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Rising Cost of Living Forces Expats To Leave GCC Countries
A foreign laborer works at a construction site in the Omani capital Muscat, on June 21, 2022. ( Mohammed Mahjoub/AFP via Getty Images)

Rising Cost of Living Forces Expats To Leave GCC Countries

Lower-paid foreigners largely unaffected by the surging cost of living

An increasing number of expatriates are leaving the Gulf as rising expenses render working there less attractive, while government subsidies are reserved for GCC citizens.

About 21 million expatriates work in the five Gulf Cooperation Council countries for which official statistics are available – Bahrain, Kuwait, Oman, Qatar and Saudi Arabia – out of a total workforce of 29 million. While such statistics are not available for the sixth GCC nation, the United Arab Emirates, citizens there comprise approximately 20% of the total population and around 11% of the workforce.

Expatriates in the GCC states sent $127 billion in remittances to their home countries in 2021, compared to $116 billion in 2020. It is the first time this figure has risen after declining during the years 2017-2020, according to official statistics.

Four Gulf countries witnessed an increase in remittances in 2020 − Saudi Arabia, the UAE, Qatar and Kuwait − while such payments home dropped in Bahrain and Oman.

The population of the GCC countries fell by 4% in 2020, 3% in 2019 and nearly 5% in 2018, according to unofficial estimates.

Since 2015, the Gulf countries have adopted intensive programs to restructure economic support that aim to help middle-income and low-income citizens only.

This led to a significant increase in expatriates’ expenses. For example, a worker in Saudi Arabia must pay 4,500 riyals, or about $1,200 per month for each member of his family residing with him, in addition to high electricity and water bills, and other fees.

In Bahrain, the government has lifted subsidies on meat and given Bahraini citizens a cash alternative, in addition to raising the price of gasoline by nearly 200%. Expatriates also are compelled to pay electricity bills that are more than nine times higher than those paid by Bahrainis – 3 fils per unit for a Bahraini compared to 29 fils per unit for foreigners, in addition to mandatory health insurance for expatriates. Also, children of expatriates who do not work in the government sector are not accepted in Bahrain’s public schools.

In Oman, the government has adopted the principle of “Omanization,” which aims to place its own citizens in most jobs. This has led to a decline of approximately 11% in the number of expatriates.

The UAE has imposed fees related to workers amid a significant rise in the cost of living as the state subsidizes citizens only.

We will work for a specific period and then return to our countries, and we must save money in order to improve our conditions and be able to buy a house and improve conditions in our countries of origin

Kuwait, in turn, allocates its support to citizens in purchasing basic commodities through cooperative societies from which foreigners are not allowed to buy at a reduced price.

Meanwhile, in Qatar, expatriate workers are paid much less than Qataris.

Contrary to what one might expect, low-paid expatriates have not been seriously affected by these government measures, as they generally work in sectors such as construction, cleaning and other manual professions where the companies employing them usually pay their rent, electricity and transportation bills, and they transfer most of their income to their home countries while retaining a little for food, drink and phone bills.

The most affected group has been the middle-income category, such as teachers, engineers and administrative workers, who receive salaries ranging between $1,500 and $4,000 per month. Many of them have had to send their wives and children to their countries of origin, and share housing and transportation with other workers, while others left jobs and looked for work in other countries.

Hamdi Ahmed, an Egyptian teacher in Kuwait, told The Media Line: “I get 1,000 Kuwaiti dinars [$3,250] per month, but the prices of housing, electricity and the fees that I have to pay have gone up, and I can no longer save more than 5% of my salary. So, I sent my wife and four children back to Egypt, and I share an apartment we rented with seven of my co-workers who are experiencing the same conditions.”

Ahmed added that : “All the expatriates in Kuwait are working to save money. We will work for a specific period and then return to our countries, and we must save money in order to improve our conditions and be able to buy a house and improve conditions in our countries of origin.”

Genish, a construction worker in Kuwait, told The Media Line: “I get 300 Kuwaiti dinars [$975] per month, although the minimum wage is 320 dinars, but the company bears the costs of housing, and I transfer about 200 dinars ($650) per month to my family in Bangladesh.”

“The prices have risen a little, but in general I can save. I have been working here for five years and I was able to buy land in Bangladesh. I will work for another two or three years until I finish building my house, and then I will return to cultivate the land and get an income,” Genish said.

Asif Yassin, a Pakistani driver who works in the UAE’s must populous city, Dubai,  told The Media Line: “I get 5,000 dirhams [$1,360], but the cost of living has gone up. I rent a bed for more than 500 dirhams, and I pay other costs of about 1,000 dirhams, not including expenses for food, drink, transportation and others. No more than 1,000 dirhams remains from my salary that I send to my family, which is hardly enough for them.

