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Dismantling the kafala system: A new era for Qatar labour market

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In a historic move, the State of Qatar has introduced major changes to its labour market, ending the requirement for migrant workers to obtain their employer’s permission to change jobs, while also becoming the first country in the region to adopt a non-discriminatory minimum wage.

Following the adoption on 30 August 2020 of Law No. 18 of 2020, migrant workers can now change jobs before the end of their contract without first having to obtain a No Objection Certificate (NOC) from their employer. This new law, coupled with the removal of exit permit requirements earlier in the year, effectively dismantles the “kafala” sponsorship system and marks the beginning of a new era for the Qatari labour market.

Additional legislation, Law No. 17 of 2020, adopted today also establishes a minimum wage of 1,000 Qatari riyals (QAR) which will enter into force six months after the law’s publication in the Official Gazette. The new minimum wage will apply to all workers, of all nationalities and in all sectors, including domestic workers. In addition to the basic minimum wage, employers must ensure that workers have decent accommodation and food. The legislation also stipulates that employers pay allowances of at least QAR 300 and QAR 500 to cover costs of food and housing respectively, if they do not provide workers with these directly – a move that will help ensure decent living standards for workers.

The adoption of these laws supports the transition towards a more skilled and productive workforce, which is a key goal in Qatar’s National Vision 2030 . It will also help promote economic recovery from the fallout of the COVID-19 pandemic , as well as the growth of the economy over the longer term.

In addition to removing the need to obtain an NOC, the adoption of Law No. 19 of 2020 provides greater clarity regarding termination of employment. To terminate an employment contract and change jobs, workers must provide at least one month’s written notice if they have worked with the employer for two years or less, or two months’ notice if they have worked with the employer for over two years.

Minister of Administrative Development, Labour & Social Affairs Yousuf Mohamed Al Othman Fakhroo said, “The State of Qatar is committed to creating a modern and dynamic labour market. In line with Qatar Vision 2030, these new laws mark a major milestone in this journey and will benefit workers, employers and the nation alike.”

Increased labour mobility is expected to provide numerous benefits to Qatar as it transitions towards a knowledge-based economy. Employers will be able to hire experienced staff locally instead of from overseas, thus greatly reducing recruitment costs. Enhanced mobility will also generate more job opportunities and increase job satisfaction for workers.

The introduction of a non-discriminatory minimum wage should directly affect around 400,000 workers in the private sector, and, through higher remittances, will improve the lives of millions of family members in the workers’ countries of origin. To ensure compliance with the minimum wage, the government is enhancing detection of violations, enacting swifter penalties and further strengthening the capacity of inspectors.

Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC) said, “This is very good news for migrant workers in Qatar. The leadership shown by Qatar in dismantling the kafala system and introducing a minimum wage is long-awaited news for all workers. The ITUC stands ready to support the Government of Qatar in the implementation of this historic move, to ensure all workers are aware of the new rules and benefit from them. Other countries in the region should follow Qatar’s example.”

Roberto Suárez Santos Secretary-General of the International Organisation of Employers (IOE) said, “These reforms will make a major contribution to the efficiency and productivity of the Qatar labour market. IOE stands ready to support the Qatar Chamber of Commerce and Industry and the Government in supporting employers during this transition. Our congratulations to Qatar and its Chamber of Commerce!”

The ILO has worked closely with Ministry of Administrative Development, Labour & Social Affairs and with employers’ and workers’ organizations to support the adoption and enhancement of laws, policies and procedures relating to labour market mobility and the new minimum wage in Qatar. Further support will be provided for the implementation and enforcement of the new laws.

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Clean energy demand for critical minerals set to soar as the world pursues net zero goals

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Supplies of critical minerals essential for key clean energy technologies like electric vehicles and wind turbines need to pick up sharply over the coming decades to meet the world’s climate goals, creating potential energy security hazards that governments must act now to address, according to a new report by the International Energy Agency. 

The special report, The Role of Critical Minerals in Clean Energy Transitions, is the most comprehensive global study to date on the central importance of minerals such as copper, lithium, nickel, cobalt and rare earth elements in a secure and rapid transformation of the global energy sector. Building on the IEA’s longstanding leadership role in energy security, the report recommends six key areas of action for policy makers to ensure that critical minerals enable an accelerated transition to clean energy rather than becoming a bottleneck.

“Today, the data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realising those ambitions,” said Fatih Birol, Executive Director of the IEA. “The challenges are not insurmountable, but governments must give clear signals about how they plan to turn their climate pledges into action. By acting now and acting together, they can significantly reduce the risks of price volatility and supply disruptions.”

