VZCZCXRO3231
RR RUEHDE RUEHDIR
DE RUEHMS #0388/01 1121319
ZNR UUUUU ZZH
R 221319Z APR 07 ZDK
FM AMEMBASSY MUSCAT
TO RUEHC/SECSTATE WASHDC 8113
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHC/DEPT OF LABOR WASHDC

UNCLAS SECTION 01 OF 03 MUSCAT 000388 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR G, M, RM, NEA/ARP, NEA/EX, G/TIP AND DRL 
DEPARTMENT OF LABOR FOR JRUDE 
 
E.O. 12958: N/A 
TAGS: PHUM PREL ELAB SMIG AMGT MU
SUBJECT: RECONCILING ANTI-TIP POLICY & RESOURCE MANAGEMENT 
PRIORITIES: A REQUEST FOR GUIDANCE 
 
REF: A. MUSCAT 219 
 
     ¶B. 06 MUSCAT 1635 
 
MUSCAT 00000388  001.2 OF 003 
 
 
¶1. (U) This is an action request. See paragraphs 9 through 12. 
 
¶2. (SBU) Summary: Some expatriate workers who fill Oman's 
low-paid, low-skill service sector jobs face exploitative 
conditions and may be victims of trafficking.  Workers in the 
commercial cleaning industry, including those under contract 
to clean the Chancery, are paid poorly due, in part, to the 
absence of a minimum wage for expatriate workers in Oman. 
Post is concerned that USG policy under the Federal 
Aquisition Regulations (FAR) of awarding contracts to the 
lowest technically-acceptable bidder may end up supporting 
the poor treatment (i.e. low wages) of workers, in 
contradiction to our labor and anti-trafficking in persons 
(TIP) agendas.  Post seeks Department's guidance in resolving 
this dilemma.  End summary. 
 
- - - - - - 
Background 
- - - - - - 
 
¶3. (SBU) South Asian expatriate workers perform most of the 
low-skilled work in Oman's growing services sector (ref A). 
Some of these workers face conditions of labor exploitation, 
including long working hours for low pay, and live in often 
overcrowded and unhealthy, company-owned compounds locally 
known as "labor camps" (ref B).  They may arrive in Oman with 
debt to recruitment agencies in their home countries that 
exceeds 400 OR (USD 1040).  Workers often report that their 
Omani employers withhold their passports despite domestic law 
prohibiting the practice (ref B).  Post is concerned that 
these conditions fall under the categories of abuse 
associated with trafficking in persons (TIP). 
 
- - - - - - - - - - - - 
The Cleaning Industry 
- - - - - - - - - - - - 
 
¶4. (SBU) Cleaning service companies, which are heavily 
dependent upon foreign labor from India, Sri Lanka, Pakistan 
and Bangladesh, are widely known to pay their employees very 
low salaries, placing them at particular risk of 
exploitation.  Embassy contacts report that cleaners 
throughout the industry regularly work 10 to 12 hour days for 
a base wage as low as 30 Omani Riyal (OR) (USD 78) per month. 
 In addition to base pay, cleaners' financial compensation 
includes an average of 150-200 beza per hour (less than one 
US dollar) for overtime in excess of nine hours per day, and 
a 15 OR (USD 39) per month food allowance.  Workers generally 
do not receive the food allowance as part of their payment, 
however, because most companies withhold it in a book 
transfer to pay for food service that the company itself 
supplies.  In addition to financial compensation, cleaning 
companies provide workers with one trip home every two years, 
and free housing in labor camps, the quality of which varies 
according to each company's standards, but is generally poor. 
 Most companies also provide workers with some level of 
medical insurance (ref B). 
 
¶5. (SBU) Contacts with ties to the industry describe the 
market for commercial cleaning services as an oligopoly, with 
four or five major companies dominating the market and 
controlling prices and, thereby, the value of labor.  Wages 
for cleaners dropped by almost a third approximately five 
years ago, contacts claim, after one of those companies, Stag 
International, won a major cleaning contract with Petroleum 
Development Oman (PDO) by cutting its labor costs through 
wage reductions.  The rest of the industry quickly followed 
suit, dropping worker salaries, which have remained stagnant 
ever since. 
 
- - - - - - - - - - - - - - - - - - - 
The Embassy,s Contract & TIP Concerns 
- - - - - - - - - - - - - - - - - - - 
 
¶6. (SBU) The Embassy is in the third year of a four-year 
contract with one of the largest cleaning companies in the 
industry, Kalhat.  Under the terms of its contract, the 
Embassy pays Kalhat 1015 OR (USD 2636) per month for general 
cleaning services.  Kalhat submitted the lowest priced, 
technically-acceptable bid among three bids to win the 
contract according to FAR guidelines.  The contract commits 
Kalhat to uphold local labor laws, and allows the Embassy to 
suspend the contract if workers are not paid on time or show 
up at work without appropriate protective clothing or 
 
MUSCAT 00000388  002.2 OF 003 
 
 
equipment.  However, since Oman has not established a minimum 
wage for expatriate workers, Kalhat employees are not 
entitled to a base renumeration.  Oman has a minimum wage for 
citizens only, which is 140 OR/month (USD 363). 
 
