Business practices contribute to exploitative recruitment of Gulf migrant workers

by David Segall | Center for Business and Human Rights, New York University
Thursday, 27 April 2017 16:52 GMT

Workers stand inside the Portland labour camp in an industrial area on the outskirts of Sharjah, United Arab Emirates, in this 2010 archive photo. REUTERS/Jumana El Heloueh

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Recruitment agents ultimately charge workers to recruit them in order to cover costs and turn a profit

Perhaps the most visible sign of the Arabian Gulf region's economic growth is its booming construction landscape. Gulf governments are commissioning new campuses for international artistic and educational institutions and building facilities for mega-sporting and cultural events. This large-scale development has prompted the recruitment and migration of millions of low-wage workers, mostly from South Asia, to fulfill the construction labor requirement for these projects.

This mass migration has enabled many construction workers to earn more than they would at home and to send money back to their families. These remittances also are a significant source of revenue to workers’ home governments. But the current model for recruiting large low-wage labor forces in places like the Gulf is itself fundamentally flawed and needs to change.

Every year, millions of migrant construction workers are being forced to pay exorbitant recruitment-related fees -- sometimes more than a year's salary -- just for the opportunity to work in the Gulf. In order to pay these fees, they must take out significant high-interest loans, which can lead to long-term indebtedness. This debt in turn exacerbates the human rights abuses many migrant laborers experience once they arrive in the Gulf.

The NYU Stern Center for Business and Human Rights has published a report finding that in this highly irregular system, with very few exceptions neither construction companies nor their clients are bearing the costs associated with recruiting their own workforces.

While corruption among South Asia-based recruitment agencies is a serious problem, if construction companies are not paying for these services, predatory behavior is all but guaranteed as recruitment agents ultimately charge workers instead in order to cover costs and turn a profit.

The time for reform of this system is long past due. In order to develop a sustainable solution, the major construction companies operating in the Gulf, many of them United States and U.K.-based firms, need to work together with other stakeholders to create a fairer recruitment system, based on industry standards, that reduces the possibility of free riders. Ultimately, clients and construction companies need to share the costs of recruitment in an equitable manner. This model is common worldwide and across many industries and issues. Clients and service providers share the costs associated with legal compliance and the prevention of reputational and financial crises.

The Gulf construction industry has begun to seriously address related issues, such as worker health and safety. It now needs to turn to the issue of recruitment fees with similar focus and vigor.

In a little over three years, Dubai will host World Expo 2020, and in five years, Qatar will kick off the 2022 FIFA World Cup Tournament. These will be the first times such events are held in the Middle East region, and they are rightful sources of pride for the governments and people of Qatar and the United Arab Emirates. These events also have generated a range of very lucrative business opportunities for construction companies working on these projects. But with such opportunities comes responsibility.

Governments, both in the Gulf and in South Asia, also must change, instituting and implementing long-overdue reforms to their current sponsorship systems. Workers should be allowed to change jobs and leave these countries at will, without permission from their employers. But in the absence of sufficient government reform, companies can and should -- in accordance with their own reputational and financial interests -- take steps of their own to help the workers who staff their projects and ultimately make them profitable.

The solutions to the problem of recruitment fees are complex, but the first step is clear. Construction companies and their clients need to pay for the cost of recruitment. As corporate sponsors, consumers, compliance bodies, and rights advocates become increasingly aware of this issue, risks to these companies' operations will continue to grow. But as experiences in other industries have demonstrated, proactive measures to protect rights can mitigate these risks and ultimately prevent serious potential reputational and financial damage to companies.

David Segall is a policy associate at the NYU Stern Center for Business and Human Rights, and the co-author of Making Workers Pay: Recruitment of the Migrant Labor Force in the Gulf Construction Industry.