India feels squeeze as Gulf hiring stalls

Remittances decline as number of staff going to work in the GCC countries falls

Indian workers get their blood pressure checked at a free clinic set up at a Mussafah labour camp. Stephen Lock / The National
Powered by automated translation

Prem Verma owns a recruitment firm in Mumbai that has been recruiting Indians for jobs in the Arabian Gulf for two and half decades.

But he has noticed a sharp drop in business from the region of late, as factors including lower oil prices take their toll on hiring trends.

"The maximum impact is in the oil and gas field," he says. "And that has impacted almost every industry. The construction industry has also taken a big hit. Companies tell us that projects have been put on hold."

Other aspects having an effect on the numbers of Indians going to the Gulf for employment are Saudi Arabia's move towards hiring more Saudi nationals, while the diplomatic row with Qatar has also had on impact on Indians appetite for moving there, experts say.

Data released by the Indian government this month in a statement by its ministry of external affairs show that the number of Indian workers going to work in the six Gulf countries fell from 758,684  in 2015 to 507,296 in 2016. To the UAE, there was a decline from 225,512 to 163,731 Indian workers over the same period, while Saudi Arabia saw a slump from 306,642 to 165,356.

“There has been a decline in the number of Indian workers emigrating to the Gulf countries for employment due to economic slowdown in GCC countries triggered by the weak oil prices, which has resulted in lack of demand for workers,” according to the ministry of external affairs.

There is evidence that this has had a knock-on effect of flows of money being sent to India, which is the world largest recipient of remittances.

Remittance inflows to India fell by almost 9 per cent last year compared to the previous year, declining to US$62.7 billion from $68.9bn, figures from the World Bank show.

Recruiters say that the drop in Indian workers to the region can be seen across the board, from blue collar labourers to highly skilled professionals.

"It is definitely a slowdown," says Emmanuel Justus, the chief executive of the Employability Bridge, a company which facilitates recruitment of IT students in India for roles including international opportunities.  "The immediate thing that we realised was that a lot of people from Kerala, a lot of kids, were looking for jobs, and really having to ask for jobs which was not the case in previous years."

People from Kerala in south India make up the largest number of expats in the UAE.

Employability Bridge's customers in the UAE are reporting declines in business of about 20 to 30 per cent on last year, which is directly hitting hiring and the head count, and in turn recruitment of Indians, Mr Justus explains.

At the same time, there are things which are holding back a number of Indians from seeking opportunities in the GCC.

Mr Justus explains that the issues in Qatar have "created ripples" among Indians, and "raised concerns about heading out there".

Plans that are in place to introduce a value added tax in the GCC do not seem to be helping matters, and on top of that Saudi Arabia has put a new "family tax" in place.

"That is definitely having an impact because some workers are telling us that they don't see the real saving potential," says Mr Justus.

Mr Verma says that unrest in parts of the Middle East have also had an impact on the perception of Indians of the wider region, and that is making them some of them wary about moving to the Gulf.

There are factors within in India that are also making a number of Indians think twice about working abroad, industry insiders say.

"The pay scale in India is getting better day by day," says Mr Verma. "In the Middle East it is more or less stagnant, so the gap which was very wide is being narrowed now. Also, they find the job security is better here now, and over there they'd be working on a contract basis."

When there are opportunities in the Gulf, he says competition is fierce.

He says he a has noticed a 30 per cent decline in job opportunities in the region.

Others agree that there has been a shift in the nature of the labour market in India and the opportunities within the country.

“India's employment issues are no longer the same as they were,” says PKD Nambiar, a marketing strategist and chief executive of Flags Communications, which is based in New Delhi and has an office in Qatar. He cites factors such as increased foreign direct investment in India as something that is helping to transform the jobs landscape in the country. “Now the country produces a large number of educated and skilled labour whereas the major work force from India use to be unskilled labor. The boom in the IT sector has generated huge job opportunities for Indians not only in India but in the USA and Europe too.”

He adds that in India, the “middle class and their aspirations are growing exponentially and the nature of jobs and job conditions offered by the Gulf countries are not any more as lucrative for this section of the society”.

“Also a large number of jobs in the labour intensive sectors such as construction has come down or people from Bangladesh, Pakistan, Nepal are coming to the Gulf region more, due to their low salaries.”

Visa reforms in the United States, that are being pushed through by the US president Donald Trump, mean that opportunities in the US are also more difficult to come by at the moment, which is forcing Indians to look to other parts of the globe for work.

"With changing immigration policies of western countries and the not so buoyant economic condition of the Middle East there has been a significant tilt towards markets like Japan, Hong Kong, Singapore and other Southeast Asian nations lately for employment opportunities,” says Maanendra Singh, the managing partner of Antal International, based in Delhi, which provides executive senior leadership recruitment services to a variety of sectors. “Attractive job openings, nearness to India and more liberal immigration policies are some of the reason for this shift."

Africa is another market that Indians are looking to for job opportunities, he adds.

The downward trend of the number of Indians emigrating to the Gulf is likely to continue for “the foreseeable future”.

He adds that despite the economic slowdown in the region, there are certain sectors including health care, education, food and beverages, and logistics which are faring slightly better when it comes to recruitment, as the GCC tries to become less economically dependent on oil and gas.

“These sectors are showing signs of improvement due to the implementation of economic diversification policies," says Mr Singh.

Meanwhile, Mr Verma is hoping that there is a turnaround soon and hiring picks up from the GCC to boost his business.

"I'm concerned about it," he says.