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By ROBERT F. WORTH
Published: February 11, 2009
DUBAI, United Arab Emirates — Sofia, a 34-year-old Frenchwoman, moved here a year ago to take a job in advertising, so confident about Dubai’s fast-growing economy that she bought an apartment for almost $300,000 with a 15-year mortgage.
Times Topics: Dubai
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Bryan Denton for The New York Times
An abandoned car in a parking garage in Dubai. One report said 3,000 cars were sitting abandoned at the Dubai Airport.
Now, like many of the foreign workers who make up 90 percent of the population here, she has been laid off and faces the prospect of being forced to leave this Persian Gulf city — or worse.
“I’m really scared of what could happen, because I bought property here,” said Sofia, who asked that her last name be withheld because she is still hunting for a new job. “If I can’t pay it off, I was told I could end up in debtors’ prison.”
With Dubai’s economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the Dubai Airport, left by fleeing, debt-ridden foreigners (who could in fact be imprisoned if they failed to pay their bills). Some are said to have maxed-out credit cards inside and notes of apology taped to the windshield.
The government says the real number is much lower. But the stories contain at least a grain of truth: jobless people here lose their work visas and then must leave the country within a month. That in turn reduces spending, creates housing vacancies and lowers real estate prices, in a downward spiral that has left parts of Dubai — once hailed as the economic superpower of the Middle East — looking like a ghost town.
No one knows how bad things have become, though it is clear that tens of thousands have left, real estate prices have crashed and scores of Dubai’s major construction projects have been suspended or canceled. But with the government unwilling to provide data, rumors are bound to flourish, damaging confidence and further undermining the economy.
Instead of moving toward greater transparency, the emirates seem to be moving in the other direction. A new draft media law would make it a crime to damage the country’s reputation or economy, punishable by fines of up to 1 million dirhams (about $272,000). Some say it is already having a chilling effect on reporting about the crisis.
Last month, local newspapers reported that Dubai was canceling 1,500 work visas every day, citing unnamed government officials. Asked about the number, Humaid bin Dimas, a spokesman for Dubai’s Labor Ministry, said he would not confirm or deny it and refused to comment further. Some say the true figure is much higher.
“At the moment there is a readiness to believe the worst,” said Simon Williams, HSBC bank’s chief economist in Dubai. “And the limits on data make it difficult to counter the rumors.”
Some things are clear: real estate prices, which rose dramatically during Dubai’s six-year boom, have dropped 30 percent or more over the past two or three months in some parts of the city. Last week, Moody’s Investor’s Service announced that it might downgrade its ratings on six of Dubai’s most prominent state-owned companies, citing a deterioration in the economic outlook. So many used luxury cars are for sale , they are sometimes sold for 40 percent less than the asking price two months ago, car dealers say. Dubai’s roads, usually thick with traffic at this time of year, are now mostly clear.
Some analysts say the crisis is likely to have long-lasting effects on the seven-member emirates federation, where Dubai has long played rebellious younger brother to oil-rich and more conservative Abu Dhabi. Dubai officials, swallowing their pride, have made clear that they would be open to a bailout, but so far Abu Dhabi has offered assistance only to its own banks.
“Why is Abu Dhabi allowing its neighbor to have its international reputation trashed, when it could bail out Dubai’s banks and restore confidence?” said Christopher M. Davidson, who predicted the current crisis in “Dubai: The Vulnerability of Success,” a book published last year. “Perhaps the plan is to centralize the U.A.E.” under Abu Dhabi’s control, he mused, in a move that would sharply curtail Dubai’s independence and perhaps change its signature freewheeling style.
For many foreigners, Dubai had seemed at first to be a refuge, relatively insulated from the panic that began hitting the rest of the world last autumn. The Persian Gulf is cushioned by vast oil and gas wealth, and some who lost jobs in New York and London began applying here.
But Dubai, unlike Abu Dhabi or nearby Qatar and Saudi Arabia, does not have its own oil, and had built its reputation on real estate, finance and tourism. Now, many expatriates here talk about Dubai as though it were a con game all along. Lurid rumors spread quickly:
the Palm Jumeira, an artificial island that is one of this city’s trademark developments, is said to be sinking, and when you turn the faucets in the hotels built atop it, only cockroaches come out.
