17/02/2008 18:25 MANAMA, Feb 17 (AFP)

A series of strikes by low-paid Asian workers in Bahrain has been blamed on the erosion of their meagre earnings as the US dollar slides and prompted contractors to threaten to stop hiring Indian labourers.

A week-long strike by around 1,300 mostly Indian workers helping to build the luxury coastal development of Durrat al-Bahrain in the south of the Gulf archipelago, ended on Saturday when they agreed to a wage rise of 15 dinars (40 dollars) a month, a union official said.

They had demanded that salaries be increased from 57 dinars (151 dollars) to 100 dinars (265 dollars) a month for unskilled labourers, and from 69 dinars (183 dollars) to 120 dinars (319 dollars) for skilled workers.

The owner of another construction company, who asked not to be named, told AFP on Sunday he had raised the wages of his 400 Indian workers who also briefly downed tools.

"In the past they were obedient because their remittances were sizeable. The slump in the value of the dollar has eroded their purchasing power and they are feeling the pinch," economist Khaled Abdullah told AFP.

The Bahraini dinar is pegged to the dollar, like most other Gulf Arab currencies.

Another factor that has encouraged the workers to protest is "the growing international interest in the (conditions of) migrant workers, especially in the Gulf," Abdullah added.

International rights groups often criticise oil-rich Gulf Arab states for their treatment of expatriate labourers.

A contractors association which groups some 300 firms said on Sunday it will not accept "arm-twisting" by Indian workers.

"We have decided not to renew existing contracts of Indian workers when they expire and we will not bring in new Indian workers in future," the association's secretary Ali Marhoun told AFP.

Marhoun said Indian workers would be "gradually" phased out and contractors would turn to workers from Bangladesh, Pakistan and possibly Vietnam instead.

It was not immediately clear to what extent the move would affect Indian workers. There are 6,000 contractors registered at the Bahrain Chamber of Commerce and Industry, though chamber officials say most are inactive.

According to the Indian embassy, there are about 270,000 Indians in Bahrain, of whom 70 percent are semi-skilled or unskilled workers, forming the bulk of labourers in the country.

Workers employed in non-vital sectors are permitted to strike, but foreigners do not belong to local labour unions.

The deal which ended the strike on the Durrat al-Bahrain -- Arabic for "Pearl of Bahrain" -- development was reached after Labour Minister Majid al-Alawi formed a commission to settle what he called the "illegal" stoppage.

Alawi attributed the strike to "wrong interpretation of a statement by the Indian ambassador to Bahrain" over his country's policy of seeking higher wages for its overseas workers.

Businessman Samir Naas, who heads the construction committee at the Bahrain Chamber of Commerce and Industry, accused the Indian embassy of "inciting" the workers to strike.

But the Indian ambassador in Manama, Palkrishna Shiti, dismissed any link between the week-long stoppage and his recent remark that no worker would be permitted to leave India for a wage of less than 265 dollars a month.

"This is an official Indian policy announced one year ago," Shiti said.

"I think the increase of prices in the region and all over the world and the change in currency rates pushed the workers to demand an increase in salaries," he said.

Bahraini labour activist Abdullah Hussein said the construction sector was the worst for wages and working conditions.

"We visited the living quarters of workers on the Durrat al-Bahrain project... 14 workers live in a single room, their salaries range from 57 to 69 dinars, they pay for their own food, and medical care boils down to a two-hour visit by a doctor every day," said Hussein, who is also on the board of the International Labour Organisation.

"We demand that the workers' wages be raised to between 100 and 120 dinars, in addition to a five-dinar (13-dollar) food allowance. Unless employers improve the situation the strikes will continue," he warned.