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How might the externality of smoking be different in a state in which unions negotiate common wages for all employees in similar positions in a company versus a state in which there are no labor unions and wages are negotiated by each employee? Assume that all other aspects of these two states are identical.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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2011 marked two momentous events in American labor history and of labor unions. It is the 100th anniversary of the Triangle Shirtwaist Factory fire in New York City described in Baumol and Blinder on page 432. There have been or will be at least two television documentaries devoted to it.

The other event is the successful effort in Wisconsin to curb the power of labor unions representing State workers in that State. Similar efforts have been made in other States. In Wisconsin, workers have been forced to give up most rights to bargain over working conditions and wages after an effort by the minority Democrats to block the changes in the law by boycotting the session failed. The Governor's rationale for this new law is to save money at a time when the state's budget situation is very serious, but union leaders say they already agreed to wage cuts and suggest that the Governor is simply trying to break the union.

How, if at all, are the two events related? How are they different? How did the earlier event affect labor unions more generally beyond the immediate factory where the fire occurred? How will the action in Wisconsin hinder or boost the labor movement in the United States?

Required:

Compare and contrast (find the similarities and differences) in the labor law of GCC countries, including the UAE, according to major legal issues such as priority of employment, similarities or differences in the treatment of women, minors, expatriates, working hours, wages, leaves, working hours, etc. You may search for additional information about the labor laws in these countries. Based on your readings, are there significant differences when compared to UAE Labor Law?

Specifics of Labor Law in GCC Countries

Bahrain

An employer is required to give priority of employment to Bahraini nationals and thereafter to other Arab nationals, wherever they are available and possess the requisite skills and competence for the role. For some businesses, there is a mandatory minimum ratio of the number of Bahraini nationals to the number of non-Bahraini nationals.

Employers are under a statutory duty not to discriminate between Bahraini and non-Bahraini nationals in particular with regard to pay (except to the extent necessary to attract foreign employees); or subject any employee to any other form of detrimental treatment.

The employment contract should include the terms of employment agreed by the parties and may be entered into for a fixed term, or for an indefinite duration terminable on notice; or for the execution of a specific project. The employment contract outlining the terms and conditions of employment must be in writing. It must comply with the Bahrain Labor Law for the Private Sector of 1967 as amended and any relevant laws, regulations and orders. Any term or condition in the contract which does not conform to the Bahraini law will be deemed null and void except to the extent it is more favorable to the employee.

Employers must register their employees in the Kingdom of Bahrain with the Ministry of Labor and Social Affairs and receive a certificate of registration. It must also register its employees with the General Organization for Social Insurance (GOSI) and contributions must be paid monthly for compulsory insurances against old age, disability and death (for Bahraini employees only), and against work-related injuries including death (for all employees). Employers may also want to consider non-compulsory insurances such as private medical or life insurance.

Wages are defined as total remuneration payable in cash or in kind to an employee under an employment contract and will include additional increments, gratuity payments and allowances, if any (bonuses, commissions, transport allowance, accommodation allowance, cost of living allowance and other allowances and benefits will all be included if they are paid by the employer to the employee as part of the employee’s wages). The general rule is that an employer cannot exclude specific payments from the calculation of the wages in the contract as any such exclusion will not be enforceable under local law. However certain payments such as phone bills, company car costs and rent (if paid directly to the Landlord rather than to the employee) may be excluded from the definition of wages. Orders are issued from time to time setting minimum wages in particular industry sectors. There is however no national minimum wage.

An employee cannot be required to work for more than six days in any given week and Fridays are deemed to be the weekly day of rest on full pay. The employee is also entitled to leave for official public holidays. Where such public holidays occur on a Friday, the employer must compensate the employee with one (1) further day of rest. The employer may require an employee to work on public holidays or on Fridays, subject to the provisions of local law. All employees are entitled to a minimum of 21 days paid annual leave rising to 28 days after 5 years of service. An employee may not waive this entitlement, postpone it, or receive payment in lieu except in accordance with the law and on termination of employment. In the event of illness which is certified by an approved doctor or hospital, an employee is entitled to a total of forty-five absences in each year of employment. A Muslim employee, employed for five consecutive years, will be entitled to leave of two weeks on full pay once during his/ her period of employment to perform his/ her ‘Haj’ pilgrimage duty.

Kuwait

An employee’s terms of service are contained in his employment contract, which may be for a fixed time or it may be indefinite. A fixed time may not exceed five years. The labor law specifies minimum limits below which terms of service may not fall, and if a clause in his contract gives an employee a lesser benefit than his right under the law, he is entitled to the minimum specified by law for that particular term.

An employment contract may be verbal or in writing. Where a contract is verbal then, in the event of a dispute, either side can use circumstantial evidence to prove what is in it. If the contract is in writing, it must be in Arabic. A translation into another language may be attached but the Arabic version is authoritative, i.e. only the Arabic version will be considered in resolving a dispute in a court of law.

An employee may be hired on probation for 100 days at most. During this time he may be terminated without notice, though accrued indemnity but not holding pay must be paid. The same employer may not put an employee on probation more than once.

