VZCZCXRO4507
RR RUEHDE RUEHDIR
DE RUEHMS #0300/01 1131212
ZNR UUUUU ZZH
R 221212Z APR 08
FM AMEMBASSY MUSCAT
TO RUEHC/SECSTATE WASHDC 9507
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHC/DEPT OF LABOR WASHDC

UNCLAS SECTION 01 OF 03 MUSCAT 000300 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR G, M, RM, NEA/SCA/PMO FOR GDEBELL, NEA/ARP, 
G/TIP AND DRL 
DEPARTMENT OF LABOR FOR JRUDE 
 
E.O. 12958: N/A 
TAGS: AMGT PHUM PREL ELAB SMIG MU
SUBJECT: INCREASING WAGES IN EMBASSY MUSCAT'S SERVICE 
CONTRACTS 
 
REF: A. STATE 28455 
 
     ¶B. 07 MUSCAT 388 
 
¶1. (SBU) Summary: With the Department's support, Embassy 
Muscat is committed to ensuring that all expatriates under 
contract to perform cleaning and landscaping services at the 
Embassy receive at least the prevailing minimum wage for 
Omani citizens (ref A).  The lack of a wage floor in Oman 
(there is no official minimum wage for expatriate workers) 
leaves foreign workers at the bottom skill levels vulnerable 
to becoming victims of trafficking in persons (TIP) for labor 
exploitation.  Post's new policy would increase the base wage 
of these expatriate contract workers by more than 300% at an 
additional annual cost to the Embassy of roughly USD 18,000 - 
a less than 30% increase in overall service contract price. 
The policy likely will have an immediate positive impact on 
the laborers' conditions of work, and help reconcile a 
possible conflict between our contracting regulations and 
anti-TIP policies.  End summary. 
 
- - - - - - 
Background 
- - - - - - 
 
¶2. (SBU) Over the past several years, post has been pushing 
Oman to adopt new laws and regulations to prevent TIP.  In 
2007 the USG placed Oman on Tier 3 in the Department's annual 
TIP Report for failing to make significant efforts to prevent 
trafficking.  Low-skilled expatriate workers in the 
construction, cleaning and agricultural/gardening industries, 
many of whom work long hours for very low wages under often 
difficult conditions, are particularly vulnerable to becoming 
TIP victims.  Some of these workers are in debt to 
recruitment agencies in their home countries and can be 
forced to accept exploitative conditions as they work to pay 
off their debt and accumulated interest. 
 
¶3. (SBU) Post currently contracts with local companies for 
gardening and cleaning services.  We became aware that 
employees of these contracted companies, all of whom are from 
South Asia, are paid a base wage as low as 35 Omani Riyal 
(OR) (USD 90) per month.  Although this is within the 
generally accepted industry wage rate for these services in 
Oman, Post strongly believes that these low wages are 
potentially exploitative and that accepting them in our 
contracts - while in line with Federal Acquisition 
Regulations (FAR) - is counter to our labor and anti-TIP 
agendas (ref B).  Subject to available funds, Post wants to 
ensure that workers assigned to the Embassy under service 
contracts are paid according to the legal minimum base wage 
for Omani citizens of 120 OR (USD 311) per month.  (Note: The 
official minimum wage for Omani nationals is 140 OR (USD 
364); a 120 OR base wage and 20 OR housing allowance.  End 
note.)   Post believes that improving the wages of 
low-skilled expatriate laborers is one important way to help 
break the cycle of debt that can lead to exploitation and TIP 
victimization.  In addition, implementing fair labor 
practices through our contracts publicly reinforces our 
anti-TIP position and helps us avoid potential claims of 
inconsistency. 
 
- - - - - - - - - - - - - - - - - 
Service Contracts at the Embassy 
- - - - - - - - - - - - - - - - - 
 
¶4. (SBU) The Embassy has two contracts that would be affected 
by this policy - one with the company Kalhat for general 
cleaning and the other with the General Development Services 
(GDS) company for gardening and landscaping at the chancery, 
CMR, DCMR and MSG residence.  Kalhat cleaners assigned to the 
Embassy receive a base salary of 35 OR (USD 90) per month for 
a nine-hour workday, six days a week.  The workers' total 
monthly financial compensation can equal approximately 70 OR 
(USD 181), depending upon allowances for which they may be 
eligible - some monthly allowances can be as high as 20 OR 
(USD 52) depending upon a worker's experience - and the 
number of overtime hours worked at a prevailing rate of 
approximately 200 beza (USD .52) per hour.  The company also 
provides each worker with food from the corporate mess at an 
estimated value of 15 OR/month (USD 39), as well as housing 
(though often in cramped conditions and of very poor 
quality), medical care and one trip home every two years. 
GDS employees are similarly compensated (ref B). 
 
