The Migrant Worker Initiative (MWI) – Unskilled Labor and the 2022 World Cup

Project Background

In 2012, Abraham Kamarck was commissioned by the Qatar Foundation (QF) Center of Design Innovation (CoDI) (under QF Capital Projects) to assess the viability and value of the Migrant Worker Initiative (MWI) – a holistic project that was started by CoDI to focus on improving the quality of life and welfare of the migrant worker community in Qatar.

Asked to asses the commercial viability, economic impact and legacy of sustainable living communities, in particular, a sub project of the holistic initiative that was commissioned as a pre-feasibility study by QF for a 40,000 person worker city and to work in conjunction with Arup, design consultant, and Kellog Brown and Root (KBR), the project manager. Abraham advised QF, Arup and KBR during the length of the pre-feasibility study on the economics of the situation and financial viability of the proposed project.

The resulting report was an Opinion of Value that looked at the commercial viability, valuation and, more importantly, the social and greater economic returns on investment.

 

Case Study

The Opinion of Value document was over 60 pages, including graphs and financial reports, the following is a brief summary of some of the general findings that are fit for publication.

Qatar is spending more than any other nation has ever spent to host an athletic event. The total value of the construction projects planned for the preparation of the World Cup is predicted to be between US $100 and 220 billion dollars. The 2010 World Cup in South Africa went off without any significant hitches and exposed the world to the beauty and passion of Africa. It was expensive, coming in at a total cost of $3.5B. In 2022 Qatar’s World Cup could put the Middle East on the world stage. But, it will also cost 30 to 60 times more than South Africa.

Migrant Workers building Villas in Qatar

Migrant Workers building Villas in Qatar

Economic Consequences

Migrant labor are a significant part of the Qatar economy and effect everything that happens in Qatar. According to the 2010 Qatar Census, there were 851 thousand Migrant Workers live in some type of labor accommodationThe residential unit is used as an accommodation for one labor gathering or more, consisting of 7 persons or more.. These workers live in almost every single zone in Qatar and in every single type of building. For example, there are over 27,000 living in marginal buildingsA place not suitable for accommodation but found occupied for residence at the enumeration time e.g. tent, kiosk, cottage, etc. It might be called an auxiliary building and even 519 living in what are classified as palaces alone (not as household servants , but the palace functioning as a labor accommodation).A building originally constructed for residence of one household. It is usually constructed on a vast area. Its shape differs according to the age of the building.

Migrant Workers are the majority population in most neighborhoods and they are the largest real-estate consumers in Qatar. 57% of the population of Municipal Doha are migrant workers living in labor accommodation. The migrant worker population is also spread out all over Qatar. Over 95% of all municipal zones have some type of labor accommodation. The largest concentration of workers is in the Industrial Area with approximately 250,000 workers in labor accommodation there. The other 70% are spread throughout Qatar mostly in small gatherings. The concept of workers all living in large +1,000 person camps is mostly a myth. 86% of all the labor accommodation in Qatar have less than 50 workers. As of 2010, there were only 68 accommodation sites in all of Qatar that housed more than 1,000 workers.

The migrant worker situation in Qatar is serious and garnering international attention – especially in light of the World Cup – the Human Rights Watch report on Qatar from 2012 chronicles some of the misgivings. International organizations like the International Trade Union Confederation (ITUC) have petitioned FIFA to deprive Qatar of the World Cup because of its treatment of Migrant Workers and its labor laws like the Kafala system.

Qatar may not lose the World Cup over its treatment of Migrant Workers because of the ITUC or other organizations. However, Qatar may still lose the World Cup because of its treatment of and dependency on low-cost migrant labor. Migrant labor may cause Qatar to lose the chance to host the World Cup because the low productivity and poor quality work completed by construction methods using unskilled labor may prevent Qatar from meeting critical construction milestones. Thus the detrimental effect on productivity that Qatar experiences from its dependency on unskilled labor, may  cause Qatar to lose the 2022 World Cup.

At the time of this report, there was little data to use to quantify productivity in Qatar, especially in the construction sector, which employs about 50% of all migrant workers. Anecdotally, the low productivity in the construction sector in Qatar is well known and interviews with contractors in every sector confirmed this finding. In addition, many major projects have been severely delayed. According to a  report from PricewaterhouseCoopers  – 80 percent of respondents said a project they were working on had suffered a delay, with nearly half (46 percent) saying deadlines had been pushed back more than six months. A number of high-profile projects in Qatar have seen delays, including the opening of Ezdan MallIKEA and the new Doha International Airport. In addition, a paper published by Jarkas, Kadri and Younes in the International Journal of Construction Management, Vol. 12, No. 3, took a survey of construction contractors in Qatar and found 10 productivity factors to have the most significant impact on construction productivity in Qatar. The number one factor was skill of labor and eight of the top ten factors were related to the availability of skilled labor, including a lack of skilled and experienced managers and foremen. Extreme weather, specifically Qatar’s extreme heat, was seventh on the list of factors in the Relative Importance Index (RII).

Low cost labor also tends to prevent technology adoption – especially in the construction sector – further exasperating productivity issues. The cost return of technology investment is only seen with volume and thus independent firms are unlikely to invest heavily in equipment if low-cost labor is readily available. Historically, rising labor costs have driven technology adoption and innovation.

Parallel’s can also be drawn between Qatar now and Singapore in the 1990’s. In the early 1990’s Singapore went through a radical building spree as it attempted to upgrade its infrastructure and put the tiny nation on the map. Singapore learned about the detrimental effects of low-cost, unskilled labor in the early 1990’s when they noticed that critical construction projects were being completed late and to a poor quality, so Singapore put a levy on unskilled labor amongst other policy changes that helped drive the adoption of modern construction practices. Now Singapore’s infrastructure is one of the best in the world.

Recently, the General Secretariat for Development Planning (GSDP) in Qatar released it’s 2013-2014 Economic Outlook in which it highlighted Qatar’s 4% drop in labor productivity between 2006 and 2012. The report says: “Estimates of construction employment may indeed be inflated (some workers assigned to the sector may actually be working in low value-added trading activities), but United Nations data on construction employment and output show that labour productivity in Qatar’s construction is far lower than regional and global benchmarks.”