x Abu Dhabi, UAESaturday 20 January 2018

Majority plan to stay and fight downturn

Countries with immobile populations face a simple dynamic when a recession hits: people tighten their belts.

Countries with immobile populations face a simple dynamic when a recession hits: people tighten their belts; they spend less and save more. Job losses mount, benefits and bonuses are cut and loan defaults increase. Yet few people consider leaving the country. With a population as mobile as the UAE's, however, a whole new set of possibilities comes into play. About 80 per cent of the population of almost 5 million is composed of expatriates, according to a census conducted in 2005.

With so many transients, hard times can more easily lead to an exodus as they seek jobs elsewhere. Such shifts can wreak havoc on economies based on expatriate labour, pushing GDP, one of the most prevalent measure of economic performance, downwards and putting the brakes on economic growth. That such an exodus has not yet happened in the UAE, at least not to any alarming degree, is a testament to the fact that this recession is a global one, and people still believe the UAE has long-term prospects.

There are simply not many great opportunities in the rest of the world for expatriates to snap up. According to the YouGov survey, almost 60 per cent of people who recently lost their jobs plan to stay in the UAE and look for new ones. Only 20 per cent said they would return to their home countries. Even more encouragingly, 83 per cent of all those surveyed said they planned to stay for at least a year, and 33 per cent said they had no plans to leave at all.

This is not to say that people here have not felt the effects of the global downturn. There have been job losses: 10 per cent of respondents said they had lost their jobs recently, while 62 per cent said they had close friends or family members who had lost jobs. Meanwhile, 68 per cent agreed that they were "very nervous" about their job security. People have also been cutting back on spending and curtailing extravagances, the survey showed. Almost 90 per cent said they would not make major investments during the downturn, 81 per cent were avoiding charging too many purchases to credit cards, and 72 per cent said they were eating out less often.

Over 80 per cent were spending more "cautiously" during the downturn and 82 per cent said they were cutting non-essential purchases from grocery shopping. If these results are to be believed, we are struggling just like everybody else in the world. But the way we have felt these effects appears more akin to the way recessions plague countries with stable labour forces. Some people will surely leave the UAE because they have been made redundant, or even because they see better job prospects elsewhere. Yet the lack of evidence of a major expatriate exodus is a positive sign for a country that bases much of its economic activity on migrant labour.