- - - - - - - - - - - 
Minimum Wage in Oman 
- - - - - - - - - - - 
 
MUSCAT 00000300  002 OF 003 
 
 
 
¶5. (SBU) While Oman has established a minimum base wage of 
120 Omani Riyal (OR) (USD 311) per month for its citizens, 
there is no official minimum wage for foreign workers.  Some 
labor exporting countries have attempted to unilaterally 
establish minimum base wages (not including overtime or other 
financial compensation) for their nationals in Oman under 
cooperative agreements with Oman's Ministry of Manpower 
(MOM).  Under these agreements, the embassies of labor 
exporting countries review all new employment contracts for 
their citizens seeking to come to Oman to work to ensure that 
they meet the required wage minimum.  If a contract does not 
meet the established wage floor, the embassy can refuse to 
approve the contract and then stop their nationals (in 
coordination with their immigration officials back home) from 
departing for Oman if the petitioning company does not agree 
to pay the required amount.  Some of the countries that 
provide the bulk of Oman's foreign labor force have 
established minimum wages for newly entering workers at the 
following levels: 
 
Country 
India -- 50 Omani Riyal (OR) (USD 130) 
Bangladesh -- none reported 
Pakistan -- none reported 
Sri Lanka -- 75 OR (USD 195) 
Indonesia -- 75 OR (USD 195) 
Philippines -- 154 OR (USD 400) 
 
¶6. (SBU) The result is a patchwork of wages for low-skilled 
workers that is notoriously difficult to enforce. 
Specifically, as the minimum wages set by these countries are 
not enforceable under Omani law, foreign embassies have no 
mechanism to impose the payment of wages at the contract 
level once their nationals are in country, although the 
individual worker could initiate legal action against his/her 
employer for a contract violation.  Moreover, there are many 
reported cases in which companies "switch" contracts by 
forcing a worker to sign a new agreement with a lower monthly 
salary once he or she starts work.  (Note: There is no 
evidence that either Kalhat or GDS is involved in contract 
switching.  End note.) 
 
¶7. (SBU) Kalhat's base wage, for instance, is well below any 
of the exporting countries' wage requirements.  An Omani 
manager in one of Kalhat's competitors, Oman International 
Group (OIG), told poloff that companies in the industry 
generally circumvent the source country wage requirements by 
reporting a worker's total monthly financial compensation in 
the contract it submits to the embassy for approval without 
specifying base wage.  A diplomat at the Indian Embassy in 
Muscat separately informed poloff that this practice is 
against his government's policy; however, to date it has 
rarely asked companies to specify the base wage rate for 
Indian nationals. 
 
- - - - - - - - - 
Costs to the USG 
- - - - - - - - - 
 
¶8. (SBU) The Embassy is in the position to enforce a minimum 
wage for its service contract workers through the contracting 
process.  As stated above and in ref A, pending the 
availability of funds, Post will require that all contracts 
include a base salary for workers assigned to the Embassy 
that is equal to the prevailing Omani minimum base wage of 
120 OR/month.  Post will not consider nationality-based 
minimum wages, as adherence to the Omani minimum is the most 
straightforward and easily enforceable way to ensure a basic 
level of equity.  At present, the Embassy contracts for eight 
workers, five from Kalhat and three from GDS.  The current 
total cost of our two contracts is USD 63,000 per year.  We 
assume that Kalhat and GDS will attempt to transfer the full 
cost of any wage increase to the Embassy through an increase 
in the price of the overall contract.  If so, the annual 
additional cost to the Embassy would be an estimated USD 
18,000. 
 
- - - - 
Comment 
- - - - 
 
¶9. (SBU) Post strongly believes that this issue is important 
enough to incur the extra cost despite budget pressures.  We 
further encourage other Missions in the region to consider 
taking a similar step.  Increasing the wages of contract 
workers who presently earn so little shows that we take fair 
 
MUSCAT 00000300  003 OF 003 
 
 
labor practices and TIP seriously, and lead on these issues 
by example.  In Oman, where there is no expatriate minimum 
wage, our action also will help call attention to gross 
inequities between Omani and foreign workers in the labor 
market.  Once the funds are made available and the contracts 
modified according to our minimum wage requirement, Post 
intends to reach out to other foreign missions in Oman to 
encourage similar action.  End comment. 
GRAPPO