The Foreign Service Journal, September 2016

THE FOREIGN SERVICE JOURNAL | SEPTEMBER 2016 37 tent with the public interest.” In practice, the Bureau of Human Resources’ Office of Overseas Employment has used surveys of data from comparators—comparable organizations and com- panies operating in the host country—to determine prevailing practice at each post. LE staff compensation targets at each post are then set at a specified percentile of the prevailing rates. During sequestra- tion, the target was reduced to the 50th percentile, but it has now been raised to at least the 60th percentile or higher, ensuring that LE staff compensation is at least a bit better than average. In countries with competitive labor markets, such as in the European Union, prevailing practice gives post management and HR/OE the justification needed to fund salaries that in some cases exceed U.S. salaries for similar positions. (I saw this first- hand in Dublin, where some LE staff who reported to me had a higher base salary than I did.) This happens because the goal of prevailing practice, as explicitly expressed in the Foreign Service Act, is to “provide a resource of qualified personnel … characterized by excel- lence and professionalism” and to “strengthen and improve the Foreign Service of the United States by … providing salaries, allowances and benefits that will permit the Foreign Service to attract and retain qualified personnel.” Posts can only achieve that goal by offering competitive compensation packages to local staff. In cases where the situation in the host country warrants an exception, the under secretary for management may make a Public Interest Determination. PIDs have been approved in cases of rampant inflation, violent conflict or other extreme conditions that may result in unique difficulties and poten- tially high attrition. In posts with weak or authoritarian labor regimes (often characterized by human rights and labor abuses), extreme conditions are, sadly, an everyday reality. Following prevailing practice in such environments fails to achieve the goal of “excellence and professionalism.” This became painfully clear at our posts on the Arabian Peninsula. The Kafala System The countries that comprise the Gulf Cooperation Council — Saudi Arabia, Kuwait, Bahrain, the United Arab Emirates, Qatar and Oman—share similar labor conditions that are unlike those in the rest of the world. They depend extensively on imported labor; in many of these countries, the population of expatriate workers far outnumbers the country’s own citizens. The kafala (sponsorship) system these societies use requires each expatriate to have a local citizen employer or sponsor to work or invest in the residing country. While details vary by jurisdiction, the sponsor often exercises complete control over the expatriate’s living situation and access to financial assets, retains their official documents and can single-handedly prevent them from leaving the country. This leverage can easily be used to pressure expatriate workers to accept unfavorable terms, and perpetuates trafficking in persons and other human rights abuses. Under kafala, the free market does not function prop- erly. Employees are not fully free to change jobs or negotiate contract terms, and wages can be held artificially low even as the rest of the economy faces significant inflationary pressure. In addition, the expatriate-dominated labor market is fully con- trolled by the citizen-dominated employers—and only citizens have any influence on local labor laws. Current State Department policy already allows for excep- tions to prevailing practice in cases of high attrition. However, attrition is an ineffective metric for measuring wages in tightly controlled labor markets, as in the GCC. In many cases, third- country nationals (TCNs) are not free to change jobs, or can do so only at great risk. In Saudi Arabia, for example, expatriates are allowed to transfer sponsorship from a commercial entity to a diplomatic mission, but not vice versa. This means that the mission’s TCN employees are not able to take other jobs even if a better offer becomes available. In the UAE, some nationalities are restricted from transferring sponsorship, and if they leave their job they must return to their home country, or are considered to be in illegal status after just 30 days. In most GCC countries, the losing employer must volun- tarily issue a “no objection certificate” before an expatriate employee can transfer to a new sponsor. In Oman, the losing Many of the economies in which U.S. diplomatic missions operate are characterized by exploitative labor practices and human rights violations.