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India’s World: Economic Crisis in Saudi Arabia & Indian Workers

India’s World: Economic Crisis in Saudi Arabia & Indian Workers

The recent economic crisis in Saudi Arabia has been reflected in the plight of the stranded Indian workers there. More than ten thousand workers have faced severe food crisis, job losses and financial hardships. The problem took a giant shape this time when Saudi Oger Construction Company sacked its workers and further stopped providing food in the camps. Only when the Indian government stood up to supply food to its people there, Saudi Arabia took cognizance of the issue and extended its support to the Indians.

Overview of Saudi Arabia’s economy and beginning of the crisis:

  1. The Saudi Arabian economy is not a normal economy. It has no taxation, minimum custom duties and relies totally on oil. Therefore, its economy has been jolted severely by an oil shock. Crude oil that was sold for over $100 per barrel once has now reduced to $50 per barrel. As an extremely specialized exporter of oil, Saudi Arabia is most vulnerable to price decline.
  2. Oil revenue has paid almost 70% of the government’s budget. With the decline in revenue, budget deficit has increased. There is a heavy subsidy on energy, food and many other items in the country.
  3. The dominance of the government sector in Saudi’s economy where more than half of the workforce is employed is another cause of this crisis.
  4. With the shale oil production in USA, its oil requirements have substantially decreased in a few years. Although this was done by USA to bring down the revenues of Iran and Russia, it has harmed Saudi Arabia’s economy more than any other nation.
  5. Since the sanctions against the exports of Iranian oil have been lifted now, it has again become a major exporter of crude oil. In order to compete with Iran, Saudi Arabia decreased its oil prices but in vein because right now there is enough oil in the market plus the climate change concerns has further led the nations to opt for cleaner sources of energy. Therefore, it is unlikely that the prices for oil would escalate in near future.
  6. War in Gulf countries like Yemen, Iraq has led to large expenditure on defense thereby causing losses.

In the present scenario where Saudi Arabia has become a victim of its own aspirations, what is needed is a long term economic reforms, creation of more private sector jobs, introduce taxes, curtail investments in construction and other areas and conclude conflicts with its neighbours.

Why Saudi Arabia came up so badly with the workers?

In Gulf countries it is commonly found that the blue collar workers are taken for granted and treated in a substandard manner. The country does not have labour unions and the labour laws are extremely strict and favour the employer. An expatriate cannot leave the country until and unless he gets NOC (No Objection Certificate) from his employer. The attitude of Saudi government is a clear mirror of the cultural narrowness they have for foreign workers.

Plight of Indian workers:

Indian workers who have paid huge sums of money to the agencies for jobs cannot choose to come back as they don’t have an option of job in their home country as well. They send huge sums of remittances to their home. These dilemmas further aggravate their conditions.

Approach of the Indian Government:

  1. The Indian government did a commendable job by extending its helping hands to the workers. But presently India is fully saturated with the issues of creating more jobs for its workforce. In this scenario, unfortunately India cannot take up 3 million workers as it does not have jobs for unskilled workforce. The workers can be a part of the job market but the government is not in a position to treat them specially.
  2. The Indian government can have Migration Resource Centres in the Gulf countries where Indian expatriates are in large numbers. They can perform necessary research on the labour market and provide Indian labours according to the demand supply equation.
  3. Better coordination with South Asian countries like Nepal, Bangladesh and Sri Lanka can help in negotiations with Gulf countries on these issues as these nations also have their workforces employed in these countries.
  4. The government can and should provide financial assistance to those workers who establish their own set up as has been done in Kerala.

People don’t understand the statistics but they do understand hunger, unemployment and a state that is apathetic to them. Therefore, both the native country and the nation employing them need to be sensitive towards them.