Three Million Could Lose Jobless Pay in Impasse

December 22, 2011 by · Leave a Comment 

By Robert Pear, The New York Times News Service


U.S. House Speaker John Boehner (R-OH) pauses as he speaks to the media after the House vote on the Senate version of the payroll tax cut extension on Capitol Hill in Washington December 20, 2011.

REUTERS/Yuri Gripas

Washington – More than three million people stand to lose unemployment insurance benefits in the near future because of an impasse in Congress over how to extend the aid and how to offset the cost.

Jobless benefits have been overshadowed by debate on a payroll tax cut, but have become a huge sticking point in negotiations on a bill that deals with both issues.

Republicans would continue aid for some of the unemployed, but would sharply reduce the maximum duration of benefits and impose strict new requirements on people seeking or receiving aid.

Democrats said these changes made no sense at a time when 45 percent of jobless workers had been unemployed for more than half a year and the average duration of unemployment — 41 weeks — was higher than at any time in 60 years.

Jon D. Grandstaff, 50, who lives in a suburb of Tulsa, Okla., said Tuesday that he had been watching the debate in Congress with trepidation, worried that his jobless benefits would be exhausted on Jan. 9.

“This mess in Congress is so upsetting,” Mr. Grandstaff said in an interview. “I don’t know who to blame — House, Senate, Republicans, Democrats. They are toying with people’s lives. I’m getting really scared and nervous.”

Mr. Grandstaff said he was making $43,000 a year when he was laid off in March from the collections department of a major cellphone company. Now he is working at a part-time job for $8 an hour and hoping the position will lead to full-time work.

Brenda G. Crosier, 52, of Northglenn, Colo., outside Denver, is also at risk of losing extended unemployment benefits. She said she applied for five to eight jobs a week but rarely received responses, and in a telephone interview Tuesday she had this question for Congress:

“Why are you leaving for Christmas vacation? If you worked for a company and you did not have your work done, you would not be walking out the door. You have no business leaving until your work is finished.”

Major provisions of the federal unemployment insurance program begin expiring in the first week of January, and people would begin to feel the effects over the next several months. By mid-February, the Labor Department estimates, 2.2 million workers would have lost jobless benefits, and by the end of March, 3.6 million will be affected.

People in states with the highest unemployment rates would be among the hardest hit.

The cornerstone of the program, regular unemployment insurance benefits, provides up to 26 weeks of assistance financed by the states. In states with high unemployment, jobless workers may be able to get up to 73 weeks of additional benefits, financed by the federal government, for a total of 99 weeks of aid. House Republicans would reduce the maximum to 59 weeks.

“This reflects a more normal level of benefits typically available after recessions,” said Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee.

Senator Orrin G. Hatch of Utah, the senior Republican on the Finance Committee, said: “I don’t see why you have to go more than 59 weeks. In fact, we need some incentives for people to get back to work. A lot of these people don’t want to work unless they get really high-paying jobs, and they’re not going to get them ever. So they just stay home and watch television. I don’t mean to malign people, but far too many are doing that.”

The Senate version of the payroll tax bill, passed with bipartisan support on Saturday, would continue paying jobless benefits under current law for two months, while lawmakers tried to figure out a longer-term solution.

House Republicans said they wanted a full-year extension, with additional requirements to prevent abuse of the program. They would require most recipients of jobless benefits to search for work and to pursue G.E.D. certificates if they had not completed high school.

Representative Jim McDermott, Democrat of Washington, said the Republican proposals amounted to “the most drastic attack on the unemployment system” in 75 years.

House Republicans would also allow states to require drug testing as a condition of getting benefits. Democrats said such tests were an insult to the unemployed, because they implied that many were lazy drug abusers.

“I don’t see anyone in the Republican majority demanding drug testing for folks who receive oil and gas subsidies,” said Representative James E. Clyburn, Democrat of South Carolina.

But Representative Jack Kingston, Republican of Georgia, said, “People who are unemployed should be looking for a job and should not become voluntarily ineligible by taking illegal drugs.”

Democrats say the program has reduced poverty and helped stabilize the economy, reducing the depth of the last recession. Republicans say the benefits have led some people to reduce their efforts to find new jobs.

Representative Dennis J. Kucinich, Democrat of Ohio, said: “The problem is not a lack of effort for those seeking a job. The problem is a lack of jobs.”

House Republicans said they had borrowed ideas from the jobs bill [4] that President Obama sent Congress in September. The nonpartisan Congressional Research Service said the president’s proposal would probably reduce the maximum length of unemployment benefits to 79 weeks, from the current 99, in many states.

