Labor Unrest in Kuwait
July 29th, 2008 by Adam
The Kuwait Times (Hat Tip: Babylon & Beyond) reports on several days of strikes and unrest by ex-pat workers seeking better labor conditions and higher pay to keep up with growing inflation. The foreign workers are mainly Arabs and Asians, and according to the Kuwait Times, this group accounts, “…for around two thirds of Kuwait’s 3.2 million population.” Though the street violence has taken a more violent turn in the past day or two, negotiations are going to proceed in the attempt to tamper down any further tension.
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July 30th, 2008 at 10:32 am
A comment on the recent labour unrest, by Abdulla Alothman
Anomalous behavior in the market place, is invariably the result of what Adam Smith once called the “hidden hand” - in this case, I also suspect, latex clad with the center digit extended - at work. Now, as anyone, at least anyone with an iota of intelligence, who has read the “Wealth of Nations” will have surmised, Adam Smith was a very perceptive, if at times - lengthy descriptions of pin factories and animal husbandry come to mind- rather tedious, writer.
Not being blessed with Mr Smith’s perspicacity and power of observation, I was nevertheless curious to discover for myself, through a process of reflection - that is without leaving my rather comfortable arm chair - whether an “invisible hand” was indeed at work and whether workers’ incredulity at governmental promises to address their concerns, were, at least probabilistically speaking, well founded.
Below is my analysis and conclusion -
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PART 1, WHAT THE DATA TELLS US:
Back of the envelope - from the comfort of my arm chair - calculation:
Current modus operandi:
Number of Bangladeshi workers*: 240, 000
Amount government pays labour companies per head: About 100 - 120 KD (I will use 100KD)
Amount company pays Employees: 40 - “Deductions**” = 18 KD
Approx profit** - see ** below - = 60*240,000*12(months) =172, 800,000 KD or 640Million USD!!!
After implementation of proposed changes:
Profit per head = 100 - 40 (salary) - 22 (costs, currently been footed for by employees who now feel they should no longer be subsidizing their employers) =38
Approx profit = 38*240,000(# workers)*12(#months) = 109,440,000
Difference:
Approx. 64m KD
Footnotes:
*I suspect that this number probably includes cleaners, hedge trimmers and of course the ever prevalent sleep deprived “security personnel” - Group 4 and Twaik International staff in their ubiquitous dilapidated TATA buses - making Kuwait a safer, if sightly more congested, place to live in.
**Any and all overheads - including: transportation, renewal of work visa, the salary of supervisors preforming random attendance checks, any insurance, deodorants etc.
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PART 2 ANALYSIS
Because the labour providing companies at the center of the disputes - i.e. those who have been”lucky” enough to have been awarded governmental contracts* for “security”, “cleaning”, “landscaping”, “street maintenance” etc - are controlled by certain families.
Because it seems reasonable to conjecture that these in turn- again, by virtue of their companies having been awarded* the contracts - are in close alliance with senior governmental officials.
Because many of these same officials are the very ones issuing - albeit by proxy - the promises, which workers - perhaps because of the munificence (from 25 all the way upto 50 KD) of the offer - are having a hard time taking seriously.
And finally, because 64million KD is at stake.
A reasonable conclusion to draw might be the following–
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PART THREE, CONCLUSION
1) That the workers are probably (i.e. with a high probability) right in their refusal to believe
2) That an invisible hand is indeed at work, and
3) That it will only be a matter of weeks (the government being on vacation ’till after Ramadan) before that extended middle digit gets put to good use.
4) In short, it is buisiness as usual here in the Gulf
*A Gulfie euphemism for distribution of oil largess through governmental patronage to selected families and individuals