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UAE - Economy

Prior to the first exports of oil in 1962, the U.A.E. economy was dominated by pearl production, fishing, agriculture, and herding. Since the rise of oil prices in 1973, however, petroleum has dominated the economy, accounting for most of its export earnings and providing significant opportunities for investment. The U.A.E. has huge proven oil reserves, estimated at 97.8 billion barrels in 2011, with gas reserves estimated at 214.2 trillion cubic feet; at present production rates, these supplies would last well over 150 years. In 2009, the U.A.E. produced about 2.41 million barrels of oil per day.

Dubai had long sought to position itself as an international finance and trading center within today's global economy. It built an ultra-modern image, with luxury hotels and resorts and high-profile sporting events. But by late 2009 the economic downturn had sent some foreign workers packing. When the global crisis reached this outpost, and boom turned into bust, more than half of the construction projects in the United Arab Emirates, worth $582 billion, have been put on hold. Many Western professionals simply left. Foreign news reports claimed 3,000 cars have been abandoned at the Dubai Airport parking lot - left behind by debt-ridden foreigners fleeing the country. Dubai moved to stabilize its economy with a $20 billion sovereign bond program to meet the city's refinancing needs in 2009 and lend stability to the economy.

Despite the continued importance of the petroleum sector, the UAE is aggressively seeking to diversity its economy and develop new industrial and commercial sectors. The UAE has already become a major international producer of aluminum and has also begun ventures in the aviation and defense sectors.

Reflecting the country’s role as a major regional commercial center, a significant portion of the UAE’s import volume is ultimately re-exported. Dubai in particular plays a central role as a regional trade facilitation, logistics and tourism hub. Still, Dubai continues to grapple with large debt burdens (thought to exceed $100 billion for state-owned entities) and an over-supply of housing and office space. However, the past year has seen strong trade and tourism performance as political developments associated with the so-called “Arab Spring” have resulted in high occupancy rates in Dubai hotels as many tourists and business travelers shy away for other traditional, regional destinations. Major increases in imports have occurred in manufactured goods, machinery, and transportation equipment, which together have accounted for 70% of total imports. Another important foreign exchange earner, the Abu Dhabi Investment Authority--which controls the investments of Abu Dhabi, the wealthiest emirate--manages an estimated $600 billion in overseas investments.

More than 6,000 companies from more than 120 countries operate at the Jebel Ali complex in Dubai, which includes a deep-water port and a free trade zone for manufacturing and distribution in which all goods for re-export or transshipment enjoy a 100% duty exemption. A major power plant with associated water desalination units, an aluminum smelter, and a steel fabrication unit are prominent facilities near the complex.

Except in the free trade zone, the U.A.E. requires at least 51% local citizen ownership in all businesses operating in the country as part of its attempt to place Emiratis in leadership positions.

As a member of the Gulf Cooperation Council (GCC), the U.A.E. participates in a wide range of GCC activities that focus on economic issues. These include regular consultations and development of common policies covering trade, investment, banking and finance, transportation, telecommunications, and other technical areas, including protection of intellectual property rights.

The United Arab Emirates (UAE) is a destination, and to a lesser extent transit, country for men and women, predominantly from South and Southeast Asia, who are subjected to forced labor and forced prostitution. Migrant workers, who comprise more than 90 percent of the UAE's private sector workforce, are recruited from India, Pakistan, Bangladesh, Nepal, Sri Lanka, Indonesia, Ethiopia, Eritrea, China, Thailand, Korea, Afghanistan, Iran, and the Philippines. Women from some of these countries travel willingly to the UAE to work as domestic servants, secretaries, beauticians, and hotel cleaners, but some are subjected to conditions indicative of forced labor, including unlawful withholding of passports, restrictions on movement, nonpayment of wages, threats, or physical or sexual abuse.

Restrictive sponsorship laws for foreign domestic workers often give employers power to control domestic workers' movements, threaten them with abuse of legal processes, and make them vulnerable to exploitation. Men from India, Sri Lanka, Bangladesh, Pakistan, and Nepal are drawn to the UAE for work in the construction sector; some are subjected to conditions of forced labor, including debt bondage as they struggle to pay off debts for recruitment fees. In some cases, employers have declared bankruptcy and fled the country, effectively abandoning their employees in conditions vulnerable to labor exploitation. Some women from Eastern Europe, Central Asia, Southeast Asia, the Far East, East Africa, Iraq, Iran, and Morocco are subjected to forced prostitution in the UAE.

Numerous labor issues plague the UAE, resulting directly from the disproportionate number of expatriates (90 percent of the population) living and working there. In 2004 expatriates constituted 2.5 million of the total labor force of 2.7 million, which meant that nationals constituted less than 10 percent of the employed population. Nationals make up an estimated 80 percent of the federal and emirate-level civil service but held only 2 percent of jobs in the private sector, which provides 52 percent of the jobs in the UAE. By 2012 the number of expats had doubled, which would suggest that these ratios are even more extreme.

