The American radio program, Morning Edition, wonders
With some projects facing delays or even cancellation because of the current credit crunch, new questions are being raised. Are Gulf states prepared, for instance, to deal with mass layoffs and huge numbers of unemployed expatriate workers?
Analyst Mustapha Alani at the Gulf Research Center says he doesn't think people in the oil-producing states of the the Gulf Cooperation Council, or GCC, are prepared for a sharp downturn in development activity — neither the developers, the investors nor the migrant workers who could be hit first and hardest.
"We're talking about 6 million Indian workers employed in the GCC," Alani says. "Possibly 50 percent of this workforce — they're going to lose their jobs in the region. And either they have to stay as illegal immigrants or they have to go back to their country to seek employment."
Many economists argue that Gulf states have the cash and the incentive to soften the regional impact of the financial crisis, and they doubt that governments here would allow the streets to be flooded with unemployed South Asians if there is a sharp downturn.
But that raises another troubling question: Is Pakistan, already struggling with political unrest and terrorist attacks, ready to absorb millions of unemployed young men back into its population?
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From the UAE's point of view, the problem may not be as big as it seems; how much of any reduction in force would be achieved by simply letting contracts expire while slowing the stream of expat laborers into the country?
Laborers come to the UAE on a fixed term contract. I presume their expectation is that the contract is good for the full term. Whether they could enforce the contract is another matter. But it would not be good for the UAE's reputation to abrogate contracts.
It's worth noting the irony here: These workers are better off in the UAE, than back home. They would prefer to stay here. Yet the UAE takes criticism for the low pay and poor working conditions they receive.
The same is true in the US for the low wage workers (legal and otherwise) who come to the US, primarily from Mexico and southward. They are better off in the US even though they are doing jobs Americans will not do. The difference is they are not under contract, and as their jobs go away or pay falls, they are going back to their home countries voluntarily.
Labels: **2008, Best of EmEc 2008, Best of Emirates Economist, laborers, labor market