Cheaper Labor from Other Countries in Constructing the UAE Economy - Essay Example

Running Head: Impact of Using Cheaper Labor The Impact of Using Cheaper Labor of Other Countries in Construction on the Economy of the United Arab Emirates [Writer’s Name] [Institute’s Name] The Impact of Using Cheaper Labor of Other Countries in Construction on the Economy of the United Arab Emirates “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if Labor had not first existed. Labor is superior to capital, and deserves much the higher consideration”. ~ Abraham Lincoln Today, in the world of globalization, advanced technological tools along with speedy means of transportation we have witnessed developments that were never possible before. As the countries progress economically and socially many problems and issues arise due to the effect of globalization and other advancements. One of them is the migration of people to other countries. The determinants of migration are the promises and hopes of a better living standard, life, and a secured future for generations. Migration, especially of labor, is said to have push and pull factors for both players; the immigrant and the country of migration. The immigrants come from a country with “poverty level incomes, low wages, lack of employment,” and the dream to work in a developed country to earn a better living. However, once people reach their dreamland they discover that they have been cheated by their hopes and dreams. The country of migration requires these cheap and skilled labors to work at job sites where the “domestic force” refuses to work due to “low wages and harsh working conditions” (Misra, 2007). True that the economies are booming but people with low levels of education and no monetary power have no possible way of climbing up the social ladder. Therefore, they start from the bottom of the social pyramid, usually as skilled labor. The United Arab Emirates is witnessing economic and social boom, it is one of the richest countries of the world. People from third world nations migrate to this great country and serve as cheap and skilled labor. The UAE’s economy has been booming due to the availability of cheap and skilled labor. This labor usually migrates from South Asian countries and lives there in poor conditions and minimal wage which is sometimes confiscated by the employer. The government of UAE does not allow the exploitation of labor laws but the employers still practice it. According to Shihab, the labor market of UAE comprises of a "two-tier" structure. The top tier is the locals or the nationals of the state, which make up only 10% of the total force. The bottom level is made up of the "unlimited supply of foreign labor." United Arab Emirates is unable to employ its natives to work for construction sites and other demanding jobs. However, the UAE has reached its economic heights by depending on the "foreign skilled and unskilled workers." The huge number of immigrations towards UAE is what "initiated its economic development in the early 1970s and subsequently have come to sustain it." Apart from construction the immigration floods also gave rise to the business of immigration agencies. This led to an opportunity and creation of more jobs for the locals. These agencies work as middlemen between the construction agency and the workers that migrate. The following table shows the importance of various sectors of UAE as the percentage of its GDP. It should be noted that during the 70s, UAEs GDP was made up mostly of oil exports. However towards the end of the century this had declined and it only contributed 22.4% to the GDP of UAE. Yet another shocking revelation is seen in the construction, commerce, restaurants, hotels, and real estate business. They have grown significantly and have started contributing majorly towards the GDP of UAE. As mentioned before, the immigrants are responsible for the economic boom of UAE as they majorly work in the fields of construction and real estate. Table 1: Relative importance of UAEs main economic sectors According to Ahmed (2007), UAE has a population of 3 million people in which 60% are the workforce. The population is growing at a rapid rate however only 13% of the growing population is the natives, the 87% is contributed by the immigrants. These immigrants have come to UAE due to the "real estate development" and the construction development opportunities in the country. According to the data of the author UAEs GDP went up by 15% ("450 billion dirhams in 2007") whereas the economy witnessed an even faster growing rate at 16.7%. The GPD shows that $121 billion of the money came from non-oil revenues. Opportunities of Foreign Direct Investments have also increased due to the development of real estate and other sectors of the company. UAE earns it FDIs from "Europe, the USA, UK and Russia." UAE is able to develop its economic standing worldwide due the availability of cheap and tax free labor which agrees to work on minimum wages provided by the big construction giants of UAE. Another advantage of usage of foreign labor is that it is tax-free and UAEs economy has found a way to "thrive" on that fact. (Shaham, 2009). The development of huge buildings, resorts, hotels, amusement parks, museums and tourists spots have also given rise to the tourism industry in the UAE. The cheap and skilled labor work in harsh conditions to develop these spots for foreigners to visit, and the construction companies reap all the benefits by overcharging these tourists. According to Kaur (2007) in the year 2002 only Dubai saw a growth of 31% in its tourism industry, that is in the arrivals of tourists. It was the only state which experienced such a high rate of growth in the year 2002. Immigrants have provided a large pool of workers for the construction companies. They have formed a monopolistic environment against the immigrants and have taken away all their powers and rights, especially of freedom. Once these workers start working in UAE there is no going back for them. Their dreams of a better world and a better living standard are shattered as they spend their entire life in building the economy of another nation. They have poor working and living conditions, sometimes even worst than their own homeland. However, they still adjust to it and keep hoping for better future. The UAE also fails to provide these people with liberal rights and trade union rights. Hence, they have no other way to survive but to abide to the rules spelled out by their employer. They usually have to find other means of survival as their pays are confiscated; this is because the UAE does not have any minimum wage rules. It is true that the UAE is one of the most advanced and globalized nations, but it has failed to implement the laws and regulations that other globalized nations have. It has also failed to provide the most important asset, human resource, with the rights that will make them loyal to the nation. The UAE is experiencing an economic boom, but at the expense of people from other nations. Its own people have refused to participate in construction because of the inhumane working conditions. It is time for the concerned authorities of the UAE and the world to take some action and provide these people some basic rights. Authorities should make laws and rules before workers join forces and rebel against the government and officials of the UAE. They will be quick to learn that they are actually in power since they are helping the UAE in expanding and progressing economically. Eventually, these people will stop working for the advancement of the UAE and it will suffer the biggest shock as it will be unable to continue its main source of economic boom: construction. References Ahmed, M. (2007). World Factbook. UAE. Retrieved April 24, 2009, from http://www.cia.gov/cia/publications Kaur, J. (2007, December 23). Tourism Industry in Dubai. Retrieved April 27, 2009, from http://ezinearticles.com/?Tourism-Industry-in-Dubai&id=894737. Misra, Neha. (August 2007). The Push & Pull of Globalization: How the Global Economy Makes Migrant Workers Vulnerable to Exploitation. Solidarity Center Senior Program Officer, Africe. Policy Brief. Shaham, Dhalia. (2009, April 27). Foreign Labor in the Arab Gulf: Challenges to Nationalization. al-Nakhlah: The Fletcher School Online Journal for Southwest Asia and Islamic Civilization, 1-14. Shihab, Mohamed. (2008). Economic Development in the UAE. Retrieved April 27, 2009 from United Arab Emirates: A New Perspective: http://82.195.132.90/​uaeint_misc/​pdf/​perspectives/​12.pdf. Read More