With oil prices plunging, the Gulf is no longer the land of opportunity for Indian migrants workers. Many of them have lost jobs and are packing up to return home; others are settling for salary cuts and bleak days ahead, reports Jayaraj Sivan from Dubai
A couple of weeks ago, Rajesh, a project manager at a data centre, invited all his friends over to his apartment in Al Qusais, a middle-class enclave in Dubai. But this get-together was different from the many others he and his family had hosted over the years.
It was a farewell party for his wife and two daughters who were moving back to their hometown in Kerala. It also signalled the end of his Gulf dream. Rajesh, who hailed from Kottayam, had shifted to Dubai ten years ago and his family had joined him after two years. The couple managed to save up enough to buy two apartments in Kottayam and Kochi. But with increments and bonuses drying up in the last two years, the 45-year-old has been forced to send his family back. He, too, will head back once he finds a job in India.
For Indians, the Gulf is about money — Bulgari, Beemers and buildings that touch the sky. It's where blue collar workers go to lift their families out of poverty, where Bollywood goes to party and promote films and where beleaguered dons flee to live in plush grandeur.
Many Indians have made their fortune here such as Lulu group chairman Yusuff Ali M A and Sunny Varkey, chairman of Gems Education, now the world's largest K12 education provider.
Folks like Ali and Varkey continue to dominate the list of the world's rich but the future of blue-collar expats is now under a shadow. Oil prices have been steadily dropping since 2014, leading to a slowdown in the Gulf countries. The conflict in Yemen and the ISIS invasion of parts of Iraq and Syria too are unsettling the region.
About 89% of UAE's population of 10 million are expats and Indians account for roughly 2.6 million of them. Thousands of families in India depend on remittances from these expat workers.
The sub-prime lending crisis broke in 2008 when the fundamentals of the Gulf region were sound and oil was at an all-time peak of $145 per barrel. But it's the recent and steady slide in oil prices since 2014 that has taken the sheen off the region's economy.
Job cuts are most in the oil and gas and finance sectors, but others such as banking, automobiles and construction — all of which employ large numbers of Indians — too are feeling the heat. Firms in UAE, Saudi Arabia, Bahrain, Qatar, Kuwait and Oman have not only stopped recruiting and giving hikes and bonuses, they also have been downsizing.
"I have been told to pack up in two weeks," says Praveen Kumar, (47), a Keralite who was assistant manager sales at an automobile showroom in Muscat. With sales of cars dipping, expat staff is being told to go. Kumar rattles off stories of fellow Indians giving up their apartments and moving into shared accommodation provided by companies and distress sales of cars, furniture and kitchen items.
In Oman, entry-level salaries for engineers in oil companies have dropped from 2,000 riyal to 800 (Rs 1,40,000 per month) even as the cost of living is going up. Most Oman schools have increased their fees and the airfare to India from Muscat has risen by Rs 15,000.
In Dubai, the land of opportunity where East and West meet, even small and medium enterprises, which have been the driving force of its diversified economy — 80% is outside the oil sector — are badly hit. The devaluation of the rouble and the yuan has meant fewer Russian and Chinese tourists, the mainstay of Dubai's hospitality sector. Hotel room tariffs and occupancy rates have dropped, even as inventory has increased to 70,000 rooms and is poised to touch 1 lakh in a few years, says Prem Kumar, who works in the hospitality sector in Dubai.
Real estate has also taken a big hit as prime villas are up for sale at prices lower than what people paid for them 10 years ago. Similarly, gold business is dull.
There are other indicators too of the slowdown, no less real for being relatively trivial. The day the government doubled parking fee from two dirhams an hour to four, old-timers in the UAE like M Krishnakumar, who heads the marketing division of a Malayalam TV channel, knew more bad news was round the corner. In a tax-free state, a hike in parking fees is a sure sign the government is cash strapped.