“Left unaddressed, these potential vulnerabilities could make global progress towards a clean energy future slower and more costly – and therefore hamper international efforts to tackle climate change,” Dr Birol said. “This is what energy security looks like in the 21st century, and the IEA is fully committed to helping governments ensure that these hazards don’t derail the global drive to accelerate energy transitions.”

The special report, part of the IEA’s flagship World Energy Outlook series, underscores that the mineral requirements of an energy system powered by clean energy technologies differ profoundly from one that runs on fossil fuels. A typical electric car requires six times the mineral inputs of a conventional car, and an onshore wind plant requires nine times more mineral resources than a similarly sized gas-fired power plant.

Demand outlooks and supply vulnerabilities vary widely by mineral, but the energy sector’s overall needs for critical minerals could increase by as much as six times by 2040, depending on how rapidly governments act to reduce emissions. Not only is this a massive increase in absolute terms, but as the costs of technologies fall, mineral inputs will account for an increasingly important part of the value of key components, making their overall costs more vulnerable to potential mineral price swings.

The commercial importance of these minerals also grow rapidly: today’s revenue from coal production is ten times larger than from energy transition minerals. However, in climate-driven scenarios, these positions are reversed well before 2040.

To produce the report, the IEA built on its detailed, technology-rich energy modelling tools to establish a unique database showing future mineral requirements under varying scenarios that span a range of levels of climate action and 11 different technology evolution pathways. In climate-driven scenarios, mineral demand for use in batteries for electric vehicles and grid storage is a major force, growing at least thirty times to 2040. The rise of low-carbon power generation to meet climate goals also means a tripling of mineral demand from this sector by 2040. Wind takes the lead, bolstered by material-intensive offshore wind. Solar PV follows closely, due to the sheer volume of capacity that is added. The expansion of electricity networks also requires a huge amount of copper and aluminium.

Unlike oil – a commodity produced around the world and traded in liquid markets – production and processing of many minerals such as lithium, cobalt and some rare earth elements are highly concentrated in a handful of countries, with the top three producers accounting for more than 75% of supplies. Complex and sometimes opaque supply chains also increase the risks that could arise from physical disruptions, trade restrictions or other developments in major producing countries. In addition, while there is no shortage of resources, the quality of available deposits is declining as the most immediately accessible resources are exploited. Producers also face the necessity of stricter environmental and social standards.

The IEA report provides six key recommendations for policy makers to foster stable supplies of critical minerals to support accelerated clean energy transitions. These include the need for governments to lay out their long-term commitments for emission reductions, which would provide the confidence needed for suppliers to invest in and expand mineral production. Governments should also promote technological advances, scale up recycling to relieve pressure on primary supplies, maintain high environmental and social standards, and strengthen international collaboration between producers and consumers.

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Global e-commerce jumps to $26.7 trillion, fuelled by COVID-19

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Parts of the online economy have boomed since COVID-19 began, while some pre-pandemic big-hitters have seen a reversal of their fortunes in the last year, amid widespread movement restrictions, UN economists have found.

According to UN trade and development experts UNCTAD, the e-commerce sector saw a “dramatic” rise in its share of all retail sales, from 16 per cent to 19 per cent in 2020.

The digital retail economy experienced most growth in the Republic of Korea, where internet sales increased from around one in five transactions in 2019, to more than one in four last year.

“These statistics show the growing importance of online activities”, said Shamika Sirimanne, UNCTAD’s director of technology and logistics. “They also point to the need for countries, especially developing ones, to have such information as they rebuild their economies in the wake of the COVID-19 pandemic.” 

The UK also saw a spike in online transactions over the same period, from 15.8 to 23.3 per cent; so too did China (from 20.7 to 24.9 per cent), the US (11 to 14 per cent), Australia (6.3 to 9.4 per cent), Singapore (5.9 to 11.7 per cent) and Canada (3.6 to 6.2 per cent).  

Online business-to-consumer (B2C) sales for the world’s top 13 companies stood at $2.9 trillion in 2020, UNCTAD said on Friday.

Bumpy ride

UNCTAD also said that among the top 13 e-commerce firms – most being from China and the US – those offering ride-hailing and travel services have suffered.

These include holiday site Expedia, which fell from fifth place in 2019 to 11th in 2020, a slide mirrored by travel aggregator, Booking Holdings, and Airbnb.

By comparison, e-firms offering a wider range of services and goods to online consumers fared better, with the top 13 companies seeing a more than 20 per cent increase in their sales – up from 17.9 per cent in 2019.

These winners include Shopify, whose gains rose more than 95 per cent last year – and Walmart (up 72.4 per cent). 

Cashing-up

Overall, global e-commerce sales jumped to $26.7 trillion in 2019, up four per cent from a year earlier, the UN number-crunchers noted, citing the latest available estimates.

