GCC Labor to Shrink by 30% in the Economic Downturn

The aftershocks of the global financial meltdown could shrink the GCC labour market by up to 30 per cent, according to an expert.

Dr Baqer Al Najjar, Professor of Sociology at the University of Bahrain, who was attending the 14^th annual three-day conference on “Human Resources and Development in the Arabian Gulf”, told Khaleej Times on the sidelines of the conference that the labour market in the GCC as a whole could see up to 30 per cent of its workers laid off, with the construction sector hardest hit.

“The job market in the Gulf countries is badly affected in real estate, construction, service, retail and wholesale sectors. The construction sector could reduce workers by up to 40 per cent due to the downturn,” Al Najjar said.

His opinion was echoed by other scholars at the conference who were unanimous in the view that the situation would take at least three years to stabilise…SOURCE

Gulf Countries Will Run a Defecit This Year

Huge surpluses will cushion budget deficits

http://archive.gulfnews.com/articles/08/12/20/10268661.html

12/19/2008 11:03 PM | Reuters

Dubai: Saudi Arabia and other Gulf oil producers will almost certainly run unaccustomed budget deficits next year as they take a double hit from the collapse in oil prices and deep crude output cuts, economists said on Thursday.

Still, huge surpluses amassed during a six-year boom when oil prices rallied as much as seven-fold compared with 2002 levels will allow the biggest oil-exporting region to keep on spending to sustain local economies during a global recession.

“If oil averages $45 (Dh165.3) a barrel next year, then I expect to see significant budget deficits in Bahrain, Oman and Saudi Arabia,” said Simon Williams, senior economist at HSBC in Dubai.

“We need to keep the shortfalls in perspective, however.

“Next year’s deficits won’t even begin to approach the value of the surpluses generated over the past five years.”…

Oil Price Drop Means Tighter Times Ahead For UAE Government

Dubai: Oil prices, which are flirting with the psychological barrier of $50 a barrel after recovering from a three-and-a-half-year low of $48.25 on Thursday – or nearly $100 down from the historic high of $147 a barrel in July, remain a double-edged sword for the Gulf countries.

US light crude for January delivery rose 96 cents to $50.38 a barrel at 1200 GMT yesterday, its first

UAE Oil Production Hits Rough Waters

increase after five straight sessions of losses. London Brent crude gained $1.40 cents to $49.48 a barrel.

However, the lower oil price could halt a number of infrastructure projects in the Gulf. Dubai’s Roads and Transport Authority is investing Dh100 billion in projects including the Dubai Metro. The government agencies will have to diversify their funding sources, analysts say, including increasing fees and charges.

“Oil is coming down. Oil is the bread and butter of Middle Eastern countries. If the incomes from oil become much less, it will affect the economies. It’s our main worry,” Dr Jasem Al Mannai, head of the Arab Monetary Fund, said at a banking conference in Frankfurt, according to Bloomberg…

According to the International Monetary Fund (IMF), the breakeven oil price for 2008 fiscal accounts (i.e., the price at which a country would achieve a fiscal balance) for the UAE is $23 a barrel -the lowest in the GCC and much lower than the average of $57. This demonstrates that most oil exporters, including the UAE can easily absorb lower world oil prices.

According to the IMF, the UAE’s oil production in 2008-09 is to stabilise at 2.8 million barrels a day. At the rate of $50 per barrel, oil could fetch $140 million revenue per day or $51.1 billion per year in 2008-09…

Is it Time to Head Back Home?

GulfTalent.com, an online recruitment site, recently sent me a press release with a headline that screamed “UAE salaries rise by 10.7% – study”. I think they forgot to add “Finally After 100 Years!” after the “UAE salaries rise by 10.7%” bit.

Let’s face the truth – the salaries are still what people used to get paid probably when Dubai was a desert and when people used horse carts for transport. Here’s an excerpt from the study:

• Regional salaries increased by 9.0% in 2007 compared to 7.9% last year
• Oman, UAE and Qatar lead the regional trend with pay hikes of 11.0%, 10.7% and 10.6% respectively
• Bahrain, Kuwait and Saudi Arabia had pay increases of 8.1%, 7.9% and 7.7% respectively
• Sectors enjoying the highest pay rise were construction and banking

The salary rise percentage is quite pathetic when compared to annual pay rises in a supposedly “third world country” like India. At least in India, I used to get a pay hike every year. The situation has worsened over the last few months, due to the slump in US Dollar, which has in turn affected the Dirham.

When I moved to Dubai 2.5 years ago, I used to get an exchange rate of about Rs. 11.75 for a dirham – there also used to be days when I used to get as much as Rs. 11.85 for a dirham. As of today, the exchange rate stands at Rs. 10.48 for a dirham, which is awfull. I have to now wait for days when there’s a slight increase in the exchange rate, before I transfer funds to India.

Sure, there’s no income tax in the Gulf countries – but then, there’s a hidden agenda here. We pay an exorbitant amount (sometimes 70% of our salary) as our rent, which I feel is not justified at all. In fact, this place is overpriced for its standards. I can probably buy my own flat for the amount I spend as rent in a year.

Transportation within Dubai sucks. I used to work in Mumbai, which has one of the best transportation systems in the world. The train system in Mumbai is awesome, while the bus system, though not as stylish as those in Dubai, is efficient. Sure, you don’t get to travel in air-conditioned Volvo and Mercedes buses, but at least there are buses every 2 minutes or less in Mumbai. In Dubai, there’s a bus every 15 minutes to an an hour, depending on the traffic.

It’s most frustrating when you want to hail a cab in Dubai. The cab drivers here, give you an attitude as if they are doing a favour by giving you a ride to your destination. Many of them even refuse to pick you up – they first want to interview you and if everything goes right, they will offer you a ride. Before These are some things that will happen, when you try to hail a cab – so be prepared:

1. Cab Driver: Kidhar Jana Hai? (Translation: Where To?)
2. Cab Driver: Kyon? (Translation: Why?) (huh?!! None of your business dumb ass!)
3. Cab Driver: Traffic Hoga Kya? (Translation: Will there be traffic?) (How do I know? Do I look like the traffic department to you?)
4. Cab Driver: Kya Yaar… Wahan Bahot Traffic Hai! (Translation: Lot of traffic on that road)
5. The Cab Driver sometimes won’t stop – he might just speed off without even looking at you, or worse, point his finger in the direction he is driving to. (So, what am I supposed to understand from that??)

So, think twice before you accept an offer in the Gulf – it might not be your worthwhile at all.