Arab News The Middle East's Leading English Language Daily Monday, 16, October, 2006 (24, Ramadhan, 1427)
Redefining the Rules of Engagement for Expatriates Dr. N. Janardhan Though the percentage of expatriates in the six Gulf Cooperation Council (GCC) countries grew from 22.9 in 1975 to 37.1 in 2004, and constituting about 70 percent of the workforce, a number of changes on the ground during the last few years have redefined the rules of engagement for about 13 million foreigners, yielding a mixed bag of results. Due to demographic changes, characterized by a population growth of more than three percent, contributing to unemployment rates ranging between nine and 20 percent, there is now increasing pressure on the governments to accommodate nationals not only in the public, but private sector too. In order to meet this challenge, the GCC countries have been employing various measures, including nationalization of the workforce. Jobs in many sectors are no longer open to expatriates, especially in Oman and Bahrain, which have lesser oil revenues and a willingness among nationals to accept occupations so far dominated by foreigners. In Oman, the number of expatriates in the private sector fell by about 24 percent between 2003 and 2005. Saudi Arabia decided in 2003 that its foreign work force will be reduced by more than half in 10 years. This means that even if all new recruitments are stopped, about four million foreigners will have to leave the country by 2013. The government plans to create about a million jobs for Saudis by 2010 and have reserved over 50 sectors for its nationals. As part of its cultural diversity policy, the UAE announced in 2003 that it intends to scrutinize visa applications of Asian workers because of official concern about their growing numbers in the country, its reliance on foreign workers and its changing demography. Moreover, many of the unwritten benefits are presently being tapered out. While companies earlier provided inflated salary certificates to enable lower income workers to get family visas, they are less forthcoming now. Last year, the GCC ministers of labor and social affairs recommended a maximum six-year uninterrupted legal stay, tougher recruitment conditions, deporting surplus expatriate workers and making renewal of residence permits more difficult. However, the first agenda on the proposal was sidelined owing to pressure from the private sector. Among those openly discouraging the plan was the Riyadh Chamber of Commerce and Industry which stressed the importance of expatriates for the ongoing development programs. Instead, the ministers proposed a quota system to limit the number of foreigners permitted to work in the region, which is currently under study. In June 2006, the UAE announced that unskilled foreign workers will be allowed to stay for only six years in the future, which may be an economically unviable proposition for many given that they need a much longer stint abroad to recover more than what it costs to get to the El Dorado. According to this plan, about two million unskilled workers will be considered temporary contractual workers under an agreement with the International Organization for Migration. This will change the workers position from being immigrants to temporary contractual workers. At the level of day-to-day existence, a booming economy has triggered high inflation, which has had a negative impact on a majority of expatriates. A survey in the UAE revealed that between April 2005 and April 2006, the perceived average inflation rate was about 22 percent topped, of course, by rents. Worse still, this inflation has not been matched by a commensurate increase in salaries, which was put at seven percent. While the government sector announced a public sector pay increase of 25 percent for nationals and 15 percent for expatriates, its implementation in the latter case has not been uniform. Compounding the problem is the impact of the dirham declining internationally (in conjunction with the US dollar), which if it continues, further weakens the value of repatriated earnings as well. As a result, expatriates have resorted to drastic measures to balance their budgets. Apart from inflation, measures that can be likened to indirect taxes are in vogue now. Health services, including consultation, medicines, hospitalization and surgeries which were otherwise free for expatriates until five years ago now come at a price. In addition, rising electricity, water, sewage and municipality charges have ensured that making both ends meet is a daily struggle for many families, leading to loans, debts and accompanying problems in several cases. No wonder then, expatriates in Saudi Arabia heaved a sigh of relief in 2003 when the Shoura Council rejected a proposal to impose 10 percent income tax on foreign workers who earned more than $800 a month. But tax-free environs in the region may soon become a thing of the past with a UAE proposal calling for the imposition of value-added taxes under consideration. The initiative suggests that initially taxes could be imposed on tobacco and other harmful products. In May 2006, Kuwait announced that it is studying a proposal to introduce a flat 10 percent income tax. In the midst of these developments, however, some countries have taken positive measures to protect the rights of foreign workers. In 2003, the formation of the Saudi Human Rights Committee and the National Human Rights Association, an independent human rights monitor, was approved. In 2004, the Saudi Shoura Council even took the extreme step of announcing that foreigners could apply for citizenship, though the eligibility criteria are tough to fulfill. Qatar too is considering a similar proposal. Further, the UAE Labor Ministry has proposed a 29-point plan to improve the plight of expatriate workers. A law allowing formation of trade unions is also on the anvil even as Bahrain has allowed migrant workers to join trade unions and vote since 2002. Most importantly, as a means of containing the practice of foreign workers transferring home about $27 billion in remittances annually, which has squeezed the regions resources by an estimated $500 billion between 1975 and March 2006, the regional governments are increasingly adopting liberal economic measures. Bahrain has allowed expatriates with more than 15 years working experience and a healthy bank balance to reside in the country even without work permits. And, many emirates in the UAE are now allowing expatriates to own real estate and trade on stock exchanges. All these ensure that money which was hitherto sent home as savings will be invested in the GCC countries. This will begin to alter the edifice of the relationship between the host countries and expatriates because the fruits of engagement will no longer be shared by just the labor exporting countries, but will be considered mutually beneficial. Though the rules of engagement have changed for expatriates, in reality, with the advent of globalization and the accelerated pace of integration of the GCC economies into the global economy, the in-flow of foreign workers will be determined by economic factors. The demand for foreign workers is not going to reduce drastically, even while the regional governments are proactive in trying to limit the dependence on expatriate labor. And, irrespective of the negative impact of the changes in the rules of engagement, the size of expatriates in the region is anticipated to grow by five percent every year to reach 18 million by 2017. (Dr. N. Janardhan is the program manager of Gulf-Asia Relations and the editor of Gulf in the Media at the Gulf Research Center in Dubai.) Copyright: Arab News © 2003 All rights reserved. Site designed by: arabix and powered by Eima IT __________________________________________________ Do You Yahoo!? Tired of spam? Yahoo! Mail has the best spam protection around http://mail.yahoo.com _______________________________________________ Goanet mailing list Goanet@lists.goanet.org http://lists.goanet.org/listinfo.cgi/goanet-goanet.org
