High living costs driving expats out of Gulf

Gareth Hitchings is planning his return to the United Kingdom, Filipino Josielynne Antes last month filed her papers to move to Canada, and India’s Benny Phillip is waiting for a decision from Australian immigration.

All three once chose to move to the UAE – to forge a career and build their futures in a tax-free sunshine paradise with an unrivalled quality of life.

But the dream they shared – and shared with millions of other expatriates – has turned sour as they struggle with the rising cost of living across the GCC.

Antes, an information technology co-ordinator whose salary has increased 200 per cent, said: “Everything is so expensive now that I am just at break-even.”

“Although my salary is three times what I received in 2004, I feel my salary was still higher in 2004.”

Dissatisfaction with the widening gap between salaries and the perceived cost of living are making more people consider switching jobs, industries and countries, a study by Bayt.com and YouGovSiraj has found.

And another study carried out by the two firms shows more than 70 per cent of the people in the UAE are unhappy with work.

Benny Phillip, 38, an automotive engineer, turned to leasing property to supplement his monthly salary, but even then, could only “just make ends meet”.

“The cost of living here is so high. I have been here for 10 years but I have to leave as I cannot bear the cost anymore,” he said.

“I am happy here, yes, but there is no permanent residency, so it is not for long term and the high cost prevents me from bringing my family here.

“I plan to leave the UAE and go to Australia hopefully by the end of next year.”

Hitchings, originally from Surrey in the south of England, said: “I came to Dubai five years ago with the plan to stay for 10. But the cost of living now means that, with schooling fees for my two children, I have next to no money left at the end of the month.

“It seems I am working solely to be able to afford to stay in Dubai. What’s the point?”

A combination of a falling dollar and the rising cost of living across the GCC has led to unprecedented levels of discontent among regional employees, the studies revealed.

The online survey polled 15,000 employees in six GCC countries across 20 industry sectors, including automotive, finance, advertising, IT and pharmaceuticals.

Across the GCC and across sectors, salary rises were far outstripped by perceived cost of living increases.

The disparity was most pronounced in Qatar, with a perceived average cost of living spike of 38 per cent, 22 per cent higher than salary increases.

In Dubai, living expenses are said to have risen by 37 per cent, representing a gap of 20 per cent between salaries and living costs.

The widening shortfall between salary increases and the cost of living has led many to consider dramatic steps. In Qatar, 50 per cent of respondents said increases in household expenses have led them to consider relocating to another country or returning home. Oman came in second, with 47 per cent, while Kuwait saw the lowest numbers of professionals looking to leave the country, at 32 per cent. In the UAE, 37 per cent had thought about moving abroad.

“The story here is not just about employees. The pinch is also being felt by businesses themselves, with many workers planning to move on,” Nassim Ghrayeb, CEO of YouGovSiraj, said.

“These results reveal just how much of a headache the spiralling cost of living and weak dollar is having on employers, who also need to consider their margins,” added the chief executive.

In the UAE, employers are taking the hit of this economic shortfall, with many employees considering job migration to improve finances. Forty per cent of the UAE workers said rising expenses might force them to look for a better job in the same industry and 24 per cent said they would consider switching to another industry.

In Saudi Arabia, corresponding figures were 45 and 19 per cent. Only 15 per cent of people in Qatar and 20 per cent in Oman said they would consider changing industries.

“In terms of perceived cost of living increases and what this is doing to retention rates, the numbers are cause for concern,” Rabea Ataya, CEO of Bayt.com, said

“Around 70 per cent of the survey’s respondents said they’ve held two or more jobs in the past five years. On average, people change jobs about once every two years,” Ataya added. “We also found that loyalty improved as salaries increased. Employers who do not close the gap between earnings and living expenses will have difficulty attracting and retaining people.”

The recent localisation policies are also rubbing salt to the wound, says Mohammed Benayoune, head coach with the Achievement Centre International. “The problem here in the region, in my experience, has much more to do with loyalty. If you are an expatriate and you know that anytime there’s a national who can sooner or later replace you, do you think you would still be engaged?” Benayoune, who is the former CEO of Aromatics Oman and Oman Polypropylene Director, told Emirates Business.

He said: “This is the challenge now, I’m not against localisation, in fact, I think it’s a good policy. I am against the way they implement it. I have seen it implemented very well in some companies but some are not handling it very well.”

In addition, the widespread racial discrimination is also a big factor behind some expatriates’ decision to leave.

“Another reason I would like to go to Canada is the equality in the working environment,” Antes said.

A British national who did not wish to be named said: “Many people, though highly qualified, don’t get the job because of their background. I know this is discrimination, but it happens a lot in this part of the world.”

Nigel Armstrong, editor of Dubai-based Future Fuels, told Emirates Business said: “In the West, you don’t see advertisements specifying UK, US, Filipino or Indian national nor do you see ads specifying any age preference. It is simply not allowed.

“They’ve got equal opportunity regulations, which many countries in the Middle East don’t have.”

Albeit many expatriates have already made up their minds to migrate to another country or to go back home, most of them could not due to their mounting debts.

Data from Dubai Police shows that 42 per cent of inmates at Dubai Central Jail are there for failing to repay loans.

Consumer loans in the UAE surged almost 40 per cent in 2007 as the second-largest Arab economy struggles to contain inflation and resist calls for it to drop its dollar peg or revalue its currency. Loans to individuals rose to Dh43.46 billion on December 31, compared to Dh31.26bn a year earlier.

Consumer lending has almost doubled over the past four years, during which time oil prices have also more than tripled, helping drive the UAE economy and borrowing.

The high inflation is also fuelling absconding cases.

David Martin, RakBank business advisor, said: “The price increases, especially in house rents, cause a lot of people to just go back home. So whatever facilities or debt they had from the banks they just leave them.

“This has more effect on our customer base whose salary is below Dh5,000 a month,” he added. “There has been increasing bad debt in that segment of customers. And we feel that this has been seen by other retail banks as well.”

The UAE’s Federal National Council has proposed stringent rules for personal loans to prevent more people falling deep into debt. At a meeting last week, officials urged the speedy creation of an independent credit bureau to regulate the multi-billion dirham lending industry. UAE courts have to settle thousands of debt-related cases despite the overall amount of personal debt in the UAE being relatively low at Dh43bn. There is also no system to track credit history and assess people’s borrowing capacity.

A special committee reported that while banks were required to limit personal loans to Dh250,000, some were lending customers with low salaries more than 55 times their monthly wage. About 560,000 people borrowed nearly Dh700bn last year, government figures show.

The numbers

37% The percentage of expatriates planning to move abroad as living cost in the GCC rises

Dh700bn The amount 560,000 people borrowed from banks last year in the UAE, say government figures

42% The percentage of inmates at Dubai Central Jail who failed to repay loans, according to Dubai Police

15,000 The number of expatriate employees surveyed in the six GCC countries across 20 industry sectors

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