, the country expects billions of additional pounds to be remitted overseas in local currencies or reinvested in Qatar’s economy each year.”

Not only will Qatar be able to boost labor productivity with these reforms, but it will also be able to grow its economy further.

Since a recent report by Human Rights Watch had highlighted problems with salary delays, nonpayment of dues and NOC restrictions in Qatar, MADLSA has stated that penalties would be enforced on employers who do not pay wages on time or provide suitable accommodations for workers.

Welcoming the reforms, the United Nation’s International Labor Organization (ILO) stated that it “effectively dismantles the kafala sponsorship system and marks the beginning of a new era for the Qatari labor market.” ILO director-general Guy Ryder said, “By introducing these significant changes, Qatar has delivered on a commitment. One that will give workers more freedom and protection, and employers more choice.”

However, Amnesty International (AI) has said that while Qatar has taken significant steps, the minimum wage was still too low. According to Steve Cockburn, the economic and social justice head at AI, “To truly make a difference, it will need to be regularly reviewed and progressively increased to secure just and favorable conditions for workers.”

Basically, until the kafala sponsorship scheme system is done away with completely, labor reforms will only be partially effective. With around 23 million migrant workers between them, the GCC states — Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait and Oman —have similar labor laws and kafala versions enforced in the region.

Even though Qatar has adopted an avant-garde approach vis-a-vis the kafala, low-wage workers would remain dependent on their employers for housing and transport. Therefore, some form of control remains that might limit access to new options. Ultimately, these issues need to be addressed by all of the GCC states.

According to Hiba Zayadin, Gulf researcher at Human Rights Watch, “A lot of the countries, in varying degrees, embarked on certain reforms. But what we found is that unless the kafala system is abolished in its entirety, there will remain remnants of control that [lead to mistreatment] of migrant workers.”

Undoubtedly, more needs to be done, and with Qatar starting its labor reforms, other GCC states will also be encouraged to follow suit. Some GCC states have already taken a few measures.

For instance, Bahrain has been allowing its foreign workers to obtain a new visa independently and without employers’ permission if they pay a fee. However, the cost of the fee limited this facility from being used more widely. More radical ways still need to be explored so that migrant workers are less dependent on their employers.

Also, the UAE provided paternity leave for workers in the private sector, though more attention was required on workplace issues for women workers.

Currently, only Qatar and Kuwait have set minimum wages for migrants, amounting to 1,000 riyals, or nearly $275. It is around the same in Kuwait except that wages in Qatar include food and accommodation, so they ultimately end up higher.

In contrast to Qatar or the UAE, other GCC states with large foreign migrant ratios continue the process of cutting back on expat employees. Such states have announced various schemes to support their local worker population instead.

However, when migrant populations leave and make way for a local workforce, new complications emerge, as pay scales for locals have always been on the higher side in the region and employing them increases productivity costs in the long run.

Describing this situation, Steffen Hertog from the London School of Economics and Political Science writes that “the GCC economies are a victim of their own success: Unlike some oil-rich kleptocracies outside of the region, they have shared their riches relatively widely and greatly improved national living standards. As a result, however, production costs and real exchange rates are high, while productivity has been flatlining.”

Moreover, even though the foreign workers are paid less than citizens for the same jobs, the wages are not cheap enough to compete with other low-cost labor regions. Such human resource issues also remain an obstacle in the way of effective economic diversification.

According to a 2019 World Bank report, structural reforms are badly required to increase labor productivity and boost economic growth as well as provide a safety net for displaced workers in the MENA region. Unfortunately, the lack of trade unions has made it a blind alley, and the migrant workers had no platform either.

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