Friday, May 14, 2010

Article in Al Masry al Youm: As Gulf economies decline, Egyptian migrants suffer

Sayyed Mohamed returned to his village in Assiut three months ago in search of a new beginning. After spending most of his adult life in Kuwait, the 46-year-old driver was dismissed from Hashim al-Shakhs company, a leading Kuwaiti importer and distributor of paper products, where he worked for several years. Forced to cut jobs due to a budget squeeze, the company informed Mohamed that they were no longer interested in retaining their older employees.

His story is shared by many other Egyptians who have recently been displaced from their jobs in Gulf states. Since the onset of the global financial crisis in 2008, many expatriate workers have suddenly been forced to return to Egypt, leaving behind the livelihoods that sustained them for decades.

Egyptians working abroad constitute an important sector of Egypt’s labor economy and the money they send home each year provides essential support for their families back home.

Egypt has long been a regional labor exporter, especially to the Gulf states, Jordan and Libya. Since the government lifted restrictions on migration in the mid-1970s, Egyptians began leaving in large numbers to find work abroad.

As a result of the oil boom, the Gulf began attracting many workers from neighboring Arab countries. While emigration patterns since then have fluctuated--due to changing oil prices, political developments, and a turn toward South Asian migrant labor--many Egyptians have nonetheless continued traveling to the Gulf in search of economic prosperity. Dubai's construction boom in the mid-2000s strengthened this pattern, absorbing migrant workers from around the region.

Remittances secure the livelihoods of many Egyptians and represent a significant portion of Egypt's national income. In 2008, the World Bank reported that Egypt was among the top ten remittance recipients in the world. But in the aftermath of the financial crisis, Egypt witnessed a significant drop in cash transfers from abroad, from which it has not yet recovered.

The Central Bank of Egypt estimates that remittances in the second quarter of 2009-2010 reached only US$1.7 billion, a low point since the start of the crisis. The actual size of the drop, however, is difficult to represent in official figures, as many migrants transfer money through informal channels rather than banks and licensed money exchanges.

Since late 2008, job cuts in the Gulf states have been on the rise, affecting both professionals and unskilled migrant workers. With the termination of their contracts, many workers who were only hired on a temporary basis have been forced to return to their countries of origin. Worker repatriation has thus served as a mechanism for Gulf states to offload the social distress caused by the financial crisis on to neighboring Arab and South Asian countries, including Egypt, while absolving themselves of any responsibility to provide for the well-being of their migrant workers.

"I worked for a small company where I made roughly LE3000 per month; overall life was good," says Mohamed.

Like most other expatriate workers in the Gulf, Mohamed was hired as a temporary worker, renewing his contract and visa every two years. His monthly salary was enough to support his wife and five children in Egypt. But since his return, making ends meet has been a challenge. He now works as a self-employed driver, transporting passengers from his village to a local town.

"Since returning to Egypt, I've only seen bitterness. I can barely make enough money to provide for my family."

According to renowned Egyptian economist Ahmed Sayyed el-Naggar, it is difficult to assess the impact of the recent crisis on Egyptian expatriate workers and, in turn, on the Egyptian economy. “Since the beginning of the crisis, the repatriation of Egyptians from the Gulf has not been represented in any official statistics, neither from the Egyptian Ministry of Manpower nor from the Gulf states.”

El-Naggar estimates that up to 300,000 Egyptians may have returned from the Gulf, especially those working in construction, real estate, trade, and services. He predicts that the most immediate effect of worker repatriation will be a rise in the Egyptian unemployment rate, which currently sits at around ten percent, according to official statistics.

“Egypt already has a high unemployment rate, and with the return of these workers it is expected to increase,” he says.

Meanwhile, el-Naggar says, the Egyptian government's response has been grossly inadequate: "The government implemented contractionary fiscal policies last year in order to reduce spending, a strategy which will not create more job opportunities."

It is still uncertain when remittance levels will rebound and what opportunities foreign labor markets may hold for Egyptian migrant workers in the near future. But those who have returned to Egypt add another layer to the growing social pressures that have been fueling public demands for government intervention to improve income levels and living standards for working people--demands which were made manifestly clear in this week's demonstrations for a national minimum wage.

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