“Is it going to get better? They tell you that, but I don’t know what to believe anymore,” said Sofia, who still hopes to find a job before her time runs out. “People are really panicking quickly.”
Hamza Thiab, a 27-year-old Iraqi who moved here from Baghdad in 2005, lost his job with an engineering firm six weeks ago. He has until the end of February to find a job, or he must leave. “I’ve been looking for a new job for three months, and I’ve only had two interviews,” he said. “Before, you used to open up the papers here and see dozens of jobs. The minimum for a civil engineer with four years’ experience used to be 15,000 dirhams a month. Now, the maximum you’ll get is 8,000,” or about $2,000.
Mr. Thiab was sitting in a Costa Coffee Shop in the Ibn Battuta mall, where most of the customers seemed to be single men sitting alone, dolefully drinking coffee at midday. If he fails to find a job, he will have to go to Jordan, where he has family members — Iraq is still too dangerous, he says — though the situation is no better there. Before that, he will have to borrow money from his father to pay off the more than $12,000 he still owes on a bank loan for his Honda Civic. Iraqi friends bought fancier cars and are now, with no job, struggling to sell them.
“Before, so many of us were living a good life here,” Mr. Thiab said. “Now we cannot pay our loans. We are all just sleeping, smoking, drinking coffee and having headaches because of the situation.”
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Panorama: Slumdogs and Millionaires is on BBC One, Monday 6 April at 8.30pm.
Dubai: From riches to rags
Ben Anderson
BBC Panorama reporter
Just say the word Dubai and the images appear: impossible glass structures glistening in the year-round sun, perfect man-made beaches, yachts, private helicopters, malls and spreads of food that would satisfy Roman emperors - all the things huge amounts of new money can buy.
And yet for me these images are the opposite of what should come to mind.
Ben Anderson spent three months in Dubai with migrant workers Having spent the last three months travelling there, I no longer think of the seven star Burj Al Arab hotel when I think of Dubai, but of emaciated, wretched men, lining up for buses before the sun has risen, resigned to the fact that their hard day's work wouldn't earn them enough to buy a round of coffee here. The branding of Dubai has to be one of the greatest PR triumphs of the past 20 years.
It works out incredibly well for the developers - they can charge first world fortunes for the dream villas and apartments, but pay third world salaries to the men actually building them.
Poor and illiterate
Many in Dubai say that this is just globalisation working, and that while the lives of the workers, and the salaries they are paid, look bad to us, to them, where they come from, it's good.
This excuse doesn't stand up to scrutiny.
The story of Dubai's immigrant construction workers shocks and depresses in several different stages. The poor and often illiterate men, who come here in their millions from the Indian sub-continent, are getting exploited from so many different angles that it's sometimes hard to know who to be angry at.
It all starts in their home countries - often India or Bangladesh, where local recruitment agents promise them high salaries and generous overtime payments.
In Pictures: Slumdog workers But often they also charge a "visa" or "transit" fee, averaging 200,000 taka, or £2,000 ($2,980).
This is supposed to be illegal.
The workers pay the fee because they believe the figures they've been promised. In most cases, it will take them the entire two-to-three year contract for them just to pay back that fee and break even.
It often takes that long because many developers, or their sub-contactors pay shockingly low wages - often less than £120 ($178.83) a month, for, on average, a 10-hour a day, six-day working week.
Rivers of stinking waste
We followed dozens of workers back to their "labour camps" where they cooked rice and potatoes (they can only afford meat or fish two-to-three times a month) in filthy rooms equipped with the most basic gas hobs.
In one camp sewage had leaked out from toilet blocks, and there was so much of it that the workers had built an entire network of stepping-stones just to get to their accommodation blocks.
"The dream," as one Indian recruitment agent told me "soon turns into a nightmare the moment they arrive."
Upon arrival, they are then bussed to their labour camp, where they will share a room with at least six other workers for the duration of their time in Dubai.
Jamie Oliver was an ambassador for Jumeirah Golf Estates in Dubai If they are given contracts, they are often not worth the paper they are written on, and collective bargaining and trade unions are illegal in Dubai anyway.
The developments we investigated are both enthusiastically endorsed by a long line of celebrities, who allow themselves to be described as "ambassadors."
England footballer Michael Owen, cricketer Freddie Flintoff and golfer Sam Torrance endorse developments by the First Group in Dubai's Sports City.
