Reports regarding massive layoffs and non-payment of wages to thousands of expatriates in Saudi Arabia for months have raised concerns in Kerala, where nearly a quarter of the total 78 lakh households depend on foreign remittances for livelihood.
Although there are only 300 Keralites among 5,000 Indians stranded in Jeddah without food for over a week, migration experts feel that the steep fall in oil prices that led to the current crisis may take a heavy toll on the expatriates from the state since they are employed mostly in construction and allied sectors that bear the brunt of the crisis.
Acccording to the Kerala Migration Survey conducted by the Research Unit on International Migration at the Centre for Development Studies (CDS), Thiruvananthapuram, as many as 90 percent of the 23.6 lakh Keralites working abroad as on 2014 are in West Asia. Saudi Arabia, which is one of the worst-hit by the slump in oil prices, accommodates 25.2 percent of the total migrants as per the survey.
S Irudayarajan, who heads the CDS research unit, says the crisis will have a huge impact on the migrants since the economies in Saudi Arabia are fueled by oil revenues. He said that the slowdown will not be confined to Saudi alone but also felt across the entire Gulf Cooperation Council (GCC) countries, including those not directly dependent on oil.
He told the Firstpost that he had suggested to the Kerala government to set up an expert team to study the crisis since it will have short-term as well as long-term implications on the Indian population living in West Asia.
“The authorities woke up only after workers laid off by Jeddah-based construction major Saudi Oger were found starving for days. More will face similar plight as many firms hit by the slump in oil prices in Saudi and other countries in the region have not been paying salaries to the workers for months,” he said.
The Oger crisis followed massive lay-off by the Saudi Binladin Group, where a large number of Keralites work. Those still on the rolls of the construction conglomerate at Jeddah have not been getting salaries for several months now. Afsal Latheef, who works in the firm, said he was working without salary for seven months.
V Kunjali, president of Janata Pravasi Cultural Centre, said there were several other big and small companies that have either laid off workers or have not been paying salaries for months. Their names have not come to light as the number of the affected workers is not as large and their condition is not as bad as those employed by Saudi Oger and Saudi Binladin.
An official of the Non-Resident Keralites Affairs (Norka) department said they have also been getting complaints from Keralites in other cities in Saudi Arabia about non-payment of salaries. He said that the department had received complaints from many in Dammam and Jubail that they were not getting salaries for more than seven months.
Sreekala, whose husband work with a mid-sized company at Jubail in Saudi Arabia, said that her husband was trapped without salaries for the last nine months. He could not even make it to their daughter’s marriage a couple of months ago.
“I am worried since he has even cut down the communication with the family. He has no money to make even telephone calls. We want him to come back, but he cannot without getting the unpaid salaries,” she said.
Sharjah-based Pravasi Bandhu Welfare Trust chairman KV Shamsudheen said the crisis was caused by the cancellation of several projects in the wake of the slump in oil prices. He told the Firstpost that many companies in other oil-dependent countries like Qatar, Oman and Kuwait were also facing similar situation.
“These companies are trying to survive by either laying off workers or cutting down on salaries, stopping perks and deferring promotions. They hope that the governments will come to their rescue. The Saudi government has already drawn up a diversification programme. We have to wait and see how this will save the companies and protect the workers”, said Shamsudheen.
Irudayarajan says the task will not be easy as the economy of most countries in the Middle East is fueled by oil revenue. The plummeting oil prices will have deep impact on the economy of most of these countries.
Curiously, the slump in oil prices has not only affected oil-dependent countries but also others. Take the case of Arjun Thomas, who was forced to quit his job in a firm in Dubai after his salary was halved two years after he joined the company.
The 28-year-old commerce graduate with diploma in computer application had quit his regular job in an IT firm in Thiruvananthapuram and boarded the flight to Dubai in early 2014 as he was offered a job with double the salary and free accommodation by the firm in the emirate.
Over 26 lakh households in the state rely on financial support from their family members employed in the Gulf to meet their monthly expenses, which include children’s education and medical expenses
He found the going tough after the company shifted him to another division with half the salary in March this year. Finding it difficult to cope with the reduced wages, Arjun put in his papers and started hunting for job in other companies. Though he could find jobs in some firms, the salary was less. He returned disappointed to his hometown after a month and is now languishing without a job.
“I cannot blame the company. This is the inevitable outcome of the crisis triggered by the steep fall in oil prices. I was aware of the looming crisis, but I did not expect that it would hit businesses in Dubai so fast,” he said.
“Although Dubai is diversified away from oil, the businesses in the Emirate are tied to the oil producing countries under the GCC. Therefore any crisis in the oil-producing countries will have its impact on Dubai,” says Arjun.
He said several companies had cancelled projects after he returned to Kerala. A number of companies have either laid off staff or cut down on salaries forcing expats to return or continue to live with reduced salaries. Many of them have sent their families back home.
The crisis will have serious implications in Kerala, which manages to sustain the high human development indices with the help of remittances received firm the migrants. The money they send through banks alone is more than Rs one lakh crore a year. This accounts for a third of the state net domestic product, 20 percent more than the annual revenue and five times the funds the state gets from the central government.
Over 26 lakh households in the state rely on financial support from their family members employed in the Gulf to meet their monthly expenses, which include children’s education and medical expenses.
VK Prasad, an economist and director of EMS Study Centre, feels that the crisis coming in the wake of the naturalization of labour force in many Gulf countries, will hasten the reverse migration. He feels that Kerala will be in for a serious socio-economic crisis if a sizeable number of the overseas Keralites return home.
“Thousands of Keralites, who have already returned to the state in the past few years, are still languishing without jobs. The state which is already grappling with a huge educated unemployment problem will not be able to provide jobs to the returnees,” he added.
Prasad fears that such a reverse exodus will also have serious implications on the state economy as the main source of the state’s revenue is sales tax. The tax comes mainly from the service sector, which is fueled by the remittances that account for over 30 percent of the state domestic product.
Finance Minister Thomas Isaac has proposed an anti-recession package in his budget for 2016-17 to minimise the impact of the crisis. If the crisis in the Gulf does not moderate, the economic situation in the state will remain dismal, Isaac said.
Chief Minister Pinarayi Vijayan said the situation was grave and people have already started returning from Gulf countries in large numbers. "Saudiisation and similar laws being implemented in other Gulf countries are turning NRKs jobless and they are forced to return," he said.
The government has deputed Local Administration Minister KT Jaleel to Saudi Arabia to take stock of the situation. He said he would explore the possibility of accommodating the affected workers in other firms in the Kingdom or elsewhere.