UAE wages system sets Gulf example

The payment method being rolled out across the nation to ensure workers receive their money on time is also attracting UN attention.

ABU DHABI // Several Gulf countries are considering copying the UAE's Wage Protection System which is designed to ensure that workers are paid on time and reduce labour disputes. In a separate move, the International Labour Organisation (ILO), the UN agency, is expected to send a representative to the UAE to assess whether the electronic system can be used as a model for other nations, Saqr Ghobash, the Minister of Labour said yesterday.

"A number of countries have expressed their desire to look at the mechanisms of the system to find out how they could apply it at home," said Mr Ghobash. Those countries included several GCC states and others within the Middle East. "The ILO has also contacted the Ministry of Labour to delegate an international expert to review the specifics of this new mechanism and examine ways it could be benefited from at the international level."

The Wages Protection System is being rolled out across the country. All private-sector companies are mandated to pay their workers through it by next spring. Companies with more than 100 employees, regardless of salary level or occupation, must sign up by the end of November, but smaller firms will have more time to join the scheme. Under the system, all businesses must chose an agent - a bank, money exchange or financial services company - through which their workers will be paid.

When wages are received by the agent, the ministry is notified, which enables it to keep track and reprimand companies that are withholding wages or paying late. "The system has garnered praise from a number of competent regional and international bodies," Mr Ghobash said. "The mechanism was introduced after in-depth talks with all parties concerned." More than 100,000 workers received their wages through the system during July and August, up from 28,000 in June, the ministry said.

But extending the service to all of the country's four million private-sector workers remains a daunting task. A similar system was meant to be in place by January 2008, but some companies said they had difficulty finding banks willing to open accounts for low-income workers. Under the new programme, wages can also be paid directly to money exchanges and collected by workers, or representatives from the exchange can go to labour camps and distribute the cash.

Thirty-five of the country's 54 banks, and 15 other companies such as money exchanges, had signed up to work as agents for the system, the ministry said. Private-sector companies with 15 to 99 employees have until the end of February to comply. Those with fewer than 15 have until the end of May. The ministry said it hoped the system would curb disputes related to the payment of wages. According to lawyers, there was a sharp rise in the number of such disputes in the country as the financial crisis hit the UAE.

Companies guilty of "incessant violations" in failing to pay workers face legal action and may be banned from issuing work permits, the ministry has said. Such action would also apply to a company's subsidiaries, or any other firm with the same owner. Sheikh Mohammed bin Rashid, the Vice President of the UAE and Ruler of Dubai, praised the system as a "step in the right direction towards protecting rights of workers and establishing trust between employers and employees".

Solidarity was required between the relevant authorities to make it a success, he added. No one from the ILO's regional office was available for comment yesterday. [e-mail]