In addition to consumer online purchases, this figure includes “business-to-business” (B2B) trade, which put together was worth 30 per cent of global gross domestic product two years ago.

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COVID-19 has reshaped last-mile logistics, with e-commerce deliveries rising 25% in 2020

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COVID-19 has shifted the way people buy goods, accelerating the rise in online shopping and e-commerce deliveries. According to a new report from the World Economic Forum, this has led to a 25% rise in consumer e-commerce deliveries in 2020.

The new report, Pandemic, Parcels and Public Vaccination: Envisioning the Next Normal for the Last-Mile Ecosystem, explores changes seen over the last year which will greatly influence last mile deliveries in the future. For example, it’s expected that 10%-20% of the recent increase in e-commerce deliveries will continue after the pandemic and the lifting of COVID-19 restrictions.

“Covid-19 shutdowns have completely reshaped how we live and of course this includes how and what we’re buying,” said Christoph Wolff, Head of Mobility, World Economic Forum. “Leaders must consider and respond to the effects COVID-19 has had on e-commerce deliveries and what impact these changes will have on their cities and communities.”

Beyond rising demand, the past year has also seen a large shift to greener delivery options, with wider spread EV across the industry and more stringent carbon emission rules from cities expected to shape delivery networks in the near future.

Overall, the report finds six main structural changes to the delivery and logistics sector that are expected to last:

Six structural changes

The pandemic has caused an increase in last-mile deliveries that are likely to persist.
In 2020, business-to-consumer parcel deliveries have risen by about 25%. The report suggests that part of this increased demand will be durable, with at least 10%-20% of the growth remaining post-pandemic.

Consumers increasingly buy new types of products online and consider environmental and health impact when buying.
As consumers continue to buy a wider array of goods online, they are also becoming more ecologically aware. For example, 56% of millennials cite environmental protection as the reason for choosing alternatives to home delivery.

Decarbonization of last-mile deliveries has accelerated.
Companies and cities have ramped up commitments to make emission-free deliveries, while many pandemic-related economic stimulus packages, especially in the European Union and China, contain provisions to support green mobility and goods transport.

Faced with budget challenges and increased transport needs, cities steer last-mile transitions.
Many cities, like Seattle and Boston, have started to repurpose kerb space to designated delivery pick-up. Others, including Santa Monica and Amsterdam, are taking bold action on cleaner delivery with “zero-emission delivery zones” and electric vehicle charging infrastructure.

Proven technologies are fuelling the last-mile ecosystem revolution.
While disruptive new technologies, such as drones and delivery robots, will continue to emerge, the last-mile revolution is happening now as proven technologies scale up. The likes of parcel lockers and data sharing for load pooling are being adopted around the world as the costs of implementation decrease

New business models emerge to meet increased demand for sustainable delivery vehicles.
Certain logistics companies are now offering services to online retailers, which will help them identify the delivery routes most suited to make the immediate transition to electric delivery vehicles.

Last mile for vaccines

While ensuring equitable access to COVID-19 vaccines remains the most pressing issue in global vaccine distribution, effective last-mile delivery is another critical issue for countries. The key challenges are cold storage, second vaccine dose needs, and a disconnect between the vaccine and patient journey.

“Governments and logistics companies could think about teaming up with players who are experienced in managing very local, capillary demand and with integrating a large number of local retail outlets,” says Anja Huber, Engagement Manager, McKinsey & Company. “Examples include large online retailers, eGrocery giants and technology platform players”

Potential solutions countries can implement for efficient vaccine delivery include real-time logistics planning, data integration, centralized management of delivery strategies at the national level and many more.

There are also early examples of countries that have handled this challenge particularly well. While there are many factors in vaccine distribution success, broadly speaking, countries with tight integration of healthcare and logistics stakeholders seem to show the highest national vaccination rates two months into 2021.

These include Israel, the UK and Chile outperforming other countries with more decentralized healthcare systems, like the US and Germany, which had slower initial vaccine rollouts.

Clearly, much still needs to be done to ensure developed countries overcome operational issues with vaccine delivery. However, mobility solutions should not overshadow an even larger ethical challenge in the differences of vaccine access between the global north and global south, which is a priority for greater equity.

Future of the last mile

The impact of COVID-19 on the last-mile delivery has accelerated existing trends across the sector, leading to six structural changes expected to shape the future of last mile deliveries.

These will be part of a broader urban mobility transition, driven by public policy and company actions. As cities and logistics leaders continue the sustainable urban delivery transition, close public-private coordination will be critical. Zero Emissions Urban Fleets (ZEUF) network, for example, provides a relevant dedicated stakeholder platform for this work.

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