QuickTake Q&A: Why layoffs are Dire for foreign laborers in Gulf

by Laurence Arnold Glen Carey, August 4, 2016, http://www.bloomberg.com/news/articles/2016-08-04/quicktake-q-a-why-layoffs-are-dire-for-foreign-laborers-in-gulf?utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid%3D=socialflow-twitter-business

The plight of nearly 16,000 South Asia workers abandoned in camps by employers in Saudi Arabia has drawn attention to the kafala system of migrant labor sponsorship practiced in Gulf Arab states. The declared aim of the system is to regulate non-national workers. But many migrant laborers have to hand over their passports (despite laws forbidding the practice) and stay in their employers’ good graces to maintain legal residency, a situation that creates rampant opportunities for exploitation. If things go bad, workers can’t go home unless their employers arrange and pay for exit visas, which they don’t always do. That’s what happened to the 7,700 Indian and 8,000 Pakistani workers who found themselves languishing in camps without food, water or visas to leave the kingdom. Many had been employed by construction companies hit by the downturn in oil prices.

1. Where does the kafala system come from?

During the oil boom of the 1970s, Arab Gulf states began importing large numbers of foreign workers to build infrastructure quickly and cheaply, and to provide services for their suddenly prospering societies. Kafala is derived from Arabic words meaning guardian and taking responsibility for another person. The six nations of the Gulf Cooperation Council — Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and the United Arab Emirates — are most closely associated with the practice.

2. How does it work?

Under kafala, a foreign worker needs a kafeel, or sponsor, to take a job in an Arab Gulf nation. Recruiters bring in low-wage workers for service jobs, construction work and domestic labor. Rules vary by country but almost always favor employers. There have been frequent complaints about employers confiscating workers’ passports and not paying them; some women domestics have been sexually abused and forced into prostitution. The U.S. State Department and international groups such as Human Rights Watch have documented cases of exploitation and urged reforms of the system.

3. What’s in it for the workers?

Money. In countries including India, Egypt, Pakistan, the Philippines and Bangladesh, remittances from expatriates working in the Gulf region account for significant chunks of gross domestic product. Impoverished families use it as a way to pay for children’s education, build homes or pay for marriages. Saudi Arabia had the second-largest remittances outflow in 2014 after the U.S., according to the latest World Bank data.

4. What has Saudi Arabia done to change its labor laws?

New labor regulations enacted last year made it easier for companies to terminate or reassign employees who are Saudi citizens, reducing the incentive to rely on foreign workers. The Saudi government raised fines on employers that confiscate passports or fail to pay salaries on time. Domestic workers, mostly migrant women who work in family homes, are excluded from labor law protection, according to Human Rights Watch.

5. Where else is this an issue?

In Qatar, where foreign workers are building stadiums for soccer’s 2022 World Cup, human-rights groups have produced scathing reports on the conditions facing migrant workers. Though Bahrain vowed in 2009 that it would abolish the kafala system, abuses have been reported since then. Human Rights Watch says foreigners employed as maids in Oman are treated almost like slaves. Just last month, Kuwait announced it had set a minimum monthly wage for its large foreign workforce of maids. Saudi Arabia, Qatar, Oman and Kuwait are on a U.S. State Department list of countries whose governments do not fully meet the minimum standards of the U.S. Trafficking Victims Protection Act, and where “the absolute number of victims of severe forms of trafficking is very significant or is significantly increasing.”