Analysis: Cash flow problems cause late payment in the Gulf construction sector, preventive action required by governments, clients and contractors

Author: Jill Wells, Engineers Against Poverty , Published on: 31 December 2018

"Protecting the Wages of Migrant Construction Workers", 18 December 2018

... Late payment is an especially serious problem for migrant workers in the countries of the GCC. When workers have not been paid their wages, they have ‘‘ few possibilities for redress. Due to the restrictions of the sponsorship system (known as kafala) workers may be limited in their freedom legally to leave their employer and seek work elsewhere... Preventive action requires the introduction of measures to address the root cause of workers not receiving their wages, which is late payment by clients and slow flow of funds down the supply chain... Governments in the region should follow the European Union, USA and UK by introducing legislation requiring all public-sector clients to pay ‘tier one’ contractors within 30 days of the valuation date and charging automatic interest on late payment... Clients and contractors need to find a way of paying undisputed items while the disputed items are subject to a process of rapid adjudication... Governments follow the UK, New Zealand, Singapore, Malaysia, Ireland and some states in Australia in banning “pay when paid” clauses in contracts, with the right of contractors and subcontractors to suspend performance when payment is delayed... 

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