This briefing paper focuses on the theme of migrant workers’ rights in the Qatari construction sector and the associated risks and responsibilities for multinational construction companies along with their investors.
1) The lack of attention to labour rights in the Qatari construction sector is associated with clear operational, reputational and regulatory risks for companies and investors. Companies are expected to honour the OECD Guidelines for Multinational Enterprises which recognize the right of workers to establish or join trade unions but Qatari law restricts migrant workers from forming or joining a trade union. Multinationals operating in Qatar – and their investors to whom the Guidelines also apply – should consider practical approaches such as establishing joint worker-employer health and safety committees.
2) A review of relevant policy and academic research points to a positive relationship between human capital management and financial performance at the firm level. The Kafala (sponsorship) system through which workers are employed in the Qatari construction sector is a barrier to optimum human capital management.
3) Investors are exposed to the Kafala system in Qatar through equity holdings in multinational construction companies, private equity investments and corporate debt holdings. It is estimated that more than 40% of the world’s top 250 international contractors are actively participating in projects in Qatar, have an office in the country or are actively pursuing opportunities there. Out of these companies, a significant number are headquartered in OECD countries and are publicly-listed companies with widely held ownership.
4) There is a breadth of evidence pointing to labour rights violations in the context of mega sporting events (MSEs). Qatari infrastructure projects are no exception.
The paper’s findings are significant for investors that are committed to integrating human capital management factors within their investment decision-making frameworks. The paper also lays out a framework for pension trustees interested in addressing this issue, as is relevant to their pension fund’s investments.