"Soon friends started phoning in about no increments and incentives (at work). There was a sense of panic in all these calls. But I was not shocked — my sales figures were already screaming out the words 'bleak future'. My total revenue last fiscal was $1 billion but as the books close this year, it has come down to a measly Rs 3 crore. I am calling it a day," says the 55-year-old who is set to return to Thiruvananthapuram.
Other Keralites —who formed the bulk of the workforce for decades — have changed their mind about moving to the Middle East. Those who are going are mostly graduates moving to slightly better paying jobs as electricians, fitters, plumbers and painters. A vast majority of low-earning workers like helpers and masons at construction sites are now from Andhra, Telangana, Rajasthan, Bihar, West Bengal and UP.
Sandeep from Andhra Pradesh, who is part of the housekeeping staff at a Dubai mall, makes 800 dirhams (about Rs 14,400) a month. Accommodation is provided by his employer in a dormitory with 10 others, and he manages to send about 500 dirhams (roughly Rs 9,000) home every month. Close to 60% of the expatriates in Dubai lead a hardscrabble life, earning less than 3,000 dirhams (about Rs 54,000) a month, which is usually not enough to support a family there. What keeps many going is the fact that, compared to 2012, the dirham has seen 50% appreciation against the rupee.
The picture back home is not rosy either. Going by data from various non-profit organizations, 95% of workers in the Gulf may not have the resources to provide for their families when they return. They tend to send most of their savings home. But back in India, their families, 98% of them in fact, spend this remittance on maintaining improved lifestyles.
But there is some cause for cautious optimism. The Dubai government has lined up huge infrastructure projects and is diversifying into sectors like non-conventional energy, all of which are expected to boost employment prospects. "The World Expo 2020 in Dubai, and the 2022 FIFA World Cup in Qatar will drive the economy for the next few years," says Abid Ali Junaid, MD of the Dubai-based Radiant Star group.
Long-time Indian residents of the UAE say the present crisis is a passing phase; they have seen and overcome worse, starting with the withdrawal of the British in 1970. Says K V Shamsudheen, director of stock broking firm Barjeel Geojit Securities who has been in UAE since 1970: "After every crisis, the number of expatriates has only gone up."
A couple of weeks ago, Rajesh, a project manager at a data centre, invited all his friends over to his apartment in Al Qusais, a middle-class enclave in Dubai. But this get-together was different from the many others he and his family had hosted over the years.
It was a farewell party for his wife and two daughters who were moving back to their hometown in Kerala. It also signalled the end of his Gulf dream. Rajesh, who hailed from Kottayam, had shifted to Dubai ten years ago and his family had joined him after two years. The couple managed to save up enough to buy two apartments in Kottayam and Kochi. But with increments and bonuses drying up in the last two years, the 45-year-old has been forced to send his family back. He, too, will head back once he finds a job in India.
For Indians, the Gulf is about money — Bulgari, Beemers and buildings that touch the sky. It's where blue collar workers go to lift their families out of poverty, where Bollywood goes to party and promote films and where beleaguered dons flee to live in plush grandeur.
Many Indians have made their fortune here such as Lulu group chairman Yusuff Ali M A and Sunny Varkey, chairman of Gems Education, now the world's largest K12 education provider.
Folks like Ali and Varkey continue to dominate the list of the world's rich but the future of blue-collar expats is now under a shadow. Oil prices have been steadily dropping since 2014, leading to a slowdown in the Gulf countries. The conflict in Yemen and the ISIS invasion of parts of Iraq and Syria too are unsettling the region.
About 89% of UAE's population of 10 million are expats and Indians account for roughly 2.6 million of them. Thousands of families in India depend on remittances from these expat workers.
The sub-prime lending crisis broke in 2008 when the fundamentals of the Gulf region were sound and oil was at an all-time peak of $145 per barrel. But it's the recent and steady slide in oil prices since 2014 that has taken the sheen off the region's economy.
Job cuts are most in the oil and gas and finance sectors, but others such as banking, automobiles and construction — all of which employ large numbers of Indians — too are feeling the heat. Firms in UAE, Saudi Arabia, Bahrain, Qatar, Kuwait and Oman have not only stopped recruiting and giving hikes and bonuses, they also have been downsizing.
