For Gulf, South Asia countries, worst is yet to come

As COVID-19 takes hold, Gulf Cooperation Council (GCC) countries are going into lockdown mode to contain the outbreak. As businesses, factories and industries shut down, millions of migrant workers from South Asian countries such as Pakistan, India and Bangladesh have been laid off. 

Facing a drastic slump in oil prices during the pandemic, Gulf economies have slowed down and expatriate workers may have become an encumbrance. According to the latest International Monetary Fund (IMF) projections, except for Egypt and Djibouti, gross domestic product for every country across the Middle East and North Africa region will shrink this year, ranging from negative 1.1% growth for Kuwait to negative 12% for Lebanon to minus 58.7% for Libya.

Over the decades, the contribution of South Asian workers has been a major factor in the Gulf’s rise and economic success. Making up nearly one-third of the population in Saudi Arabia, and half the population in countries such as Bahrain and Oman, overall there are around 23 million migrant workers in the Gulf — at least, until recently. As this workforce decreases, Arab states will have to fill in the employment gap with their local populations.

Around 10 million foreign workers have helped construct hotels, malls, sports arenas and airports. They continue to maintain and modernize all this infrastructure for the six GCC countries. Mainly employed in service-based fields such as transportation, health care, hospitality and construction, the South Asians have had a large presence. 

Nowadays many of them are badly stuck. Some are unable to return home due to travel restrictions and to make matters worse, once they lose their jobs, they also lose their immigration status. Homebound with no pay, those in white-collar jobs face an uncertain future, but it is even worse for the laborers who live in stifling conditions. 

Some workers remain employed in essential sectors such as construction and energy, and as the number of COVID-19 cases rises in the Arab states, the ones at work have the highest risk of exposure to the coronavirus.

This sudden shift is expected to have a long-term impact on the Gulf states and the major South Asian countries.

First, there are significant economic setbacks. With so many expats going jobless, most South Asian economies will lose a crucial income source.

Meanwhile, the World Bank projects that South Asian countries will most likely record their worst growth in four decades in the wake of this pandemic. Because of lockdowns, the entire region could experience an economic contraction this year, and it could not come at a worse time. 

Likewise, any decrease in oil and gas demand in these largest South Asian economies directly affects the Middle Eastern energy industry. India, Pakistan and Bangladesh are all following similar containment strategies, implementing the world’s largest lockdown on their massive populations and contributing mightily to the drastic drop in energy demand. 

George Naufal, co-author of “Expats and the Labor Force: The Story of the Gulf Cooperation Council Countries,” told Bloomberg news that the total amount of money sent home by these migrant workers could be twice as high as the official number of $70 billion to $75 billion annually.

Second, the delay in repatriating South Asian workers has created tension as the United Arab Emirates announced it would review labor ties with countries refusing to repatriate their citizens.

Apparently, the Indian and Pakistani envoys to Abu Dhabi would not agree to take their citizens back immediately, saying they needed time to prepare for quarantines and treatment. Also, because of the outbreak, there are fewer flights to take migrant workers home.

Sayed Zulfiqar Bukhari, special assistant to the Pakistani prime minister, told Reuters, “We’re aware of all of those who have been laid off and their plight. We’re just waiting to create the right mechanism so that we don’t overburden the system of taking people in here.”

Delay was unavoidable. In fact, the chief minister of Kerala province in India has been trying to get thousands of Indian workers repatriated from the UAE since he received complaints about inadequate arrangements at quarantine facilities. Out of the 3 million Indian migrants working in the UAE, around 1 million are from Kerala.

Meanwhile, Bangladeshi Minister for Expatriate Welfare Imran Ahmed Dhaka was planning to alleviate the hardship of his country’s stranded citizens by sending money to foreign missions “so that migrants can be taken care of."

Third, repatriated workers may struggle to find jobs in their home countries, as there are many unemployed workers there as well. 

According to the International Labor Organization, a UN agency, this health emergency could leave nearly 25 million people unemployed. 

Returnees used to a good standard of living and minimal income tax might find it difficult to adjust. Getting jobs when most economic sectors are affected by lockdowns will be an uphill task. 

For example, the coronavirus pandemic and lockdown have plunged Pakistan into an economic crisis. Businesses are closed and around 3.78 million local migrants employed in major urban centers in the country could be laid off.

According to a report by the Pakistan Institute of Development Economics in Islamabad, “With the calls for social distancing and lockdown, the COVID-19 outbreak has shut down business operations across the country. As projected, millions of people are facing potential layoffs, but the situation is doubly bad for the internal migrant workers who are staying away from [their] homes to earn a livelihood.”

Fourth, even though the World Bank has suggested that unemployed migrant workers should be supported monetarily, that doesn’t seem likely to happen.

Mustafa Qadri, director of the labor rights organization Equidem, told the international business publication Quartz, “Historically, when companies are facing financial trouble in the Gulf, they tend not to pay workers. During this pandemic, companies know there will be no consequences or punishment if they delay wages or don’t pay workers.”

However, private sector employees may fare better. 

Finally, there is the spread of the virus to be considered. According to the Saudi Ministry of Health, more than half of the COVID-19 cases in the kingdom have been foreigners and migrant workers.

The main reason for this could be their living conditions. This matter has been raised by rights groups in the past and the pandemic has made matters worse as the workers are being housed in unsanitary dorms as they wait to be repatriated. Therefore, the coronavirus will probably be on the rise as these workers return home.

Right now, the pandemic has not peaked in GCC states and South Asia. Lockdowns in those regions could remain in place for a long time yet, causing instability, displacement and a loss of revenue at the very least.