In April 2007, the UAE government unveiled a new national strategy that declared “emiratisation” of the workforce to be at the heart of the country’s future economic development. In recent years, the government has explored various ways to create employment opportunities for UAE nationals in several economic sectors. In June 2006, a government decree mandated the replacement of all privatesector expatriate secretaries and human resources managers with UAE nationals. In February 2007, the government posted online for comment the draft of a new labor law that would impose a minimum quota of UAE nationals across the private sector.

More than 500,000 low-skilled, poorly paid (often unpaid) South Asians worked in the UAE in substandard living conditions without any rights or recourse for alleged abuses. Workers reportedly are denied health care, and there have been numerous instances of industrial accidents, some fatal, particularly in the construction industry, which is the main employer of expatriate Asian labor. Numerous publicized worker demonstrations and other negative publicity, including November 2006 and January 2007 reports by the U.S.-based nongovernmental organization Human Rights Watch and the United Nations High Commissioner for Refugees, respectively, charging that the UAE had failed to prevent the abuse of the country’s migrant construction workers, have evoked some response from the UAE government.

The Ministry of Labor has negotiated some worker benefits with employers and begun construction of new housing outside Abu Dhabi for foreign workers. In addition, the UAE labor minister has met with representatives of India, Pakistan, Sri Lanka, Bangladesh, China, the Philippines, Indonesia, and Nepal to advise them of remedial measures the UAE will take to ensure better and safer living and working conditions for workers from their countries. At the same time, however, the Ministry of Labor is beginning to enforce a September 2006 law banning strikes and has vowed to deport foreign workers participating in protests that are not triggered by employment contract violations. In March 2007, the government deported dozens of striking South Asian workers in Dubai.

The law does not permit workers to form or join unions. The law does not prohibit strikes in the private sector, but it allows an employer to suspend an employee for striking. The labor code forbids strikes by public sector employees, security guards, and migrant workers. There is no right to collective bargaining. In the private sector, individual employment contracts must be approved by and registered with the Ministry of Labor. The labor code does not apply to public servants or domestic and agricultural workers. At the request of an employer, the government may cancel the work permit of and deport for up to one year any foreign worker for unexcused absences over seven days or for participating in a strike.

No unions existed in the country. The government granted some professional associations with majority citizen membership a limited ability to raise work-related issues, to petition the government for redress, and to file grievances with the government. These organizations were required to receive government approval for international affiliations and travel. Foreign workers may belong to these professional associations; however, they do not have voting rights and cannot serve on the organizations’ boards.

Private sector employees may file collective employment dispute complaints with the Ministry of Labor, which acts as mediator between the parties under the labor law. Employees may file unresolved disputes with the labor court system, which are in turn forwarded to the conciliation council. In practice most cases were resolved through direct negotiation. All foreign workers have the right to lodge labor-related grievances with the Ministry of Labor. The ministry sometimes intervened in disputes and helped negotiate a private settlement. Public sector employees may file an administrative grievance or a case in the civil courts to address a labor-related dispute or complaint. There was no publicly available information on cases filed.

Protests and strikes take place, most of them illegal. Most worker protests were related to unpaid wages and hazardous or abusive working conditions. The government generally did not punish workers for nonviolent protests or strikes, but it did disperse such protests.

The law prohibits all forms of forced or compulsory labor; however, the government did not effectively enforce the law, and such practices occurred, predominantly involving migrant workers from South and East Asia employed in construction or domestic work.

Migrant workers were subject to forced labor. Employers routinely held employees’ passports, thus restricting their freedom of movement. While employer passport retention is illegal, few laborers filed complaints. Migrant workers also were subject to nonpayment of wages, threats, and physical or sexual abuse. Upon arrival to the country, some foreign workers signed contracts that had lower salaries or involved a different type of work than what was stated in contracts signed in their country of origin, a practice known as “contract switching.” There were reports that some female migrant workers were forced into prostitution.

Some noncitizen domestic and agricultural workers were subject to unpaid labor to repay their employers for hiring expenses, often in the form of forced labor. In most of these cases, workers paid recruitment fees in their country of origin and were responsible for repaying them once beginning work. In some cases, employers withheld payment while workers “repaid” expenses incurred by employers to sponsor the worker; some employers did not pay workers even after these debts were repaid. In other cases, workers who had taken out a loan to pay labor recruiting fees in their home countries arrived in destination countries and spent most or all of their salaries trying to pay either the labor recruiters or loan sharks back, at times trapped in unpleasant or exploitative work environments because of the incumbent debt.

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