India is pressing rich countries in the Gulf to raise the wages of millions of Indians working there, in a drive that could secure it billions of dollars in fresh income but risks pricing some of its citizens out of the market.

Over five million Indian nationals are believed to be employed in the oil exporting states of the Gulf, the single largest group in a migrant worker population of more than 20 million. Migrants do many of dirty and dangerous jobs in the region, from construction to oil industry, transport and services. They account for nearly half of roughly 50 million population of the six-nation Gulf Cooperation Council (GCC).

So India’s campaign for much higher pay could have an impact on economies around the region, especially if it leads to a general increase in wages for workers from other big labour-supplying countries such as Pakistan and Bangladesh. Over the past seven months, Indian diplomats in Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the United Arab Emirates have sharply increased the minimum salaries that they recommend for Indian workers at private and public firms in those states. “We want Indian workforce to be paid higher salaries. Inflation, value of Indian currency and a rise in cost of living in the Gulf were the factors that led to the decision,” YS Kataria, a spokesman for Ministry of Overseas Indian Affairs (MOIA) in New Delhi, told Reuters.

The success of India’s strategy is not yet clear, however. Officials in at least some GCC nations have expressed displeasure, and the strategy could backfire if those countries end up hiring more workers from elsewhere in the world. “Of course it will encourage firms to look elsewhere as more viable options to get migrant workers,” said Mohammed Jindran, MD of UAE-based Overseas Labour Supply.

The Indian government cannot dictate the pay of its citizens in the Gulf — decisions to hire workers are made by labour recruiters in individual countries, which have not set minimum wages for migrants and usually prohibit union activity by them. However, recruiters must rely on cooperation of local authorities to operate in India. An internal memo prepared by MOIA says that if workers are offered wages below specified minimums, officials ‘would deny emigration clearance’.

In Saudi Arabia, Indian embassy lifted the recommended minimum salary posted on its website to 1,200 riyals ($320) a month earlier this year from 670 riyals. In UAE, minimum wage for Indian blue-collar workers rose to 1,500 dirhams ($409) in recent weeks from 1,200 dirhams last year. India’s role as a top labour supplier means its drive cannot be totally ignored by recruiters. But there may be a backlash.

Another MOIA official said India’s pay demands had met initial resistance in all six GCC countries, while two had threatened to reduce their Indian workforces and hire more, lower-paid workers from Bangladesh and Nepal instead. If India’s efforts to secure higher pay succeed, they could boost its economy, as migrants send much of their pay home.

Published on: 18 November 2014 | The Himalayan Times