Remuneration includes basic pay, incentives, commissions, obligatory bonuses, gratuities from third parties and allowances from whichthe employee benefits (such as housing allowance), but excludes allowances on account of expenses and profit shares, Payment of a bonus is obligatory if it is stipulated in the contract of employment or in the by-laws of the firm or it has been paid in the same amount regularly every year. What is included in total remuneration is important, as this is the Figure that must be used when calculating terminal indemnity or compensation on account of injury. Where an employee is paid on a time basis the last salary payable is used, but if he is paid on a piece-work basis than the average wage actually payable to him during the previous three months is used.

There is no minimum wage. Salaried employees must be paid at least once a month. Piece-workers and those on hourly or weekly wages must be paid every two weeks.

Persons working for a subcontractor, who has failed to pay their salaries, may demand payment from their employer’s superior contract to the extent that the latter owner their employer money for work done. When an employer goes bankrupt the outstanding salaries and termination benefits of his employees must be paid before his other creditors.

An employee may not be obliged to buy products made by his employer, if he owes his employer money than not more than 10% of his salary may be deducted to pay off his debt and he may not be charged interest. Where an employee’s Salary is attached on account of debts to third parties, the deduction is limited to 25 % of his salary.

The working hours of an adult are limited to eight hours a day and 48 hours a week. A rest break of at least one-hour must be allowed after five consecutive hours of work. Rest periods are not included in the calculation of working hours. These standard hours may be increased or decreased by the MSA&L in certain cases, such as hotel works.

An employee is entitled to one full day off with-out pay a week. The traditional day off is Friday, but this is not a legal requirement in Kuwait. An employee with up to five years of continuous service is entitled to 14 days leave a year on full day, provided he has completed one year of services, and 21 days after more than 5 years of continuous service. Official holidays and days of sick leave may not be counted a part of annual leave. The employer has the right to fix the date of leave.

An employee must be given his holidays pay before he goes on leave and the last salary payable before the holidays must be used to calculate the amount due. If an employee’s services are terminated that he is entitled to acash payment in lieu of accumulated leave, irrespective of the number of years of leave due, and payment for the accumulated leave must be calculated on the basis of the last salary payable on the date of termination.

A women performing the same work as a man must be paid equal remuneration. The standard working hours for women are the same as for men. They may not work at night (7pm to 6 pm) except in clinics, pharmacies, hotels, nursery schools, homes for the handicapped, airline and tourist offices, theaters and Entertainment City. They may work up to midnight in cooperative societies and public utilities, beauty salons, tailoring shops, banks and offices. Night-time working hours may be extended by the MSA&L during Ramadan, and on Eids and public holidays. Employers are obliged to ar-range transport for women working at night. A woman is entitled to maternity leave to a maximum of 30 days prior to delivery and 40 days after delivery on full day. Thereafter she may be absent from work without pay for up to 100 consecutive or non-consecutive days, provided she presents a medical certificate stating that she is ill as result of gestation and parturition. The annual leave entitlements of a woman who makes use of her maternity for leave privileges in any year are forfeit on day-per-day basis until her annual leave entitlement for that year is extinguished.

When his employment is terminated, an employee is entitled to a lump sum payment called termination indemnity.

For those paid monthly, termination indemnity is 15 days remuneration for each complete year of service for first 5 years and 30 days for each complete year beyond 5 years, but the total indemnity is limited to one and a half year’s remigration. For piece-rate workers and those paid on an hourly, daily or weekly basis, the indemnity is 10 days remuneration for each complete year of service for the first 5 years, and 15 days pay for each complete year beyond 5 years, subject to a limit of one year’s remuneration. In both cases part years are calculated pro-rata.

An employee who resigns with less than five years of service is not entitled to indemnity. One who resigns with five years or more of services is entitled to 50% indemnity. But employees are more made redundant (irrespective of length of service), who reach retirement age, who are disabled at work, or who die are entitled to full indemnity. And woman who marriage while she is an employee and who resigns within six months of marriage is entitled to full indemnity.

All employees’ related regulations must be issued as circulars or bulletins written in Arabic. Miscreant employees may be penalized provided the employee issued regulations specifying the acts that are punishable. Where an employment contract is for a fixed period, it terminates automatically at the end of the period, but if both parties then continue to implement it, it is deemed to be renewed indefinitely under the same terms and conditions. If both parties terminate the contract before the end of the fixed period and there is no clause in the contract to cover this, then the party terminating the contract must compensate the other. Where termination is made by the employer, compensation is limited to wage the employee would have earned from the day of termination to the expiry of his contract. Where it is the employee who quits, compensation is limited to the employer’s actual loss. Where an employment contract is for an unlimited period, either party may terminate it by notifying the other in writing at least 15 days prior to termination (Where the employee is paid more frequently). Either party may pay the other 15 or 7 days salary, as appropriate, in lieu of notice.