Republicans would allow states to get waivers from many federal standards and requirements, including one stipulating that money from state unemployment taxes must be spent on jobless benefits.
Democrats see the waivers as a threat to the fabric of the unemployment insurance system. But Republicans said that, instead of just writing benefit checks, federal and state officials must do more to help people get back to work.

“In this uncertain economy, using unemployment dollars to subsidize the training of a new employee to re-enter the work force is just good public policy,” said Representative James B. Renacci, Republican of Ohio.

This article, “Three Million Could Lose Jobless Pay in Impasse,” originally appeared at The New York Times News Service.


Gulf States Struggle to Shift Jobs to Choosy Locals

November 10, 2011 by · Leave a Comment 

By Mahmoud Habboush

ABU DHABI, Nov 2 (Reuters) – Ibrahim Hasanain worked as a tour guide at a Dubai tourism company for four years but quit to study law at the University of Dubai, hoping to land a better-paying government job.

All eight United Arab Emirates nationals who worked for the company eventually quit, not only because of disappointingly low wages but also because of difficulties fitting in with their co-workers, who were mostly South Asian and Western, he said.

“We were all hired because the company had to fill their required quota of Emiratis,” said Ibrahim, 24, as he walked the aisles of a glitzy shopping mall in Dubai.
Across the Gulf, Arab governments are seeking to create more private sector jobs for their citizens while reducing their economies’ reliance on hundreds of thousands of foreign workers, who fill posts in sectors ranging from construction and public transport to tourism, retail and financial services.

The motive is partly economic; finding private sector jobs for citizens cuts the fiscal burden that governments must pay in the form of unemployment benefits or state salaries for workers at government agencies and corporations, which are traditional tools for job creation in the region.

But it is also political — social unrest across the Arab world this year underlined the risks posed by unemployed youths. Even countries which experienced little or no unrest on the streets, such as Saudi Arabia and the UAE, want to reduce unemployment among their citizens to avoid storing up potential trouble for the future.

“We should invest in people, not stones,” said Abdulrahim Naqi, secretary general of the Federation of GCC Chambers, a regional business association, referring to the Gulf-wide obsession with building skyscrapers, swanky hotels and shopping malls — and using foreign labor to do it.

As Ibrahim’s case underlines, though, governments face a tough task trying to change labor market patterns established over decades. Accustomed to social benefits and cushy jobs paid for by oil wealth, many Gulf nationals find employment at private firms unattractive because it involves harder work, longer hours, and in many cases smaller salaries and benefits compared to the state sector.

And the lack of enthusiasm cuts both ways. Many private firms in the region remain reluctant to hire Gulf nationals because of workers’ insufficient training and high salary expectations, said Azfar Khan, a senior migration specialist at the International Labour Organization (ILO) in Geneva.

He said undertrained Gulf nationals even posed problems to governments which wanted to increase the proportion of locals employed in their public sectors.

“There is a funny paradox that the governments want to create jobs for their nationals, but are themselves reluctant to employ them,” he said.


Localising jobs has been a long-term goal of many Gulf governments for years, but efforts are accelerating. At a ceremony in Abu Dhabi last month, labour ministers of the six-member Gulf Cooperation Council (GCC) — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE — handed out awards to firms in recognition of their role in employing Gulf nationals.

“When it comes to my number one concern, it’s Emiratisation,” UAE labor minister Saqr Ghobash said on the sidelines of the ceremony, using the local term for giving UAE citizens more of a role in the workforce.

The UAE is a prime example of both the potential for localization and the difficulty of implementing it. The country does not regularly release up-to-date jobless figures; an ILO estimate in 2009 put unemployment among its citizens at 14 percent, but UAE citizens account for under 20 percent of the population of more than 6 million, which is largely made up of South Asians and Southeast Asians.

Like most other government officials in the region, Ghobash said his country had no plans to reduce the number of foreign workers — it was simply trying to provide more access to jobs for qualified locals.

Although the UAE does not operate an official quota system for local employees, it uses incentives to encourage private sector firms to have certain proportions of UAE citizens in their workforces, a labor ministry official, who declined to be named because he was not authorized to speak publicly about the policy, told Reuters.

But if the government presses companies too hard, it could hurt private business and conflict with another plank of the UAE’s economic policy, which is to diversify the economy away from oil and spur the creation of innovative small and medium-sized firms.

