(FORTUNE Magazine) - AS DUBAI REACHES FOR THE SKY with a building that, when completed in 2008, will be the tallest in the world, it is facing a revolt from the workers who have made the emirate's audacious development boom possible. In March, 2,500 laborers at the giant construction site that includes the $1 billion Burj Dubai tower (above)--most of them immigrants from India, Pakistan, and Bangladesh--showed up and refused to work. The protest quickly turned violent, resulting in an estimated $1 million in damage. Work on the tower, now 38 stories high, wasn't interrupted, says a spokesman for developer Emaar Properties. But the demonstration, along with a sit-down strike the same day at the site of a new airport terminal, was the largest in a series of protests over the past year. At issue is what human rights activists describe as indentured servitude. Dubai's one million immigrant laborers, about two-thirds of its population, are housed in company-owned dormitories, fed by their employers, and paid about $4 a day--not much for a city where a hotel room can cost $300 a night. Workers spend most of their wages repaying interest on the $3,000 they typically borrow to secure a work permit, says Hadi Ghaemi, a researcher at Human Rights Watch in New York City. A spokesman at the U.A.E. embassy in Washington, D.C., says his government has made an effort to resolve worker grievances but won't press employers to raise wages.