Oman

Investor Visa is granted to a foreigner who intends to invest his money in Oman and pursuant to a certification in this respect from the authority concerned. - This visa can be used within six months from the date of its issuance. - It is a multiple-entry visa valid for staying in the country for two years from the date it is inserted in the passport. This period is renewable.

Oman, like most other GCC states has adopted minimum employment quotas for companies in favor of Omani nationals (Omanisation). The required approval to employ foreign workers is generally only granted if the company meets the established quotas. The required quotas vary from industry to industry. The minimum wages payable to Omanis is RO 140 (about US $ 360) per month including house and transport allowances. Apart from that as per the Social Security Law private sector employer must make monthly contributions to the Public Authority for Social Insurance at the rate of 9.5 % of the monthly wage.

Qatar

The relationship between an employer (other than the government and its corporations) and its employee (skilled or unskilled) is regulated by the Labor Law. The Labor Law No. 14 of 2004 mandates that an employment contract must be drawn in the Arabic language. Another language may be used besides Arabic, but the Arabic text will prevail. A working week may consist of up to six business days. Ordinary working hours may not be more than eight hours a day, except during the Islamic month of Ramadan in which the normal working hours are reduced to no more than six a day. The term of an employment contract may be of an indefinite duration or of a limited period, provided that the term does not exceed 5 years. Any stipulations contrary to the provisions of the Labor Law are void unless more advantageous to the employee. The Law provides a framework for forming worker's committees in organizations in which the number of Qatari workers is not less than hundred.

Saudi Arabia

With regard to their employees, foreign contractors are subject to terms of employment of the Saudi Labor Law ("Labor Law"), which regulates all fundamental aspects of the relationship between employer and employee. These include in particular working hours and conditions, leave, termination and (relative) employment protection and various contracts and due diligence requirements of the employer. The labor laws in part directly relate to residence law provisions. Foreign workers only receive a (temporary) residence permit if, as in Germany, they have a work permit. The Labor Law sets exemptions to its application, especially for foreign workers who are sent earmarked for no more than two months to Saudi Arabia.

Employment law disputes can be carried forward by the employee to the Labor Inspection("LaborOffice"), if it is not possible to reach an amicable agreement, the Labor Office refers the case to the Labor Court ("Labor Dispute Committee").Trade unions and workers associations are prohibited by law, strikes are illegal.

As the U.S. Surgeon General warns on each pack of cigarettes, smoking can be hazardous to your health. Researchers estimate that smoking kills 440,000 Americans a year10 times the fatalities from traffic accidents. Smoking is the overwhelming cause of lung cancer, which is the top cancer killer among women. Four of five people with lung cancer die within three years. Smoking is also the leading cause of heart disease, emphysema, and stroke.

Thus, smoking imposes major health and economic costs. Policymakers try to reduce these costs by discouraging smoking, especially among young people. About one in four U.S. high school students were smokers in 2005, the same rate as in 2003. Each day, about 3,000 U.S. teens under 18 become regular smokers. Worldwide, an estimated 100,000 teens become regular smokers each day.

One way to reduce youth smoking is to prohibit the sale of cigarettes to minors. A second way is to raise the price through higher cigarette taxes. The amount by which a given price hike reduces teen smoking depends on the price elasticity of demand. This elasticity is higher for teens than for adults. Why are teenagers more sensitive to price changes than adults?

First, recall that one factor affecting elasticity is the importance of the item in the consumer's budget. Because teen income is relatively low, the share spent on cigarettes usually exceeds the share spent by adult smokers.

Second, peer pressure shapes a young person's decision to smoke more than an adult's decision to continue smoking (if anything, adults face negative peer pressure for smoking). Thus, the effect of a higher price gets magnified among young smokers because that higher price also reduces smoking by peers. With fewer peers smoking, teens face less pressure to smoke.

And, third, young people not yet addicted to nicotine are more sensitive to price increases than are adult smokers, who are more likely to be already hooked.

The experience from other countries supports the effectiveness of higher cigarette taxes in reducing teen smoking. For example, a large tax increase on cigarettes in Canada cut youth smoking by two-thirds. Another way to reduce smoking is to change consumer tastes through health warnings on packages. In Canada, these warnings include photos showing how smoking can affect the brain, teeth, and gums, and a wilted cigarette depicts male impotence.

In Australia, labels show gangrenous limbs, underweight babies, cancerous mouths, and blind eyes. Belgium adds corpses to the picture.

In California, a combination of higher cigarette taxes and an ambitious awareness program contributed to a 5 per cent decline in lung cancer among women, even as it rose 13 per cent in the rest of the country. (As of 2007, state taxes varied from a low of 7 cents per pack in South Carolina to a high of $2.58 in New Jersey.)

More generally, the message about the dangers of smoking along with the higher cost of cigarettes has affected over time. Only about 20 per cent of American adults now smoke, down from more than half in the 1960s.

According to the U.S. Centers for Disease Control and Prevention, each pack of cigarettes sold in the United States costs society $7.18 in higher health care costs and lost worker productivity. The added cost exceeds $150 billion a year, which works out to be about $3,400 per smoker per year.

What is the best way to prevent and reduce smoking? Briefly discuss.

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