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Qatar to implement wage protection system; doesn't fully address workers' needs

On February 26, 2015
The WPS in isolation will do little to improve conditions of low-income migrant workers in the country. Qatar's failure to reform the oppressive sponsorship system shows reluctance to delve deeper into its labor market problems.

Qatar approved amendments to the labour law on 18 Feb; key among which is the introduction of the Wage Protection System. The system, which has already been implemented in Saudi Arabia and UAE, will make it mandatory for companies to pay their employees through bank transfer.

Companies will be given six months to implement this, failing which, violators would be liable for jail time up of one month and fines of up to QR6000.

No more details are currently available.

In May 2014 Qatar announced wide-ranging reforms to kafala and labor laws, but has since made conflicting statements at various international and regional forums, much to the frustration of rights activists, recruitment agencies, and migrants.

Pressure on Qatar mounted in December 2010, following its successful bid for the 2022 FIFA World Cup. Four years later, and one world cup away from D-day, Qatar still seems reluctant to commit to improve the lives of the low-income migrant workers building its infrastructure and dreams.

The Kafala system and poor labor protections facilitate the rampant abuse and exploitation of these workers, who remain voiceless and invisible.

One of the biggest problems facing workers is non-payment or delayed payment of wages, resulting in depleted standard of living for both the workers in Qatar and their families at home.

These are solutions tailored by ‘consultants’ far removed from the reality. The needs of workers has not been taken into account.

Criticism of WPS

Labor rights activists feels the WPS is a misinformed, even if outwardly well-intentioned, response to the problem

Speaking to, one activist said the problem with wages involves more than non-payment, but includes wrong computation, lack of overtime pay, and unfair deductions. . “When the worker only receives a bank transfer, without a pay slip, he can’t contest it then and there. The first step should have been a minimum wage commitment.”

He adds, [tweetable]“These are solutions tailored by ‘consultants’ far removed from the reality.[/tweetable] The needs of workers has not been taken into account–their education level and cultural context for instance. Of course, this provide another opportunity for ‘consultants’ to make money by conducting workshops.”

The WPS for now is the only available salve in the GCC’s severely malfunctioning labor market, and Qatar will have to ensure careful implementation to mitigate  at least some of the problems migrant workers face in relation to salaries. It has two case studies close to home to study and improve upon.

Regional Models

The UAE was the first to announce the WPS in 2009. Implementation was rolled out in phases based on the size of the companies.

Companies could enter into a contract as WPS agents with any bank, bureau de change or financial institution approved and authorized by the Central Bank of the UAE.

Saudi began work on its WPS in 2013. As of November 2014, it completed implementation of three phases (workforces of over 3000, 2000 and 1000), and entered the fourth stage covering companies with workforces of over 500.

“Public transportation continues to be scarce, and the workers are unwelcome in the glitzier parts of the Doha, further restricting workers’ access to their money.”

Hurdles to implementation

Saudi, unlike the UAE,  restricts WPS to banks alone, placing heavy demands on its banking system. Following Saudi Arabian Monetary Agency’s (SAMA) demand that pressure be eased on the Kingdom’s banks, it delayed the fourth phase from July to November 2014.

A majority of companies (between 65% to 90% based on workforce size) had complied in both Saudi and UAE. For instance, in Saudi, in the first phase (over 3000 workforce), a total of 119 companies fulfilled conditions out of 184 companies, while 48 companies pledged to submit their updated data soon after the deadline and 17 had services halted by the ministry for failure to comply with the new system.

In the second phase, (over 2000 workforce) 81 companies fulfilled the ministry’s demands, 13 were penalized for failure to comply, and 17 companies resumed services after complying past the deadline.

Punitive measures in both UAE and Saudi include suspension of ministerial services and suspension of new work permits.

Challenges and Opportunities for Qatar

Though over 90% of Qatar’s workforce is foreign, its total population is much smaller than the UAE or Saudi. Foreigners account for 87% of the nearly 10 million residents in the UAE; and over a third of the nearly 30 million in Saudi. This, coupled with Qatar’s geo-advantage – its economic activities are centred around Doha and a few oil and gas townships-   should enable quick implementation and wide coverage of WPS.

[tweetable]Qatar must also consider workers’ ability to fully benefit from the new system by improving access to banking infrastructure.[/tweetable] Currently, there are no ATMs in areas where low-income migrants are housed. Public transportation continues to be scarce, and the workers are unwelcome in the glitzier parts of the Doha, further restricting workers’ access to their money.

While Qatar has not made the actual system public yet, the wording of the announcement indicates it will similarly be restricted to bank transfers, putting to test the preparedness of the banks.

However, reports in a local daily indicate that exchange houses are preparing to be part of the WPS network, which would ensure much deeper reach. The article highlights scope for misuse of this system too.

“…the new rule doesn’t seem to bother some illegal workers as they think their original sponsors could open salary accounts for them with financial institutions, as required by the law, and transfer their wages.

And they could return their employers the cash immediately after, said a ‘free visa’ worker. This is happening in the case of expatriates whose salaries are low and they want to show bigger salary transfers to be eligible to sponsor their families.

“Their sponsors transfer extra sums as part of their salary and that sum is returned to them.” A ‘free visa’ is a work visa for sale on which a foreign worker arrives after buying it and takes up work elsewhere illegally. In most cases, as per rule, a worker’s sponsorship is officially transferred from ‘free visa’ to a regular visa after a year. As for runaway workers, they can be paid wages by their illegal employers in cash.”

Though the WPS may prove one step in the right direction, even if perfectly implemented it remains only a partial resolution to the systematic exploitation of migrant workers. For the WPS to have an enduring impact on the condition of migrant workers, Qatar must live up to its commitments to reform.