Bahrain has formed a commission to settle an "illegal" strike by 1,300 Asian laborers demanding higher wages, Labor Minister Majid al-Alawi said on Monday.
The team led by a senior official of his ministry has been tasked with "resolving the problems of the foreign labor force" and "putting an end to the strike", he said, quoted by the state news agency BNA.
A company official said around 1,300 migrant workers helping to build a luxury coastal development in Bahrain have been on strike since Saturday to demand higher wages.
The workers are employed by the contracting firm GP Zachariades to work on the luxury Durrat al-Bahrain development in the south of the wealthy Gulf archipelago.
But the labor minister said their demand was "illegal" because it contravened the contract which the laborers had signed with the employer.
The strike action was undertaken "due to a wrong interpretation of a statement by the Indian ambassador to Bahrain" over his country's policy of seeking higher wages for its workers abroad, said Alawi.
But the envoy, Palkrishna Shiti, rejected any link.
"It's wrong to say that my statement is behind the strike ... This is an official Indian policy announced one year ago," the Indian ambassador told AFP.
"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.
"We want to protect our workers abroad ... We call for new contracts with a minimum wage of 100 BD (Bahraini dinars) ... Any contract less then this wage will not be accepted in India," he said.
"No worker will be permitted to leave India with a wage less than 100 BD," or 256 dollars a month, he said.
The remittances from the workers have declined due to the slump in the value of the U.S. dollar, to which the dinar is pegged like most other currencies in the oil-rich Gulf.
Durrat al-Bahrain -- the Arabic for "Pearl of Bahrain" -- is a multi-billion-dollar residential and commercial development consisting of 15 man-made islands set out in the shape of a necklace.
Official figures state that Bahrain has approximately 270,000 expatriate workers who are mostly from the Asian sub-continent and employed mainly in unskilled jobs.
Workers employed in non-vital sectors are permitted to strike in Bahrain, unlike in other Gulf Arab states such as the United Arab Emirates.