Barely a year ago, few would have imagined the drastic impact of a strong rupee on millions of  Indians employed in the Gulf. Thanks to the weak US dollar and inflation in the region, the salaries of Indians working in Saudi Arabia, the United Arab Emirates (UAE), Qatar and other Gulf countries have come down nearly by 30 percent.
The rupee has emerged as one of the top four strongest currencies in the world in 12 months and has been at a nine year high against the dollar. In the Gulf region alone, the plunge has been as steep as 15 percent in the value of dollar-pegged currencies against the rupee. With another 15 percent dent due to high living costs, the salary of the average Indian in the Gulf remains the least attractive among the Asians.

As against this, India presents a rosy picture, especially for qualified youth. The country’s booming economy means much higher wages than what was prevailing five years ago. The old timers did have a good time in the Gulf but not anymore.

Money matters
The Gulf currencies have substantially declined to such an extent that many in India feel that it makes no sense to relocate to the Gulf countries to make money. The decline has been so sharp that one Saudi riyal which fetched Rs 12.50 in 2006, now returns only Rs 10.70. In March 2006, every dirham earned in the UAE was worth Rs 12.70, it is now far below Rs 11. More or less same story goes with other Gulf currencies pegged to the dollar. The worst affected are those who came to the Gulf in 2006. Besides the plunge in their rupee savings which means they now send less to their families back home, the housing cost in all major cities such as Riyadh, Jeddah, Abu Dhabi, Sharjah and Doha have gone up by 30 percent while Dubai has seen unprecedented 50 percent rise as demand for housing has been growing by leaps and bounds. The food items too saw unexpected rise in the past one year and with the exception of Saudi Arabia there has been hike in transportation cost.

“The construction activity is booming in the region, attracting large number of workers from India. But they seem to be in dilemma as wages in India have gone up considerably,” points out a Civil Engineer. “In fact, we are finding it difficult to get civil engineers to recruit even within India as their demand has grown up next only to Information Technology specialists. Very few think of going to the Gulf countries.

Some of the civil engineers from the Gulf are returning to India as the gap between what they earn there and India, has narrowed down considerably,” contends Sunil Sonnad, Technical Director of Civil Aid Technoclinic Pvt. Limited in Bangalore, a firm engaged in all kinds of construction related activities. Construction companies in the Gulf are already facing a labour crisis as Indians look back at their own country. Some other Asian countries whose currencies haven’t appreciated could fill the gap. But it is easier said than achieved since the migrant Indian labour force both skilled and unskilled has traditionally played a big role in the region’s development. Some experts are of the opinion that construction boom seen over the last few years must be slowed down to take stock of the overall scenario. But there are many on-going projects in these Gulf countries which cannot be stopped. 

For example, four economic cities are planned in Saudi Arabia and the government would have to work out the projects schedule in consultation with contractors, since they would need 1.3 million skilled and unskilled manpower by 2020 when the projects are scheduled for completion.  The contractors on the other hand, need to undertake a study to look into the demand and supply situation concerning the various sectors to avoid any adverse impact. If these mega projects are undertaken at the same time, there is bound to be a huge demand for labour that could create bottlenecks in the economy. The challenge, therefore, is to pace the overall development with the available manpower.

However, some do believe that the region can overcome the  manpower crisis by ensuring some rise in salaries and perks.  The Indian economy has been showing signs of overheating and living costs in major cities are getting equally high. With some modification in the wage structure the Gulf could remain as an attractive destination. Till this happens, it seems for time being India’s growth story would remain a bone of contention for its Gulf-based population.

The writer is Media Editor, SABIC, Saudi Arabia E-mail: gopalsutar@gmail.com