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ShareDirham's fall pinches Indians' pockets in Dubai, many want to come back
DUBAI: Just back from the money exchange centre, copywriter Ryan Frantz is disappointed. These past few months, he's had to dig a little deeper each month to send the same amount back home to Chennai.
"It's Rs10.9 to the dirham now," the 30-year-old says. "When I got here four years ago, it was Rs12.9."
Two rupees may not sound like a lot, but to Frantz it makes a difference of about Rs4,000 to his monthly pay.Factor in inflation, officially at a galloping eight per cent each year in the UAE and 12 per cent in neighbouring Qatar, and it adds up to more money lost for Frantz and the estimated 4.5 million overseas Indians, most living in the Gulf, who support families back home and who have watched their savings vapourise by the appreciating rupee.
"I'm seriously thinking of going back," he says, recounting how three other colleagues in his agency have gone back home in as many months. "You might as well live at home, with mom's food and servants to pick up after you, instead of a cramped apartment where you're renting out a room to make ends meet. And India is now paying just as well as the UAE."
India is the top recipient of remittances in the world with an inflow of $27bn in 2007 according to the World Bank, which put the UAE and Saudi Arabia as the top two countries for emigrant Indian workers, followed by the US. RBI assessments say the six Gulf countries are responsible for 24 per cent of all remittances to India. But this can change.
Salesman Satish G explains how his salary has declined over the last few years. "When I came here I was earning Rs80,000 per month. Now I make Rs70,300," he says, working out the conversion on paper.
Worse off, though, are the workers plugging away around the clock to build these spanking new cities with nosebleed-inducing buildings that are emerging almost overnight from the sand, and the taxi drivers taking tourists up and down these cities. A casual chat with a labourer on a construction site in Al Quoz shows that it no longer stacks up: "I earn about Dh500 each month," says the Keralite man, who gave his name as Kumar. "I keep about Dh200 to eat, the rest I send home. Earlier, my wife could run the house on that money, which was about Rs3800. Now it comes to only Rs3250. That means she has to cut back on what the family eats."
In June 2002, the Indian rupee was Rs49 to the US dollar. Thursday's rate was Rs40.2. As the dollar has declined in value, the currencies of most Arabian Gulf states have followed suit, pegged as they are to the greenback.
For Indians at home, a rising rupee means more bang for their buck, for Indians abroad, it's the opposite. A sister's wedding means they now have to take loans and an unscheduled trip home often means maxing out credit cards.
Though it is illegal to strike work or unionise in the six Gulf countries, workers have started protesting the fall in salaries. Some 35,000 construction workers putting up the Burj Dubai, the tallest building in the world, protested for 10 days in November over wages. In Bahrain, the workers of ten construction companies went on strike last month, demanding better salaries and improved living conditions.
Many are also now choosing to stay back in India instead of heading westwards towards the petrodollars that have seen their fellow villagers build three-storey houses and start new businesses all along the Konkan coast.
Samir Khosla, managing director of Dynamic Staffing Services, told a conference organised by the Middle East Economic Digest last week that five years ago, workers could save up to 250 per cent more than what they would in India if they relocated to the Gulf. "But India's economic boom and the tumbling dollar value have reduced the savings. During the past three decades, workers were saving more money than now. The charm of jobs in the Gulf is lost," he said. "Workers have more options now."
With Indian employers now paying better rates, offering accommodation and appointing labourers to payrolls, thus allowing them benefits such as sick leave, workers often see no reason to come to the UAE.
At the junior level, the difference between a Dubai and Indian salary has fallen to about 50 per cent. This differential narrows as you move up the hierarchy, and there is little difference for senior management, Khosla said.
Consequently, recruiters are now looking further afield for staff. New source markets particularly in the construction industry are Bangladesh, Nepal and Vietnam. More workers were reportedly recruited from Bangladesh in the first two months of 2008 than in the whole of 2007.
Another option is to hire out labourers on short-term contract to other firms, often competitors, to meet the skill shortage at rates such as Dh18 per hour. The normal hourly rate for workers is Dh3.
One HR professional we spoke to said on condition of anonymity that higher up the ladder, the trend is now to recruit expatriate employees from within the region - often for as much as a 50 per cent increase in salary. "It's difficult to match salaries in India now; people don't want to come here," she said.
The consequent widescale poaching of so-called local talent has prompted some firms to ask employees to sign no-competition contracts that bar them from working in the same industry for up to a year after they leave their current jobs.
For some people, that doesn't matter: they just want to go back.B Rosario, a Keralite marketing manager, has quit his job to head back to Chennai, where his wife has a government job as a first-class gazetted officer. "It is very easy for her to quit the job and come and join me," he says. "But she won't get it back. And we have a child, school fees here are expensive, and rents are only going up. I don't see the situation improving for a long time."
The other side of the story is the eight percent inflation. Unofficially, the rate is well into the double digits, and in some product categories, heavily so. Earlier this month, an Emirates Consumer Protection Society survey found that the UAE's annual food price inflation was between 27 and 30 per cent. The society's director, Dr Jamal Al Saeidi, said it could rise to 40 per cent this year.
