Pursuing prestige by putting workers first

17 February 2019
Enhanced standards are set to become the only standards in the Middle East construction industry, according to experts at law firm DLA Piper

The spotlight is shining brightly on the Middle East’s construction industry in anticipation of world events such as Expo 2020 Dubai. Public relations machines have responded to this with an increased focus on enhancing the region’s reputation.

However, this is not just a PR stunt. Change stems from a desire to be truly global leaders, and in order to lead, the focus must include setting new standards in worker welfare and occupational health and safety.

Need for change

DLA Piper and MEED’s recently published industry report, ‘Time for Change: Construction in the GCC reaches a tipping point’, identified appetite for legislative reform in these areas.

To what extent, however, can we realistically anticipate the widespread legislative changes needed to revolutionise business practices and force local contractors to meet prescribed international standards?

Anticipating legislative change in this region is tricky. The emphasis in 2019 is likely to be on enforcing existing legislation.

The UAE has the policies in place, as seen in the UAE Occupational Health and Safety Standard and the 2017-18 Worker Welfare Report. Now, there is a chance to translate these policies into real change.

The UAE authorities have already taken steps in the right direction, encouraging employees to report their employers and imposing fines and restrictions on wrong-doers.

Welfare of workers

The focus of the UAE Labour Ministry is expected to remain on the welfare of workers and the issue of late payment. The introduction of an insurance system for workers, replacing the existing deposit scheme, has the potential to both revive struggling employers and assist employees.

Under this scheme, it is predicted that about AED14bn ($3.8bn) previously held in deposits has been released back to employers; a boon for cash liquidity. The benefit for employees is they can recover up to AED20,000 in backdated salary, holiday or notice period payments should their employer collapse.

There are also organisations across the region campaigning for legislative changes such as the outlawing of ‘back-to-back’ payment mechanisms, to make sure money flows all the way down the supply chain, and the holding of developers responsible for on-site accidents.

In the future there must be a base competence for all employers, contractors and subcontractors underpinned by enhanced legislative standards.

Legal infrastructure

However, it is not simply legislation that drives change. Legal infrastructure plays a crucial role. Across the region, new methods of dispute resolution are allowing employees to challenge employers. Access to justice is the buzzword of judicial policy in the region.

Whether this will be successful remains to be seen, but with eCourts and fast dispute resolution methods becoming the focus of judicial institutions, particularly in Abu Dhabi and Dubai, there is great potential.

  • Click here to access Time for Change – Construction in the GCC reaches a tipping point

Government-backed projects have also begun to lead the charge towards higher standards. In the UAE, Dubai South is backed by both public and private stakeholders. Its vision is impressive. Based on a 145 square-kilometre site, the hope is it will create 500,000 jobs and sustain 1 million people.

Dubai South’s emphasis remains on its people, and that includes enforcing higher standards in the construction process.

Wim Raath, head of safety at Dubai South, says: “Dubai South is committed to ensuring that the entire development is developed to a higher occupational health, safety and environmental standard based on international best practice with a focus on practicality and economic affordability for its contractors.”

Such projects are intended to build a long-term legacy, in human standards as well as their physical structures.

Private sector buy-in

Private companies are also rising to the challenge. A major developer in Saudi Arabia has begun working to the International Finance Corporation’s performance standards, with a focus on the environmental and community impact of its work.

Multi-national project management consultants have begun to walk away from projects that fail to meet international expectations.

Though these appear to be moral decisions, they have huge commercial value. It is essential that major developments and multi-nationals be seen to be meeting an international standard to attract investors.

Taking action

At present, ‘standard’ projects only require the standards prescribed by law, but the mood is shifting. While it is understood that the cheapest option yields the highest returns, those returns are not materialising.

For projects to ensure their prestige on the world stage, adherence to internationally recognised worker welfare and health and safety standards must be made compulsory. This will also be crucial in order to attract talent.

It is likely that government infrastructure projects will, in the future, only be offered to companies that demonstrate these standards. When change is driven from the top, those that do not already have evidence of enhanced practice for human rights will not pass pre-qualification.

Looking ahead

For many industry participants, investment in the welfare of workers and occupational health and safety may seem like an unnecessary distraction.

Gradual improvement is crucial, however, to spread the cost of training and policy improvement once enhanced standards are enforced.

The ultimate cost is likely to be distributed across all levels of the supply chain. Those that wish to thrive, however, may well be forced to meet standards that the funders and developers dictate. This means international developers and contractors may be back in the driving seat.

About the authors

Suzannah Newboult is a partner at DLA PiperSuzannah Newboult (pictured) is a partner at DLA Piper and Lewis Elliott is a trainee solicitor at the firm

READ MORE: A quick solution to contractor disputes


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