UAE expat population at 90% even as economy slows

Expat increase at 3 year low; economists say reliance on foreigners risks social dislocations, drains resources.

By DAVID ROSENBERG / THE MEDIA LINE
April 4, 2011 13:41
4 minute read.
Dubai

Dubai. (photo credit: Courtesy)

 
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Expatriates have increased their share of the United Arab Emirates (UAE) population to close to 90% in the past three years, even as the domestic population grew sharply and an economic downturn slowed the increase in foreigners to nearly nil, figures from the National Bureau of Statistics show.

The proportion of non-nationals stood at 88.5% of the UAE’s combined estimated population of 8.26 million as of the middle of 2010, the bureau reported over the weekend. That was down slightly from a peak of 88.8% in 2008 but up from 83% as recently as 2006, the figures showed.

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Experts have warned that Gulf countries are risking severe social dislocations from an over-reliance on foreigners for labor. Policy makers aren’t doing enough to ensure that the skills and knowledge foreigners bring with them are transferred to locals to create employment and ensure domestic values and cultures aren’t swamped by a preponderance of outsiders.

“Are we more concerned about national identity and social stability than economic growth, or double-digit economic growth?” Khalid Al Yahya, director of governance and public administration at the Dubai School of Government, told The Media Line. “We need to make tough choices.”

The UAE and other Gulf countries have had one of the world's highest population growth rates over the past three decades because of rapid birth rates among the locals and a massive influx of foreign workers to the region, where vast oil production needs has created enormous demand for skilled and unskilled labor.

Most Gulf countries, including the UAE, haven’t conducted an official census for many years and their first joint census scheduled for 2010 has been postponed. The UAE population figures released over the weekend are estimates based on the 2005 census and other data.

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The population of UAE nationals rose 11.4% -- in excess of 3% annually -- to about 948,000 in the four-and-a-half years, the statistics bureau data showed. But the increase was outpaced by a jump of nearly 76% in the number of expats to just over 7.3 million, the bureau said. Overall, the combined national and expat population of the UAE jumped a whopping 65% in the period to 8.26 million.

The rate of expat-population growth contracted to as little as 0.7% in 2010 from as much as 34% in 2008, the last boom year for the UAE economy, bureau figures showed. The rate of growth, however, may be on the rise again as gross domestic product growth recovers.

The International Monetary Fund estimates that GDP for the UAE, whose seven members include Abu Dhabi and Dubai, declined 3.2% in 2009, but it resumed growth last year, with non-oil GDP growth projected to accelerate from 2.1% in 2010 to 3.3% this year.

Europeans and Asians, as well as other countries of the Arab world, have helped build universities and hospitals in Saudi Arabia, and turned Dubai from a sleepy village into an international trade and financial center and tourism destination. Flexing their oil muscles, tiny Qatar (population 848,000) and Abu Dhabi (population 404,500) are pursuing the same development path.

But even when economies are growing, unemployment among the Gulf’s indigenous population remains high. A study by the International Council on Security and Development published in February estimated that unemployment in the UAE at around 12%. It said the figure was likely higher among young people, calling high joblessness “a factor that will continue to challenge policymakers seeking to avoid future social problems.”

Among Gulf countries, only Bahrain has experienced severe unrest since mass protests have erupted across the Middle East in the past four months. But high levels of unemployment, together with a large young population, have been cited as key factors for regional unrest.

“Although overall unemployment in the UAE is low, unemployment among nationals remains high and concentrated in the northern emirates,” the IMF said in a March 7 report on the economy.

Foreigner workers began arriving in the Gulf nearly half a century ago when the discovery of oil kicked off a massive infrastructure construction drive. The global financial crisis in 2008 and 2009 and a drop in oil prices took a toll on growth, especially for the high-leveraged, oil-less emirate of Dubai.

But Gulf nations continue to be heavily reliant on expatriates as more experienced and cheaper to do everything from pouring concrete to running locally based multinational corporations. The major infrastructure projects announced by GCC countries over the last several months, including a program worth at least $133 billion announced by Saudi Arabia in March, will likely serve as a magnet for more expats.

“No one has an interest in fixing it, except the average person,” said Al Yahya. “The leadership in the pubic and private sectors alike seems to be happy with this, especially the private sector. You have access to the cheapest labor market in the world, with very light regulation.”

Al Yahya warned that the savings from cheaper foreign labor came at a cost to the wider economy because most of the wages earned by expatriates aren’t spent or reinvested locally. In Saudi Arabia, he estimated that as much as $60 billion a year, equivalent to the state budget for education and human resource development, was sent home by guest workers.

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