British celebrity chef Jamie Oliver, golfers Greg Norman, Vijay Singh, and Sergio Garcia are all ambassadors for Jumeirah Golf Estates, which will be home to the $20M "Race to Dubai," the richest tournament in the golfing world.
The master developer of Jumeirah Golf Estates is a company called Leisurecorp, which owns Turnberry and has a stake in Troon.
'Like a prison sentence'
We looked hard for a single example of good practice on two different developments, interviewing dozens of workers employed by many different companies - some British, some owned by the Dubai government.
But I didn't find a single exception, not one worker who hadn't paid a visa fee, not one who was being well paid (the highest monthly salary I heard of was being paid to a skilled crane operator- approximately £220 ($327) a month), not one who could eat well or was free to go home if he chose to.
They all said they were much worse off than they had been back at home.
"We are doing slavery," said one worker, "we feel we are in jail, it's like a prison sentence. This is how I feel. I am helpless. What can I do?"
Nick McGeehan, who runs Mafiswasta, one of the few NGOs working on behalf of the immigrant construction workers, is not surprised. I asked him what role we were playing in this, as property buyers, or as one of the million plus British tourists that visited Dubai last year.
"You're contributing, directly or indirectly, to the enslavement of a migrant workforce. That's a difficult pill to swallow, but when you look at the evidence that's a fact."
And what about the celebrities who endorse these developments, some of whom told us they sought, and got, re-assurances that the workers were being treated well.
"It's not enough to say that. At best that's naive and at worst that's negligent."
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Fear for remittances as Pakistanis abroad lose jobs
14 Apr 2009 10:55:22 GMT
Source: Reuters
By Faisal Aziz
KARACHI, April 14 (Reuters) - Thousands of Pakistanis have lost their jobs overseas in the global downturn in recent months, particularly in the Gulf, boding ill for a major source of foreign exchange for the cash-strapped country.
Pakistan received nearly $740 million in remittances from overseas workers last month, its highest-ever monthly amount.
But finance officials and analysts have warned that the good figure likely heralds bad news -- that Pakistanis thrown out of work are repatriating the last of their pay and savings, and the income stream is about to dry up.
A downturn in the property market in Dubai has hit unskilled Pakistanis particularly hard.
The trade and tourism hub in the United Arab Emirates is a prime destination for unskilled workers and, according to Human Rights Watch, is home to an about 3 million workers from Pakistan, India and Bangladesh.
"Our business is seeing one of its slowest paces ever," said Iqbal Ahmad, chief executive of the Karachi-based recruitment firm Iqbal Brothers.
"Most of our unskilled workers were going to Dubai in the construction sector, but that is not happening any more and those who went earlier are returning," said Iqbal, who has been in the business for more than 30 years.
Iqbal declined to give specific figures but said business was a fraction of what it was a year or so ago.
"If we were sending 100 workers before, now it's just 25," he said.
Pakistan's economy is already suffering, propped up by a $7.6 billion International Monetary Fund loan programme over two years agreed in November to avert a balance-of-payments crisis.
The government hopes to secure aid pledges of $4 billion for socio-economic needs when donors meet in Tokyo on Friday.
SIGN OF WORRY
During the first nine months of this July-June fiscal year, Pakistan received $5.66 billion from its citizens working overseas, about half of total foreign exchange reserves of $11.17 billion.
But the record high figure for March is making people nervous.
"This is a sign of worry for me," said Ashfaque Hasan Khan, dean of the NUST Business School in Islamabad. "It appears that people who are out of jobs and unemployed are bringing their savings back."
About 430,000 Pakistanis went abroad to work last year, most to the Middle East, according to official figures. There is no data for those coming home.
"We may benefit from this jump in remittances in the current fiscal year but the next year would be pretty tough," said Khan, who until recently was an economic adviser to the government.
Khan said some skilled workers were also returning from Europe and the United States, coming home to an economy already suffering from high unemployment.
Anjum Nisar, president of the Karachi Chamber of Commerce and Industry, said prospects for those coming home were grim with the economy unable to absorb them.
"The cost of doing business is very high here and those returning are unlikely to find new jobs or investment opportunities easily," he said.
"It will require a lot of work on the part of the government. This should be looked at on an urgent basis as the government will also suffer because of its dependence on remittances," Nisar said. (Editing by Robert Birsel and Alex Richardson)
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