How can Blockchain technology stop labour exploitation?
by Martin Saldamando
The United Arab Emirates is home to over 200 nationalities. Migration from poorer Asian countries to richer Gulf Cooperation Countries (GCC) for employment is one of the pillars of society here which helps raise thousands of people out of poverty. However, illegal recruitment traps thousands of migrant workers into a life of desperation. Many thousands end up in jail, and a financial burden on their host government.
But this exploitation could end if Fintech (Financial Technology) companies who are working on financial inclusion to bank the un-banked would also direct their efforts to preventing corruption in the recruitment of workers from Asian countries like India, Bangladesh, Pakistan and the Philippines.
Fintech companies have developed new, innovative ways to transfer money automatically with programmable smart contracts over the Ethereum blockchain, making it possible for migrant workers to send money home in more convenient, faster and less costly ways than traditional banks do.
These Fintechs have an obligation to ensure legal, corruption-free migration for these workers, since for many of them, the need to open a bank account in the first place goes hand-in-hand with them getting an opportunity to migrate and work abroad.
According to the World Bank, remittances to South Asia in 2017 were US$117 billion and are expected to rise in 2018 on the back of an increase in oil prices which should have a positive impact on the GCC economies. A large percentage of these remittances were sent by un-banked workers from India, Bangladesh and Pakistan.
Foreigners living in the UAE remitted AED 43.5 billion in the first three months of 2018 compared with AED 37.1bn a year ago, according to a report published in The National newspaper. About 70 per cent of these remittances were done through money exchanges.
There is enough evidence that illegal recruitment practices by agents and corrupt officials in labour sending countries steal much of the money these workers earn long before it ever reaches their families.
I have spoken with migrant workers, and with the recruitment agents who bring them to GCC countries. In order to pay agents for their employment visas, migrants usually sell off all their belongings, their ancestral land, or take a loan leaving them in huge debt so that they can work abroad to provide for their families back home.
Once they start working, if they fall ill, get injured or if their company lays them off, they are left with nothing but debts. In many cases, they can not even return to their families back home due to the shame and despair of their family members.
Could a blockchain-based recruitment platform improve the situation by providing corruption-free employment opportunities to migrant workers and prevent bribery and exploitation?
Recruitment of workers from Asia has been open to abuse and mismanagement by Asian governments and corrupt and unethical agents, and so is excellent grounds to explore blockchain solutions.
The blockchain can improve the delivery of employment visas in two ways:
- By dis-intermediating the middlemen agents who act as recruiters for employers in the host countries, it can reduce the chronic problem of outright exploitation and demanding of bribes.
- As a transparent and immutable ledger of the candidate recruitment process, it compels large institutions, from concerned non-governmental labour organizations to governments, to monitor the process and identify exploitative practices. If they do not, migrant workers could fall into desperate circumstances in their new host country, get into legal troubles and may end up in jail and a financial burden on the host country.
How would it work?
Migrant workers could register for jobs on a blockchain-based distributed computing platform, managed by a network of different labour-welfare groups acting as nodes on the network.
When jobs for migrant workers are offered by employers in the host countries — for example with construction groups in the GCC countries — those “transactions” can be time-stamped on a distributed ledger, radically improving the transparency of the recruitment process.
The selection of candidates for employment could be made by a completely random, mathematically-based selection process that is transparently open to all on the ledger.
From a pool of candidates wherein the skills are almost equal (ideal for labour which is the class of workers who are most exploited) a candidate would be selected at random (like a lottery). After each selection, the pool would be dissolved transparently and registration opened again for the next round.
Because a random selection is made, paying a bribe would not guarantee any candidate an employment visa to migrate abroad, and demanding bribes would cease to be a viable business model for corrupt recruitment agents.
Challenges
The challenge, of course, would be in the implementation. People in the host and labour sending countries would need to know how to use Distributed Ledger Technology (DLT).
Clever agents and corrupt government officials in labour-sending countries might still find ways to exploit workers for financial gain because entire business enterprises are run on the bribes extorted from migrant workers desperate for employment opportunities abroad.
But are these reasons not to explore the technology? The situation today is untenable and many governments recognize the need to do things differently.
When large numbers of migrant workers end up in legal trouble, governments outlaw or severely restrict recruitment, as was the case when the UAE banned all workers from Bangladesh in 2012. For the last six years, the UAE halt on recruitment of workers from Bangladesh cut off an important source of remittance earnings to that developing country.
At present, there are some 700,000 Bangladeshi workers working in the UAE, while thousands have returned home over the last few years. According to officials quoted in newspaper reports, some 1,000 Bangladeshis are currently in jail in the UAE.
Excellent steps taken by the UAE Government
In April 2018, a Memorandum of Understanding (MoU) agreement was signed between the UAE and the Bangladesh governments. In the agreement, a three-month implementation stage was mentioned promising to lead to a full re-opening of the UAE labour market to all sectors of workers from Bangladesh.
The UAE Federal Law №10 of 2017 offers protection to workers in the country. The Ministry of Human Resources and Emiratisation (MoHRE) is actively holding talks with Asian governments to introduce systems to safeguard contractual rights and protect workers against those who would exploit them. These include extensive efforts at an international level to improve cooperation with labour-sending countries, to stamp out illegal recruitment practices.
According to the MoU signed between the UAE and Bangladesh, the Tadbeer Service Centre, a company working under the UAE MoHRE, will manage the recruitment of the Bangladeshi workers from now on, and not the private sector. The Tadbeer Centres will reportedly work to remove the black market that hires workers, and promote healthy competition.
These are excellent initiatives by the UAE Government, and people who are working on this in the UAE and Bangladesh may ask how does blockchain fit into this? How can Fintech companies in the UAE working on Blockchain-based solutions improve on what we are doing?
It would first improve administrative accountability. Corporate governance and transparency are important in the UAE and other GCC countries. Employers in the UAE especially would be attracted to any Fintech solution that uses Blockchain for greater accountability.
Also, if recruitment processes are recorded on to a blockchain-based distributed computing platform and candidates and their family members were able to access them, they could hold the recruitment agencies accountable for exploitative behavior. As the reputation of recruiters who have genuine concern for workers grows, they will be favored by migrants seeking jobs abroad.
What would-be migrant worker would rather go to a recruitment agent with a notorious reputation, when they could choose a safer option for themselves and for their families?
Finally, the Ruler of Dubai His Highness Sheikh Mohammed Bin Rashid Al Maktoum, declared in April 2018 that over 50 per cent of the UAE’s federal transactions would be powered by blockchain technology by 2021. He said, “The adoption of this technology would reflect on the quality of life in the UAE and will enhance happiness levels for citizens.”
To the Fintech companies in the UAE and elsewhere who are working on Financial Inclusion and Blockchain, please get involved! The UAE government will surely support you. The international press will praise your efforts and showcase the social benefits of your technology, not only banking the un-banked, but also saving families from despair and enabling governments to better manage legal migration. This will save lives.
This article was originally published on Gulf News, May 31st 2018. The most widely read newspaper, and online site in English in the Middle East.
Martin Saldamando is a Consultant and Entrepreneur based in the United Arab Emirates and a member of LegalBlock community.
DISCLAIMER: Blockchain is a disruptive technology that introduces several doubts about its legal nature. LegalBlock aims at being an open forum in which its members and invitees can share views and comments on such technology and its impact on different legal systems. However, the views and discussions expressed in LegalBlock are merely personal and do NOT constitute legal advice of any sort and do NOT necessarily reflect those of LegalBlock.