¶7. (SBU) As part of its broader anti-TIP efforts, Post 
investigated the situation of workers under contract to clean 
the Chancery and perform basic landscaping services.  Kalhat 
sends four cleaners and one supervisorto the Embassy five 
and a half days a week.  On teir full days, two of the 
cleaners work for ten ours, including lunch and break time, 
and the oters for eight hours, leaving the Embassy at 1630by company transport 
for overtime work at separatelocations. 
 The cleaners tell poloff that Kalhat ays them the industry 
average wage of 30 OR per onth, plus a 5 OR/month stipend. 
They receive fod in lieu of a 15 OR/month meal allowance, 
and an additional 15 OR/month (USD 39) for approximately 110 
overtime hours, the majority of which is worked at sites 
other than the Embassy.  The cleaners added that Kalhat 
withholds their passports. 
 
¶8. (SBU) In February, poloff visited the Kalhat labor camp, 
located in the hala industrial area on the outskirts of 
Muscat,where the Embassy's cleaners reside.  Prior to the 
visit, contacts told poloff that Kalhut runs oneof the 
better facilities for expatriate workers, aintaining a mess 
hall and health clinic on site  The camp, however, which is 
home to 700 worker, appeared overcrowded.  Groups of up to 
60 workrs live in poorly ventilated dormitories that measre 
approximately 120 meters square.  Bathrooms an toilets lack 
proper sanitation, with mold and peling paint indicating 
infrequent maintenance.  fficials at the Ministry of 
Manpower, which is responsible for inspecting work and living 
sites, told poloff that they are aware that conditions in 
labor camps like Kalhat,s may not meet health and safety 
codes, and that the Ministry is in the process of upgrading 
its capacity to enforce them. 
 
- - - - - - - - - - - - - 
Comment & Action Request 
- - - - - - - - - - - - - 
 
¶9. (SBU) Post believes that the current wage for Kalhat's 
cleaners - set under imperfect and uncompetitive market 
conditions - is potentially exploitative.  This low wage 
makes it extremely difficult for workers to pay off their 
debts to recruitment agencies or improve their living 
conditions.  Post is working with partners in government, the 
private sector and labor groups to improve the situation of 
low-skilled workers under its anti-TIP, human rights and 
labor reform agendas.  We are concerned, however, that the 
USG's current contracting and federal acquisition regulations 
convey a contradictory message by forcing the USG to contract 
with companies based primarily on price, without 
consideration for the larger context of worker rights. 
 
¶10. (SBU) The Embassy also has a contract for gardening and 
landscaping services with the company Global Design Systems 
(GDS), whose workers report that they too receive very low 
salaries.  Their wages and employment conditions also present 
a contradiction between the USG's concern for the fair 
treatment of workers and its desire to contain costs through 
the contracting process.  Furthermore, Post understands that 
low-paid, expatriate contract workers are widely used to 
provide cleaning services elsewhere in the region.  We 
consequently suspect that the problem of exploited labor 
working at U.S. diplomatic facilities is an issue that 
extends far beyond Oman. 
 
¶11. (SBU) Post has identified two possible alternatives to 
conform its practices to the USG goal of ending labor 
exploitation: 
 
-- Make cleaning and gardening direct hire positions: 
According to USG wage and compensation rates for Oman, a 
direct hire employee at the FSN 2/1 level, which would 
include cleaning and gardening staff, would earn 3,314 
OR/year (USD 8,608) or 276 OR (USD 717) per month in wages 
and allowances.  This amount, which the USG considers a fair 
compensation, is more than five times the equivalent wage and 
allowance package currently earned by Kalhat and GDS 
employees.  By making cleaning and gardening direct hire 
positions instead of contracted services, Post would be able 
to control the conditions of work and ensure that the 
employees were paid a non-exploitative wage. 
 
-- Demand that contracted employees receive the Omani minimum 
 
MUSCAT 00000388  003.2 OF 003 
 
 
wage: In the absence of a universal minimum wage covering 
both Omani citizens and expatriate workers, the minimum wage 
of 140 OR/month for Omani citizens is the only official, 
domestic estimate of what may constitute a fair wage. 
Imminent passage of an expatriate minimum wage is unlikely 
given the potential negative political and economic effects 
of increased labor costs in an economy that is heavily 
dependent -- and becoming more so -- upon cheap foreign 
labor.  Despite this political and economic reality, Post 
could demand that workers assigned to the Embassy be paid 140 
OR/month when rebidding current contracts.  Both companies 
likely would demand a higher contract price to recoup the 
additional labor costs, but the resultant gap in wages 
between those working at the Embassy and workers assigned to 
other sites could help call attention to inequities in the 
current wage structure. 
 
¶12. (SBU) Either alternative outlined above would require 
significant additional resources for Post.  Post requests 
Department feedback on our proposals, as well as specific 
guidance on how to ensure that contract workers at the 
Embassy are treated fairly and in accordance with USG human 
rights, labor and anti-trafficking principles. 
GRAPPO