Economic slowdown in the Gulf: Indian workers need not worry, not yet

With oil prices down since the last two years and the economy in Gulf countries slowing down, nervousness has gripped the large population of Indians living and working in the region.

Last week, the Saud Binladen Group, the largest construction conglomerate in the region, sacked over 70,000 workers. The company was started by Osama Bin Laden’s father Sheikh Mohammed bin Laden Sayyid, in 1931. (Bin laden was removed as a shareholder in the business in 1993 and disowned by the family.)

The lay-off has stoked latent fears of job loss. Some 40 percent of these workers are from India, mainly Kerala. The fired workers have been given exit visas to leave the kingdom. The workers refuse to leave the country without being paid their wages.

Indian labourers work at the construction site of a building in Riyadh. File photo. Reuters

Indian labourers work at the construction site of a building in Riyadh. File photo. Reuters

The Indian and Pakistani workers have been holding regular protests and even indulged in the usual subcontinental tactics of burning down a few company buses in the holy city of Mecca. The angry outburst is because the workers have not been paid wages for three months or so, and are claiming that they be paid for the months they have worked. Is this an indication of things to come? And if there are job cuts across the Gulf Cooperation Countries (GCC) then South Asians, whether Indians, Pakistanis, Bangladeshis or Sri Lankans, would be directly affected.

KV Shamsudheen, chairman of the UAE-based Pravasi Bandhu Welfare Trust, says there is no need to panic. While he agrees that there may be a slow down, the governments in the region are grappling with the situation. Saudi Arabia is planning to infuse nearly two trillion dollars to the Kingdom’s economy, through sale of a 20 percent stake in Saudi Aramco, the state-owned oil company. The money will be used to steer the country from the oil economy and make the kingdom a manufacturing hub, said Shamsudheen.

He explains that the Saud construction problems have little to do with the economy but is a direct result of the tragic accident in Mecca last September, when a company crane collapsed, killing over 102 pilgrims. The troubles for the company began after that.

“The company has been what in our parlance is called black-listed, after the terrible accident in Mecca. The Saudi government which had in the
past given good business to the group has cancelled their orders. So there is a cash crunch. So the company has no other option but to sack the workers. This has nothing to do with the economy,” Shamsudheen said, when contacted in Dubai. He was confident that many of the workers would be absorbed by other companies, who will be given work taken away from the Binladen group.

He also points to the 2022 FIFA World Cup which will be held in Qatar and the massive preparations that are going on. All these building projects will need workers and the Indian work force already in the Gulf would step in. "Dubai, Qatar and Kuwait have projects worth $100 billion to complete,” he added.

So far there has not been any large scale exodus of Indian workers out of the region, nor have remittances dropped just yet. India expatriates in the Gulf send back as much as 30 billion annually. Assocham has already called for the states and the Centre to have contingency plans in place should a situation arise when they need to head back home.

Professor Irudaya Rajan, at the Centre for Development Studies, Thiruvananthapuram, who has been working on migration in South Asia, said so far the full impact of the economic slowdown in the Gulf has not been felt. But the future may be different. “Too early to say. There is certain to be both long term and short term impact. But when I was last in Qatar last year, only the highly skilled people were losing jobs. The effect of these people living there with their families is minimal. They generally don¹t send back remittances like the poor. For many of them the Gulf region is a stepping stone to go to the US, Canada or Europe.”

Qatar Petroleum, Rajan said, had laid off more than 3,000 people last year. But the impact has so far been minimal.

Shamsudheen,said that expatriate Indians in the Gulf have faced several upheavals in the past, and come out stronger. He speaks of the Iran-Iraq war, the occupation of Kuwait by Saddam Hussain, the war in Iraq where Indians were affected. However they have come back in larger numbers to work in the Gulf. However he adds, many of the workers, send back their remittances home and families blow it up.

“They are not used to saving for a rainy day. Only 5 percent of the working class have money put away. I am trying to educate them about the need to save and hopefully in the future they will be more careful,” said Shamsudheen.

As of now some seven million Indians working in the Gulf region are fine. The question is, for how long they’ll stay that way.

Updated Date: May 07, 2016 19:22 PM

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