So authorities are also planning to subsidize jobs for Emiratis at private firms — a move that would initially cost the government, but would ensure higher salaries and hopefully in the long run help to change the habits of job seekers. Kuwait and Saudi Arabia have already tried similar policies.

“Why do we need subsidies?” said Ghobash. “It’s because the gap between the public salaries and the private sector salaries is quite big. Unless you do these subsidies, there is very little chance to succeed with Emiratisation.”

Another area under study is education. Heavy public investment has created a network of colleges and universities in the UAE; now there is pressure to orient them more closely to teaching job-related skills rather than just producing degrees.

Naqi at the Federation of GCC Chambers said GCC countries should tailor their education systems to cater to their local job markets. This would allow Gulf nationals to fill more technical and managerial positions that are now occupied by highly trained foreigners, he said.

But Khan at the ILO said localization would be hard to achieve in the UAE as 70 to 80 percent of the foreign workforce was employed in the construction sector, the services sector and as domestic servants — mostly jobs that locals would shun.

“Are they taking away the jobs from the nationals?” he said. “Or, to rephrase the question: would any national want to take up these activities? I think no.”


Saudi Arabia, where locals account for just 10 percent of private sector employees and the most recent official estimate for unemployment is 10 percent, launched its latest localization program in June. The scheme codes companies according to the proportion of Saudis on their payrolls — red for the least and green for the most.

Companies in the red zone may face punitive measures, labor minister Adel al-Faqih said. For example, workers in red-zone companies may join firms in the green zone without having to ask their current employers for permission to leave.

“For many coming years, we will still be in need of a large number of foreign laborers to build our home countries in the Gulf region,” Faqih told Reuters. “But the main goal is to have balanced opportunities for our sons and daughters so that they can get jobs.”

Once again, however, Saudi Arabia has to move carefully to avoid damaging growth of the private sector, which is already lagging the oil-fuelled public sector. Pinak Maitra, chief financial officer of Kuwait Projects Co, a big regional conglomerate, said the localization program was a major challenge for business in Saudi Arabia.

“In the region, we have made the mistake of depending on expats. It was easy. We’re focused on trying to grow local talent,” he said.

Yet Saudi Arabia’s local talent has become notoriously choosy about where it works. So-called withdrawals, where employees who have been trained by one firm jump ship for another after a short period, have become endemic.

“The rate of withdrawals is among the highest worldwide. In our company, it has reached 60 percent,” said Abdulmajeed Alhokair, head of Saudi retailer Fawaz Abdulaziz Alhokair Co.

And some measures which the Saudi government is taking to reduce social discontent appear directly opposed to the goal of localizing jobs. Earlier this year, the government announced $130 billion of additional spending on welfare programs, subsidized housing and other social spending.

By strengthening the social safety network, the government may be reducing the incentive for people to join the private workforce. A foreign banker in Saudi Arabia recalls that on the day after social benefits were increased this year, few of the security personnel at his bank’s offices were at their posts — some had evidently decided that the benefits of staying in their jobs were no longer attractive enough.


With unemployment among its citizens low at around 4 percent, gas-rich Qatar has little economic reason to worry about giving more private sector jobs to locals, but officials say limiting foreign workers involves social and security issues. Qataris make up only about 16 percent of the 1.7 million population.

Qatar’s solution may be increasingly imitated across the Gulf: where it is unable to find local citizens to move into jobs, it appears to be encouraging the use of Arab workers from other countries, rather than the South Asians and East Asians who have traditionally done much of the hard labor.

“We have now started to limit foreign labor,” said Hussain Yousuf al-Mulla, undersecretary at Qatar’s labour ministry. “When I say foreign, I mean Asian workers.

“The instructions that have come to us from the government are to stick to Arab laborers. Foreign laborers caused many problems — their number is big, their customs and habits are not similar to ours, besides social and security problems.”

Oman and Bahrain, which have seen street protests this year, also aim to localize jobs, but they may have less room for expensive steps such as job subsidies since they are not as wealthy as bigger oil exporters. Both countries are receiving multibillion dollar aid schemes from other GCC governments.

Oman’s foreign minister said in March that his country planned reforms which could include reducing the number of foreign workers.

Khan of the ILO predicted the GCC states would need years of work to reduce unemployment rates among their citizens and cut their dependence on foreign labor.

“I don’t think the nationals are, at the moment, ready to ‘take over’,” he said. (Additional reporting by Amran Abocar and Asma Alsharif; Editing by Andrew Torchia)