Using blockchain to stamp out labour exploitation

The UAE is home to 200 nationalities. Migration from poorer Asian countries to the rich Gulf countries for employment is one of the pillars that helps raise people out of poverty. However, illegal recruitment traps thousands of migrant workers into a life of desperation.

Many end up in jail and become a burden on their host government. There is enough evidence that illegal recruitment practices by agents and corrupt officials in Asian countries steal much of the money these workers earn long before it ever reaches their families.

But this could end if financial technology (Fintech) companies in the UAE and Gulf work on preventing corruption in the recruitment of migrant workers from countries like India, Pakistan and the Philippines, which are among the world’s Top 5 remittance-receiving countries, according to the World Bank. According to a World Bank report, remittances to South Asia in 2017 were $117 billion and expected to rise further in 2018.

A big area of focus for fintech companies is financial inclusion and banking “un-banked” populations. For example, fintechs have developed solutions to transfer money automatically with programmable smart contracts over the Ethereum blockchain, making it possible for migrant workers to send money in more convenient, faster and less costly ways than banks do.

Fintechs have an obligation to ensure transparency and accountability in the recruitment of migrant workers, because if they fall ill, get injured or if their company lays them off, they are typically left with nothing but debts.

When large numbers of migrant workers from labour exporting countries end up in legal trouble, governments outlaw or severely restrict recruitment, as was the case when the UAE banned all workers from Bangladesh in 2012. For the last six years, the UAE’s halt on recruitment from Bangladesh cut off an important source of remittance earnings to this developing country.

The UAE government has implemented new steps to monitor the recruitment of migrant workers closely. The UAE Ministry of Human Resources and Emiratisation (MoHRE) is actively holding talks with Asian governments to introduce systems to protect workers against those who would exploit them.

These include extensive efforts at an international level to improve cooperation with labour-exporting countries to stamp out illegal recruitment practices. A recent example is the memorandum signed in April with the Bangladesh government to restart recruitment to the UAE.

I propose that migrant workers could register for jobs on a blockchain-based distributed computing platform, managed by a network of labour-welfare groups acting as nodes on the network. When jobs for migrant workers are offered by employers — for example, work with construction groups in the Gulf — those “transactions” can be time-stamped on a distributed ledger, radically improving the transparency of the recruitment process.

The selection of candidates for employment could be made by a completely random, mathematically-based selection process that is transparently open to all on the ledger.

From a pool of candidates wherein the skills are almost equal (ideal for labour which is the class of workers who are most exploited), one would be selected at random (like a lottery). After each selection, the pool would be dissolved and registration opened again for the next round. Because a random selection is made, paying a bribe would not guarantee any candidate a visa to migrate abroad, and demanding bribes would cease to be a viable business model for corrupt recruitment agents.

The challenge, of course, would be that people in the hosting and labour exporting countries would need to know how to use Distributed Ledger Technology (DLT). However, even just trying out such solutions would improve corporate governance and transparency. Employers in the UAE especially would be attracted to any fintech solution that uses blockchain for greater accountability.

Also, if recruitment processes are recorded on to a blockchain-based distributed computing platform and candidates and their family members are able to access them, they could hold the recruitment agencies accountable for exploitation. Fintech companies in the UAE and other Gulf countries who are working on financial inclusion and less expensive ways to transfer money could save people from despair and help to better manage legal migration with an innovative Blockchain-based solution.

■ Martin Saldamando is an entrepreneur and strategic communications consultant.