The recently dropped bombshell related to Dubai’s debt will most likely extend to the expatriate community in the emirate and may lead to a huge wave of restructuring for many companies.
An analyst for the regional investment bank EFG-Hermes, Raj Madha, told Zawya Dow Jones, “it’s clear there will be job cuts but it’s too early to know the extent of it.”
Recently, prior to a public holiday, the Dubai government made the announcement that it will try to get a payment freeze for a period of six months on the debts of one of its largest corporations Dubai World, which is the owner of Nakheel, the real estate developer. Dubai World is estimated to have nearly $60 billion in liabilities, with $26 billion of that being debt.
The largest employers in Dubai are the government-owned companies, which account for most expatriate jobs. Dubai World is the employer of at least seventy thousand people around the world. A representative for Dubai World refused to comment on whether expatriate jobs would be lost due to the restructuring.
Reducing the number of expatriates from other countries working in Dubai would further affect the economy, which has already been hit by a fifty percent decrease in real estate prices just within the past year. Oil sales account for fewer than five percent of the economy. The majority of the sheikdom’s income comes from tourism, retail, trade and industries.
The high standards for living and the tax-free lifestyle of Dubai have worked remarkably well to lure expatriates to the desert land during the years when business was booming. The boom years may be coming to an end as the emirate begins to come to terms with its obligations and debts of the extended business empire.
Around eighty-five percent of the population in Dubai is made up of migrant workers, with locals being the minority. Laying off the local workers may prove to be a political challenge for the unelected rulers of the emirate. Dubai is a country that prides itself on providing the indigenous population with full employment and high incomes. Many are anxious to see what the government decides to do.