Asian expatriate worker earnings are facing a squeeze as currency appreciation at home triggers higher wage demands across the Emirates.
For expatriates from Bangladesh, which was hit by a cyclone last week, the problems caused by currency appreciation are particularly acute.
The Bangladeshi taka has appreciated by 4.5 per cent against the dirham, reducing the value of remitted dirhams sent by workers to their families.
The Philippine peso has rallied by 4.6 per cent against the dirham, as the Philippines’ government debts are upgraded by ratings agencies to “investment grade” status and capital flows into the country.
Some of the most acute pressures are being felt in the service and construction economies.
That was reflected this week when some Arabtec sites ground to a halt after workers went on strike over pay. The contractor said that most of the striking workers were Bangladeshi.
The costs of employing staff in the construction industry are rising, according to data released by the Statistics Centre Abu Dhabi.
Hourly rates for electricians were Dh16 in April, 33 per cent higher than the same month a year earlier, and Dh11 for steel fixers and carpenters, representing a 37.5 per cent increase during the same time period. Vijay Gandhi, the regional director at Hay Group, the global management consulting firm, said higher pay expectations and rising rents in places such as Dubai were the principal drivers of wage inflation.
“People from countries such as the Philippines and Bangladesh may expect to get paid 5 or 10 per cent more than a year ago,” he said.
“Rent increases have been a phenomenon that we have seen over the last eight to 10 weeks. Hopefully things will not get as bad as they were some years ago.”
Rents in Dubai have risen by as much as 25 per cent over the past year according to broker data, putting more pressure on employers to increase housing allowances.
Overall inflation in Dubai climbed 0.9 per cent in April from the same period last year, higher than the 0.6 per cent annual rise the month before.
During the month, inflation remained steady, with a 0.1 per cent lift from the previous month. Consumer prices in Abu Dhabi climbed 0.6 per cent last month from a year earlier.
Inflationary pressures are also being felt in other Arabian Gulf economies.
Qatar inflation is expected to accelerate to 3 per cent in the next two years rising to 4 per cent in 2015 and to as much as 5 per cent until 2017, Global Investment House predicted last week.