As Oil Price Falls, Job Opportunities Dry Up for Pakistanis in Saudi Arabia
Asian workers have their lunch at their accommodation in Qadisiya labour camp, Saudi Arabia on August 17, 2016. Faisal Al Nasser/Reuters
Sohail Khattak and Taimur Khan, Foreign Correspondents
PESHAWAR // Visa agent Khushal Akbar sits at his desk in the 40ºC heat, sweating; the air conditioner silent and the lights in his office dark. But there is no power outage in central Peshawar — Mr Akbar simply cannot pay his bills.
The 45-year-old makes a living arranging GCC work visas for Pakistanis from across Khyber Pukhtunkhwa province and the adjacent tribal areas, the majority of whom find jobs in Saudi Arabia, he says. Or at least they used to.
The past year and a half has been the worst period for business Mr Akbar has ever seen in his 15 years of being a visa agent.
“People are not even willing to buy a [Saudi] visa for 600 riyals (Dh588) that used to cost 1,600 riyals,” Mr Akbar says. “Every agency has 100 to 200 Saudi work visas allocated to them every month, but they don’t have any workers interested in buying them now.”
Many workers already in Saudi are not renewing their visas, he adds.
Between 2005 and 2014, when oil prices were mostly high, demand for foreign workers in Saudi Arabia soared as the country undertook large infrastructure projects and, after 2011 and the Arab Spring, allocated US$130 billion (Dh477.5bn) for subsidised housing developments. Two-and-a-half million jobs were created in the kingdom over this period, and although figures on countries of origin are not kept by Riyadh, and Pakistan does not keep track of how many of its citizens work in the Arabian Gulf, the construction jobs were filled almost exclusively by South Asian labourers.
However, since the beginning of 2015, when it was clear oil prices were unlikely to recover, tens of thousands of Pakistani workers have been issued exit visas by companies in Saudi Arabia, while new job openings have declined dramatically.
The power of remittances
Remittances from Pakistani labourers in the Gulf — the largest proportion of whom are thought to work in the kingdom — are a key factor in the significant strides that Pakistan has made over the same period in expanding its middle class and reducing poverty.
Money sent home to Pakistan reached $19bn in 2015 and essentially covered Islamabad’s large trade deficit. The drop in oil prices, meanwhile, has saved Pakistan about $5bn since 2014 because the country imports most of the oil it consumes, and the government plans to end its IMF assistance programme later this year.
But a sustained reduction in demand for workers in the construction sector in Saudi Arabia and elsewhere in the GCC would threaten to undo many of those gains. And this just as Pakistan is looking likely to push its economic growth toward the 6 per cent threshold needed to create enough employment for the country’s youth.
Macro-economic indicators have been looking increasingly bright in Pakistan over the past two years as militant violence dropped to decade lows, while the country’s stock market has been the best performing in Asia this year. The country’s market status has also been upgraded from frontier to emerging by the MSCI, which provides analysis for investment institutions.
With Pakistanis from across the country travelling to the Gulf for work, remittances have had a nationwide effect on Pakistan and helped spur societal changes including greater urbanisation, small business growth and greater consumer spending.
“It is because of remittances that the middle class is growing, it is because of remittances that poverty is declining,” says Nadeem Haque, the former deputy chairman of Pakistan’s federal planning commission, and a former IMF development economist.
“If remittances decline, poor areas will suffer, and that could cause some political effect.”
Goodbye to the good days
Syed Habib Ali Shah, a former chairman of the Pakistan Overseas Employment Promoters Association, says that 80 per cent of Pakistan’s overseas workers are in Saudi Arabia.
But, he claims, since the oil prices plunged more than 80,000 Pakistani migrant workers have been issued exit visas by companies in the kingdom. “The number will be higher than our estimates. Moreover, those still working there are not in good conditions,” he says, referring to delayed and missing salaries. In Peshawar, visa agents across the city expressed their concern about the dwindling demand for Pakistani workers in the Gulf.
One of Mr Akbar’s competitors, Hayat Gul, estimates that Saudi Arabia’s economic problems have affected at least 200,000 Pakistani migrant workers. Before the current crisis, Mr Gul says he processed up to 200 Saudi visas a month. Now, if he’s lucky, he sells ten.