"I have been told to pack up in two weeks," says Praveen Kumar, (47), a Keralite who was assistant manager sales at an automobile showroom in Muscat. With sales of cars dipping, expat staff is being told to go. Kumar rattles off stories of fellow Indians giving up their apartments and moving into shared accommodation provided by companies and distress sales of cars, furniture and kitchen items.
In Oman, entry-level salaries for engineers in oil companies have dropped from 2,000 riyal to 800 (Rs 1,40,000 per month) even as the cost of living is going up. Most Oman schools have increased their fees and the airfare to India from Muscat has risen by Rs 15,000.
In Dubai, the land of opportunity where East and West meet, even small and medium enterprises, which have been the driving force of its diversified economy — 80% is outside the oil sector — are badly hit. The devaluation of the rouble and the yuan has meant fewer Russian and Chinese tourists, the mainstay of Dubai's hospitality sector. Hotel room tariffs and occupancy rates have dropped, even as inventory has increased to 70,000 rooms and is poised to touch 1 lakh in a few years, says Prem Kumar, who works in the hospitality sector in Dubai.
Real estate has also taken a big hit as prime villas are up for sale at prices lower than what people paid for them 10 years ago. Similarly, gold business is dull.
There are other indicators too of the slowdown, no less real for being relatively trivial. The day the government doubled parking fee from two dirhams an hour to four, old-timers in the UAE like M Krishnakumar, who heads the marketing division of a Malayalam TV channel, knew more bad news was round the corner. In a tax-free state, a hike in parking fees is a sure sign the government is cash strapped.
"Soon friends started phoning in about no increments and incentives (at work). There was a sense of panic in all these calls. But I was not shocked — my sales figures were already screaming out the words 'bleak future'. My total revenue last fiscal was $1 billion but as the books close this year, it has come down to a measly Rs 3 crore. I am calling it a day," says the 55-year-old who is set to return to Thiruvananthapuram.
Other Keralites —who formed the bulk of the workforce for decades — have changed their mind about moving to the Middle East. Those who are going are mostly graduates moving to slightly better paying jobs as electricians, fitters, plumbers and painters. A vast majority of low-earning workers like helpers and masons at construction sites are now from Andhra, Telangana, Rajasthan, Bihar, West Bengal and UP.
Sandeep from Andhra Pradesh, who is part of the housekeeping staff at a Dubai mall, makes 800 dirhams (about Rs 14,400) a month. Accommodation is provided by his employer in a dormitory with 10 others, and he manages to send about 500 dirhams (roughly Rs 9,000) home every month. Close to 60% of the expatriates in Dubai lead a hardscrabble life, earning less than 3,000 dirhams (about Rs 54,000) a month, which is usually not enough to support a family there. What keeps many going is the fact that, compared to 2012, the dirham has seen 50% appreciation against the rupee.
The picture back home is not rosy either. Going by data from various non-profit organizations, 95% of workers in the Gulf may not have the resources to provide for their families when they return. They tend to send most of their savings home. But back in India, their families, 98% of them in fact, spend this remittance on maintaining improved lifestyles.
But there is some cause for cautious optimism. The Dubai government has lined up huge infrastructure projects and is diversifying into sectors like non-conventional energy, all of which are expected to boost employment prospects. "The World Expo 2020 in Dubai, and the 2022 FIFA World Cup in Qatar will drive the economy for the next few years," says Abid Ali Junaid, MD of the Dubai-based Radiant Star group.
Long-time Indian residents of the UAE say the present crisis is a passing phase; they have seen and overcome worse, starting with the withdrawal of the British in 1970. Says K V Shamsudheen, director of stock broking firm Barjeel Geojit Securities who has been in UAE since 1970: "After every crisis, the number of expatriates has only gone up."
Resource: http://timesofindia.indiatimes.com/home/sunday-times/deep-focus/A-passage-back-to-India/articleshow/51665366.cms
