Syndicate content

United Arab Emirates

Will Possible Labor Policies by Gulf Countries Affect Remittances to South Asia?

Ceren Ozer's picture

My entry last week gave a quick profile of the South Asian overseas workers and discussed the crucial role of remittances received from the Gulf Cooperation Council (GCC) countries (Saudi Arabia, the U.A.E, Kuwait, Qatar, Bahrain and Oman) for South Asian economies. Today I’d like to discuss whether changes in the labor market policies of the GCC countries could jeopardize job prospects for South Asian migrant workers.

Creating jobs for GCC citizens is already on the top of the agenda in some of these countries and is bound to gain more momentum with the youth bulge. Efforts to create jobs for nationals through the “nationalization of the labor market” have been further intensified as a response to the recent events in the Middle East. Across the GCC, additional policy measures are being announced highlighting the need to replace expats with nationals in private and public sector. These messages have been the strongest in Saudi Arabia, but also in the U.A.E. and Kuwait.

Will recent events in the Middle East Affect Remittance Flows to South Asia?

Ceren Ozer's picture

For countries with substantial numbers of workers in the Middle East, recent events have not only raised concerns for the repatriation and welfare of their citizens, but have also raised fears of a possible slowdown in remittances. Will remittance flows noticeably decrease due to recent events in Egypt, Libya, and Tunisia?

For South Asian countries, remittances are among the largest and most stable sources of foreign exchange and their developmental impact have been remarkable. For example, in Nepal national poverty level has come down from 42% to 31% during 1996 to 2004, and to 21% today, largely on the account of remittances which finance household consumption as well as education and health expenditures. Nepal, Bangladesh, and Sri Lanka, were among the top 15 remittance recipients in 2009—with inflows being equivalent to 24% of the GDP in Nepal, 12% in Bangladesh, 8% in Sri Lanka, 5% in Pakistan and 4% in India.

Gulf States employ more than 11 million expatriate workers, an estimated 8 million or more from South and East Asian countries. Saudi Arabia, the U.A.E, and Qatar are top destination for South Asian migrants and are main sources of remittance inflows. The table as well as the country profiles below demonstrates the sheer magnitude of migrant workers in the Arab Gulf countries and their contributions to the labor force; sometimes greater in overall numbers and proportion than the respective labor force in the countries.

Dubious Dubai

Dilip Ratha's picture

I was in Dubai two weeks ago to attend a meeting of the World Economic Forum. Our hosts, the Government of Dubai, told us that Dubai had turned the corner – hotel occupancy was up, airline traffic had recovered, and Burj Dubai, the tallest building in the world was complete. And then the story broke – Dubai World was having difficulty repaying creditors. 

  Photo ©istockphoto.com
I have been to Dubai twice this year. In early 2009, I learnt that migrants were not returning en masse as reported in the media at the time. They have stayed on instead, even at the cost of losing legal status in many cases.  This time conversations with some Bangladeshi construction workers at a labor camp brought out some interesting facts: Because new construction is slowing, maintenance is doing well. Migrant workers in maintenance and hospitality are doing better than those in new construction and finance. Many migrants are moving on to Abu Dhabi and other oil-rich Emirates and neighboring countries where huge infrastructure investments are going on. Many are coping with the crisis by cutting consumption and sharing accommodation. Many have sent their families back home, so the funds spent in Dubai are now remitted home.

Many migrant workers, from Bangladesh in particular, are somewhat stuck in Dubai because they cannot afford to return. It costs about 12,000 dirhams to pay recruitment agencies and travel costs. At a monthly income below 900 dirhams – no overtime these days – a construction worker can easily take three years to save enough to repay recruitment costs. Too bad there is a crisis – they just can’t risk returning home. So many are entering into creative arrangements (e.g., taking unpaid leave) with employers to simply wait it out in Dubai.

United Arab Emirates to become world center for renewable energy

Julia Bucknall's picture
 Photo © Julia Bucknall/World Bank

The Gulf News is reporting that oil-rich United Arab Emirates is among the few developing countries to host a major international organization. Abu Dhabi will be the interim headquarters for the International Renewable Energy Agency, appealingly named IRENA. That fact is remarkable enough, but what is really surprising is that it was chosen over  environmental powerhouses Germany, Austria, and Denmark. 
 
The World Development Report is full of recommendations – transform agricultural subsidies in rich countries, make US$ 50bn a year in additional funding available for adaptation in developing countries – that readers may be tempted to dismiss as politically impossible. Yet political transformations are possible. Ten years ago would anyone have thought that Abu Dhabi could become a leader in sustainable development? The transformation reaches deep. Consultants making recommendations about the UAE's drinking water tell us that reform of the tariff structure is now being considered at the highest levels - not because it would improve water management, but because the efficiency gains predicted would reduce the country's carbon footprint.


Pages