Structural Flaws: Part 1

The Freakonomics blog was kind enough to point out that a few people had taken exception to Johann Hari's piece in the Independent. Today Life in Dubai pointed to a spectacular bit of satire that not only tears apart Hari's work, but cuts into the whole slasher travel writing genre that seems to be a major British media export these days. Still, in all of this debate, I have yet to see any serious analysis into the "why" of the situation in Dubai, since everyone seems entirely focused on the "what". But simply noting what is happening does nothing to help an understanding of the underlying causes of a situation, and can only serve to entrench vested interests, especially when accusations of suspect morality are being thrown around.

So, to that end, I thought I would take a look at the "why" of Dubai's situation in respect to the expat laborers who have become the focus of the world's media recently. For the first part, which lay at the crux of the "slave" accusation, is the passport issue, that is, the practice of employers holding the passports of employees.

*Full disclosure - the argument below comes from a comment I left on the Freakonomics post I mentioned earlier. I just didn't want to waste it on the bottom of a list of comments.

Structural Flaws: The Passport Issue

One point that has been covered in this debate, but has not been explored, has been the practice of “taking” passports. In Dubai, the law is clear - employers are not allowed to take an employee’s passport. For those who work in a professional capacity, there is never a question about surrendering your passport. I wouldn’t surrender mine, ever, because I know what that entails. But my side is not the only side of this issue. So, then why does this happen? To understand why, it is better to look on the issue with the eye to economics rather than law or morality.

Yes, employers are not allowed to take and hold employee passports. However, employers also directly sponsor any expat employees, and as the sponsor, are on the hook for any illegal action on the part of the sponsored employee. And this plays a big part in why this practice occurs.

Complicating the issue is the way businesses are structured. Foreigners are not actually allowed to own businesses in Dubai, only locals can. Say an entrepreneur comes to Dubai and wants to set up a company. He has money, skill, and connections, but in order to do business he has to find a local, a UAE citizen, to sponsor the business. The local takes a fee, or yearly salary in exchange for putting their name on the business license, and for most sponsors, their involvement ends there. This creates a lucrative sideline for many locals, but it also allows for a weakness in the system.

The business operator, the person who actually runs the business, has to make sure that the sponsor isn’t dragged into any unnecessary mess. If some employee ran afoul of the police, the overall sponsor is on the hook for that person’s actions, just as much as the business operator is. At any time, the sponsor can decide to withdraw his sponsorship, and that company and all their employees will be up a creek without a paddle.

Which leads to the passport holding issue.

Why do so many come to Dubai? The streets are not paved with gold, but they may as well be when you compare this place to almost any other place in South East Asia. The opportunity to escape a life of poverty is possible here, but impossible where many of these workers are from. Plus, the vast majority of expat laborers come from desperate straights. They do not know the laws of the country, and they all come in order to better their situation. Given a chance, more than a few would slip away from their job sites, looking for even better opportunities, opportunities that do exist here. It’s just basic economics - enlightened self interest in action. But by doing so, they would actually be breaking the law, as you cannot just switch employers here. You have to leave the country, and re-apply for a new visa.

Were a number of employees able to slip away, sure a few would find their footing fast, but a number would not. What options would they then have? A chance to become a vagrant? Go begging for money? That is all illegal here. And where do you sleep? It’s a desert. If you don’t have housing, it’s not like you can just hang out under a bridge, and kick back in a cozy cardboard box. In the summer it hits 50 degrees in the day, and often around 40 at night because of the humidity.

Soon enough those newly liberated employees would find themselves in a jail cell. Their employer and sponsor would be dragged in, and there would be a whole lot of hell to pay all around. Which is why a lot of these employers take passports. The practice is frowned upon, but usually overlooked as an acceptable compromise.

What I’ve outlined only includes a few of the complications involved in this issue, because you have to also take into account transportation, food, culture, religion, and sanitation. Dubai has grown faster than almost any city on record, and due to this, comes into contact with issues and difficulties no one had really thought about until they happened.