Images of thousands of migrant workers walking miles on foot expressed the real plight of the poor. However, little did anyone think about the international migrants – the people who have been working in the Middle East for years and enriching India’s remittance economy.
In May, Consul General of India in Dubai, Vipul, told The Gulf News that they had received 150,000 applications from Indians living in the UAE willing to return to India. A majority of them had been forced to do so as there have been tremendous job losses in the UAE after the spread of coronavirus. As per a report in the Khaleej Times, almost 40% of the applicants were blue-collar workers and 20%, professionals.
Kerala is one of the major Indian states to contribute a large number of migrants to the Middle East. In May, the Norka (Non-Resident Keralites Affairs) said that it had received a total of 398,000 applications from Keralites worldwide who wished to return to their native land. The international migrant crisis is not limited to India. Similar reports have emerged from Pakistan, Bangladesh, and Afghanistan. Though some Middle Eastern nations like Kuwait are encouraging foreign nationals to leave, the case with Dubai- an aspiring global hub for business, trade, and tourism – is different.
Watch: Jobs of Indians In Gulf at Risk
A primary reason for the outflux of ex-pats from Dubai is its unaffordability. Once famous for being a tax haven, Dubai has become exorbitantly expensive in the last few years. The overall cost to sustain a family is impossible to bear for a blue-collared ex-pat without even a month’s salary. The cost of education is also rising in Dubai.
The Badly-hit Economy
The coronavirus pandemic has magnified the problems of Gulf nations that were already struggling. A report from S&P Ratings said the pandemic’s impact on the gulf countries will be significant as oil prices had been falling for months now, and a few crucial sectors, including tourism and real estate, are bound to come to a halt. The tourism sector contributed 11.5% of the UAE’s GDP in 2019. However, in the current circumstances, it has already fallen drastically.
Dubai’s real-estate sector had been reeling under immense pressure since 2014. Its ambitious Expo 2020 world’s fair has been postponed until next year. Dubai’s export of aluminum also has been reduced significantly after the U.S. increased tariffs. The on-going Sino-American trade war has also adversely impacted Dubai’s shipping industry.
Dubai has promoted itself as built for a global economy. It had anticipated that the Expo 2020 would attract 25 billion dirhams ($5.27 billion) to the region and create 277,000 jobs over the next few years. However, with the current situation, the absence of labor may impact Dubai’s dream.
2008 Déjà vu
The last time the UAE faced similar strains was during the recession of 2008, which cost the UAE’s job market significantly. According to experts, it took almost three years for normal hiring in the UAE to be restored.
The job market has started showing similar pressure over the last few months. With thousands of job losses and expatriates leaving the gulf nations, the fears of 2008 are reemerging.
Airways announced hefty pay cuts in April, and that has now turned into job losses. Similarly, hotels across the Emirates are cutting loose non-essential staff. The restrictions on movement have forced the retail sector to cut down on the bottom-line.
During the 2008 crisis, Abu Dhabi ultimately had to intervene and announce a $10 billion package to bail out Dubai. A similar $10 billion package was offered by the Central Bank as there was panic amongst creditors due to the failure of state-run companies.
If the need arises, Abu Dhabi may have to aid Dubai again. It definitely has the resources for such a bailout. However, it is easier said than done. With oil prices declining, Abu Dhabi may have to think long and hard before committing. And in most bail-out scenarios, the instances of reckless investments have increased.
With all these odds, Dubai is likely to be watched by international investors- existing and aspiring. As Gurinderpal Singh, CEO, Talent21 opines, “While no nation or individual is left untouched by this pandemic, at the same time the friendly business environment, openness, and moreover agility in the policies with financial solidity are helping Dubai bounce back.”