Pakistan amid changing GCC labour market trends

Pakistan is expected to see 5.3% growth in cash inflow from GCC based citizens

Naveed Ahmad November 02, 2016
PHOTO: Reuters

The Gulf States are struggling to preserve the outsized economic and political punch amidst ridiculously low oil prices, labour nationalisation and resurgent militant Iran. Today’s oil price rests slightly over $46 a barrel, a marked surge compared to the $32 low witnessed this February.

Since the region holds around 45% of the world’s oil reserves with Saudi Arabia alone controlling about 37% of the supply, surplus stocks in the market continue to pull the price downwards. Earlier this year, lifting of sanctions against Iran amid heightening tensions with Saudi Arabia torpedoed any hope for surge in oil price. Thus, the World Bank (WB) predicts less than 2% economic growth in the region.

In its Global Economic Prospects report, the WB estimated an average oil price of $41 per barrel for 2016 while projecting its rise to $50 in 2017 and $53 in 2018.

Besides oil price, the GCC economy also depends on peace and security in the region. Currently, Saudi Arabia is spearheading a counterinsurgency campaign against Iran-backed Houthi militia in Yemen. Not only is Yemen witnessing unprecedented destruction, but Saudi Arabia and its allies too are draining their precious foreign exchange reserves to fund the campaign against Iran’s proxies. There’s little hope for ceasefire and political settlement in the short run.

Of over 50 million inhabitants of the Gulf Cooperation Council member countries, 75% are migrant workers. The ongoing fiscal tightening has threatened their livelihood since the process began last year. Non-payment of contractors, stalling of public sector projects and imposition of unprecedented taxes or price hikes have become the new normal here. Remittances from the GCC are falling and the decline won’t be arrested till sometime in 2018. For the first time since Iraqi invasion of Kuwait, hundreds of unpaid construction workers were airlifted by their respective countries, including Pakistan, this year. This time, two cash-strapped Saudi construction companies failed to pay their salaries before facing total bankruptcy. The phenomenon sent shockwaves across countries exporting low-skilled labour. The domestic workers are not as much under threat as are the ones employed in the infrastructure development and services sectors, such as banking, hospitality, etc.

Pakistani workforce in Middle East facing the worst despite giving the best

The history of migrant workers in the Arabian Peninsula dates back to the 1948 Arab-Israeli war. The displaced people from Palestine and Bilad al-Sham found their way here. Later, the civil war in Yemen in 1962 further brought in the second wave.

The necessity for expatriate labour skyrocketed with the discovery of hydrocarbons in 1970s. Still, of two million foreigners employed in the Gulf, 90% hailed from Palestine, Yemen and Egypt. Pakistanis too joined the foray due to the country’s closeness with its Arab neighbours. In the decades to come, the Asian labour edged over the one of Arab or African descent. However, Arab migrant manpower dominates in skilled and white-collar job arena while the Asian labour force overshadows the rest.

The GCC economies continue to be threatened by resurging, militant Iran whose proxies are not only engaged in full-scale insurgency in Yemen but also fire missiles inside Saudi Arabia. While Oman is posturing neutrality as the state policy, its Ibadi rulers are increasingly tilting towards Iran, turning a blind eye to smuggling of arms to Houthis tribesmen through its territory. Iran has continuously threatened Bahrain which once used to be its part while UAE and Qatar have joined Saudi Arabia in ramping up their defences against likely Iranian adventurism.

Such a scenario will immediately cause a surge in oil prices globally, bringing to fore the nightmarish state of Kuwait invasion for migrant labour, numbering in millions. Iran has been following Iraq’s suit in Bahrain, though heavy odds are stacked against hawkish fantasies. If sanity prevails and status quo persists, remittances from the GCC will be stable, but at a slightly lower mark than now.

Fewer jobs for Pakistanis in Middle East

Islamabad has worked out preferential labour export deals with Saudi Arabia and Qatar in 2016. If all goes well, fresh manpower export to the kingdom and the gas-rich tiny state will avert a new crisis for Pakistan’s economy. Some of the labour force from the construction sector has already headed home while a good number could find their way in the diversified economy of the UAE.

In its latest study titled ‘Migration and Development’, the WB too seems optimistic about the macro picture of Pakistan’s supply of remittances. Contrary to the estimated decline in its neighbourhood, Pakistan is expected to see 5.3% growth in cash inflow from GCC based citizens. The WB recorded Pakistan amongst the top recipients of remittances alongside China, the Philippines, Mexico and India. Time is running out for Pakistan to transition from a low-skilled labour exporter to a high-skilled one. The country is in dire need of skill development centres as well as finishing schools for professional grooming.

Naveed Ahmad is a Pakistani investigative journalist and academic with extensive reporting experience in the Middle East and North Africa. He is based in Doha and Istanbul. He tweets @naveed360


baloch | 5 years ago | Reply Good article. Only problem is UAE is very anti pakistan /racist now. They prefer either Arab or Indian workers over pakistanis with the similar skillset. Eventually, Pakistan needs to to provide job opportunities for them in Pakistan and export skilled workers to the western countries where there is less racism and better career paths.
Honest Observer | 5 years ago | Reply Dear Facebook addicts Kindly read the article again before finding faults with it. Naveed has pieced together the entire situation in the Middle East to give a 360 perspective on the labor market and economy in GCC. Those who find it biased must challenge the facts elaborated and also sequence of events. Those questioning credibility of data must challenge if any figure is misplaced or wrong. It is a newspaper article with plenty of depth packed in 700 to 800 words. What else you'd need for a teatime reading!
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