“This month I have processed only four visas,” says Mr Gul, who charges $160 for a visa, making a $50 profit. “You can imagine the dismal situation of our business. Workers are not willing to go [to Saudi Arabia] and their relatives and friends [working in the kingdom] are asking them to avoid Saudi these days.”
The agents also arrange airfare for workers heading to the kingdom, and Mr Gul says the travel agencies he works with have been forced to lay off staff. Mr Gul himself is having to take money from his savings to pay the rent for his office and his assistant’s salary.
But despite these difficulties he’s not willing to give up on the visa business yet.
“We won’t leave the business due to this crisis,” he says. “We will wait and hope for the good days to return.”
Out of options
The rest of the Gulf offers few other options for Pakistani workers.
“Saudi Arabia is a huge market for our labourers,” says Mr Gul. “The other Khaleej [Gulf] countries can’t accommodate this huge number of jobless workers … Kuwait has already stopped giving visas [to Pakistanis], while Dubai is too expensive for these low-paid workers to survive and save some money for their families.”
Muhammad Islam, another visa agent in Peshawar, meanwhile, says it is difficult to get visas for Qatar and Oman.
“Our business was mainly running on Saudi Arabia because of its huge potential to accommodate workers,” he says. “A Qatar visa costs around $1,500 and … [Oman] and Qatar have made it mandatory for workers to have a driver licence” from the Gulf to obtain work visas.
Many poor Pakistanis who have recently returned from Saudi Arabia after losing their jobs are facing insurmountable financial burdens because of unpaid loans they took to finance the costs of securing work abroad. Many also sold property or other assets such as their wives’ jewellery to pay for airfare and visas.
“We spend years paying back the loans we took for reaching the job’s destination,” says Usman Ghani, a 29-year-old plumber who returned to Pakistan from Jeddah in January after being sacked by the largest construction firm in Saudi Arabia, the Saudi Binladin Group, whose contracts until recently mainly came from the government.
Last year, Riyadh began delaying payments to contractors to keep its budget deficit under $100bn and in May, reports emerged that the Binladin Group had fired nearly 80,000 workers, many of whom had not received their salaries for months. This sparked weeks of protests by unpaid workers who set fire to Binladin buses in Mecca.
Pakistani workers were particularly affected, says Bawar Khan, another visa agent, because only Muslims can work in Mecca where the Binladin Group has many construction contracts.
“I was lucky enough to have got my outstanding payments due by the company,” says Mr Ghani. But “many of my fellow workers are still stranded there without having been paid”.
The Binladin Group’s problems were exacerbated after one of its cranes toppled into Mecca’s Grand Mosque last September, killing 107 people. A ban on the form bidding for public contracts was only lifted in May.
Without their outstanding salaries, many workers are unable to afford the flight home and can end up trapped in Saudi Arabia, jobless and facing mounting debts as they borrow to meet rent payments and buy food.
“Workers were spending days in their rooms with no money to buy food and everyone was struggling to borrow money from someone to meet their daily expenditures,” says Mr Ghani. “The frustrated workers then turned angry and began protesting outside the company’s offices and some torched company vehicles.”
Mr Ghani says some of his fellow workers were so desperate that they even committed suicide. At one point, he adds, “we stopped a shakil [a fellow worker] from jumping off the roof”.
Like Mr Ghani, Amjad Khan, a former mechanic at a car rental company in Saudi Arabia, also returned to Pakistan recently after losing his job. And he too witnessed the desperate situation that many Pakistani workers are facing in Saudi Arabia.
“If 20 Pakistanis are sharing a house, only two of them will have work. The rest are either jobless or unpaid,” he says. “These two workers will pay the rent and other expenditures of the other 18 who will return the money to them when they get their salaries or jobs.”
But returning home is not always an easy prospect for these men, even those who can afford the flight.
As Mr Khan says, “How will you face your family or the people who gave you loans for visa and tickets?”
For more on how falling oil prices are also affecting Lebanon, click here