Massive layoffs likely in Gulf (Al-Jazeera)
Since 2003, the Gulf Co-operation Council (GCC) countries – including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) – have enjoyed very high growth rates.
By 2006, Kuwait was averaging real annual growth rate of about 11 per cent a year a rate higher than China’s during the same period.
Qatar in 2004 grew in real terms by almost 21 per cent and the UAE saw rates of about 20 per cent during both 2004 and 2005.
Such spectacularly high rates gave rise to the term „turbo” growth. Even though Bahrain, Oman and Saudi Arabia did not enjoy the „turbo” growths of their neighbours, they too averaged a very respectable six per cent between 2003 and 2006.
The growth rates in the GCC countries were fundamentally based on the sharp increase in the price of oil and natural gas which was due to a global economic boom.
During the same period, the US economy grew at more than a three per cent annual rate, China by more than 10 per cent, and India by more than eight per cent.
Latin America and Africa, continents which were considered laggards in earlier decades, grew by at least by five per cent a year.
Gulf governments are now likely to start cutting back on spending. The first sector to be hit will be construction and municipal maintenance. That is bad news for the unskilled and poor expatriates from South Asia.
However, the decline in worldwide economic activity will have its adverse effects across the board. The new, diversified sectors created in the Gulf over the last 10 years will also be hard-hit, leading to massive layoffs of expatriates.
In Dubai, the layoffs will be in tourism, travel, banking, and real estate. These layoffs will affect the more educated, white-collar expatriates.
The new diversified industries of Saudi Arabia, under the mantle of the Saudi Basic Industries Corporation (Sabic), which is a leading manufacturer of petrochemicals, fertilisers, and chemicals will cut back on their output. The same will be true of the new energy-intensive industries, aluminium fabrication in Bahrain and steel production in Qatar.
The only jobs filled by the expatriates which are safe for now are the ones which are supported by the personal income and wealth of the nationals.
These would be domestic servants, household chauffeurs, and those serving education and health care.
But they, too, wonder how long they will remain insulated to the global economic downturn.