“Now I am looking for another job, but the average wage for drivers is not great here. I will look for another job,” Yassin added.

The percentage of foreign remittances from the Gulf countries is among the highest rates in the world compared to the gross domestic product

Ali Omran, an engineer of Jordanian nationality working in Saudi Arabia, also spoke to The Media Line. “I’ve been living alone since 2018, when I sent my wife and child to Jordan. I am trying to save enough money to buy an apartment in Jordan, and then I will return to my country. I get 14,000 riyals [$3,725] per month, and I can live with my wife and child here in Saudi Arabia, but I cannot provide money toward the goal for which I came,” he said.

“Most of the people I know have returned their wives and children to their countries, so the areas inhabited by foreigners have become almost empty,” Omran added.

Mahmoud Khattab, an accountant working in Bahrain, told The Media Line he had sent his family home to India.

“I get 500 dinars [$1,325] as a monthly salary, and I cannot live with my family here. The rent rose from 150 dinars to 250, and the electricity bill rose after removing the subsidy, from 20 dinars to 120 dinars,” Khattab said.

Muthanna Khaled, a Jordanian graphic designer working in Qatar, said that things haven’t changed much in Doha, but that the cost of living is skyrocketing.

“The salaries of expatriates did not increase but the costs did. Only Qatari citizens receive support; we do not get it. There are many who sent their families to their countries,” Khaled said.

Saudi economic expert Abdullah al-Otaibi told The Media Line that “this is a correction to the market, not an expulsion of expatriates. There is a major distortion in the market.”

“Unemployment in Saudi Arabia was up to 15% and, after these steps, it decreased to 11% in 2021. Expats work in the same jobs as Saudis, but with lower salaries,” he explained.

“The Saudi has obligations and likes to live a good life. As for the expatriate, he is coming for a few years to save what can be collected from the money and then return to his country. This is money that goes abroad,” Otaibi said.

“These positive steps certainly have some negative effects, including that many apartments have become empty after expatriates began to share their places of residence and sent their families back to their countries,” he said.

“The real estate owners may have been affected but, on the other hand, there is a decrease in the unemployment rate. There is no decision that does not have negative consequences, even if the decision is positive,” Otaibi said.

No countries provide support to expatriates, and this is not new, especially since budgets are limited

Ahmed Alwan, a Kuwaiti economic analyst, told The Media Line that “The percentage of foreign remittances from the Gulf countries is among the highest rates in the world compared to the gross domestic product. In Kuwait, it is close to 8.5%, and in the Gulf countries it ranges between 8% and 13%.

“It cannot be that all these sums go abroad, which caused a major imbalance in the economy of the GCC countries. Now things have changed and artificial intelligence solves many things, and many jobs for expatriates can be dispensed with,” Alwan continued. “Things are different, and all the countries support their citizens only, not everyone.

Alwan points out that there are no income taxes in the Gulf, “so the expatriate gets his full salary.”

“Even the expatriates in the Gulf are not below the global poverty line, just as there are no homeless in our countries,” Alwan said.

Omar Ahmed, an Egyptian economic analyst based in the UAE, told The Media Line: “Prices are going up and the immigration of foreigners led to a major imbalance in the labor market in the UAE and the entire Gulf states. This was largely reflected in prices and the high cost of living, which led to expatriates raising their prices and salaries, and this was reflected in inflation,” he added.

“Gulf countries will not support expatriates [with subsidies], this is clear. But there was limited support for expatriates during the corona pandemic, to maintain social security,” Ahmed said.

Osama Ahmed, a Bahraini economist, told The Media Line, “There is a drop in apartment rental prices in Bahrain and in the Gulf in general due to the high cost of living for expatriates. On the other hand, there are plans to have citizens replace expatriates in these countries, so these measures help in the Gulf plans.”

“No countries provide support to expatriates, and this is not new, especially since budgets are limited,” he added.

Expatriates are not refugees, they are coming to work and will go back to their countries. They did not come to become citizens, so they get less support.

Hamad al-Marri, a Qatari economist told The Media Line that the host countries cannot be expected to subsidize foreign workers so that they can send home their income.

“We in Qatar may be different as the number of citizens is few and cannot cover all these jobs, but in return there are high salaries paid to expatriates, sufficient for their livelihood, and we are not responsible for their desire to accumulate funds before returning to their countries,” he said.

Jamal Al Balushi, an Omani economist, told The Media Line: “In Oman, things are different. The salary level does not match the Gulf, but in return the cost of living is lower.”

“There is localization of jobs here in the sultanate, and the government is responsible for its citizens. When we go to live in any other country, we do not get support unless we are citizens,” he said.

“Expatriates are not refugees, they are coming to work and will go back to their countries. They did not come to become citizens, so they get less support,” Al Balushi said.

 

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