Deal will stave off worker unrest but cost construction companies up to £13m

Construction companies based in Dubai have increased salaries by up to 20% in an effort to stave off industrial unrest.

Strikes by workers earlier this month increased pressure on employers to improve conditions and pay in the emirates.

It is estimated that the increase could cost some companies up to £13m a year, which is likely to be factored into bids. Although UK contractors are not subject to the agreement, the move is likely to increase labour costs across the region, but should stave off immediate fears of strikes.

The increases have been agreed by the United Arab Emirates Contractors’ Association (UAECA) after the UAE government failed to increase statutory minimum pay. According to a Human Rights Watch report, the average migrant worker receives a salary of about £88 a month.

The association agreed to raise workers’ wages to compensate for rising living costs and currency depreciation, with immediate effect.

Contractor Arabtec’s workers had been on strike until last week when an agreement was reached between employees and managers. It has given its workers a pay rise as part of the UAECA agreement. The rise will increase its costs by 1%.

Arabtec employees started striking in early November after migrant workers, mainly from the Indian subcontinent, struggled to send sufficient money home to support their families after the UAE’s currency depreciated.

Many of Arabtec’s builders are working on the construction of the Burj Dubai, which will be the largest tower in the world when it is completed.

Nigel Truscott, a partner at law firm Trowers & Hamlins who is based in Dubai, said wages were not the only matter that needed to be addressed. He said: “A happy worker is a better worker. If the conditions cause problems then looking at the wages is not enough.”