Rony H. moved to Dubai in 2003 in the midst of the city’s building boom, and eventually got a job in the red-hot property market. By 2007 he worked as real estate broker, banking $10,000 a month selling condos and apartments.
“It was easy money,” Rony said.
But a year later, the bottom fell out of the real estate market as the global financial crisis hit the Gulf. Rony lost his job when the real estate company he worked for folded. The company’s owner fled.
“He has millions with him, and he’s in Germany in jail now,” Rony said, adding that he thinks his boss was laundering money.
Rony wasn’t caught up in the scam, and he’s now returned to Lebanon after spending the last six months unemployed in Dubai. He’s one of perhaps thousands of Lebanese who have returned jobless and near penniless from the Gulf, a phenomenon that could drastically reduce the remittances that fuel a quarter of the country’s economy.
Last year, remittances from millions of Lebanese expatriates working and living everywhere from Kuwait to Australia totaled more than $6 billion. Thirty percent of Lebanon’s labor force resides in the Arab Gulf states like Dubai, according to Standard Chartered bank.
Overall, one in every three expatriate workers in the Middle East may be poised to return home or move jobs, according to a poll conducted by Bayt.com, which surveyed 22,000 people this spring.
Lebanon’s Central Bank has planned for a worst-case scenario of remittances dropping 30 percent, says Central Bank Governor Riad Salameh, although he says it’s still too early to gauge how severe the impact will be.
“Up till now, we haven’t seen really a negative affect or big change in remittances, and maybe it’s too soon for we are at the beginning of 2009,” Salameh said. “They are a pillar of stability and source of funding of the private and public sector, that’s why we give them importance.”
A river to a trickle
A decline of “between five percent and 10 percent in remittance inflows to Lebanon in 2009 would result in a current account deficit of 10 percent of gross domestic product (GDP) for the year,” wrote Byblos Bank in an article in ‘Lebanon this Week’, citing a prediction by Standard and Poor’s.
And any drop in remittances will mean Lebanese families have less to spend. Rony used to send $500 to $1,000 home every month to help his parents pay the bills. Now thousands like him, and their families, will be forced to survive on much lower salaries than were once available in Dubai.
“I need to find a job ASAP,” Rony says, indicating he’d readily accept a far lower salary than the one he had in the UAE. He says he’d accept “at least one thousand dollars per month, as a start.”
Others have, luckily, landed a job as soon as they returned to Lebanon.
Charbel Karam, 26, lost his job in January as a graphic designer at one of Dubai’s top advertising firms. With his top-notch experience, Karam quickly found a new job in Lebanon that gave him more responsibility, as an art director. He’s making about a third of what he made in Dubai, but he doesn’t mind.
“The cost of living is high in Dubai. It costs $25 for lunch,” Karam said. “I was making money but I wasn’t enjoying it.”
Both Karam and Rony had to leave cars they bought in Dubai behind. Karam says he’ll probably have to sell his late-model Chevrolet Lumina for less than he owes on it — which is about $25,000. Rony’s Nissan Murano has been left with a friend, who Rony says is taking over the loan.
Rony has other loans to worry about as well. His high-rolling, nightclub-loving lifestyle (“every night was a weekend,” he says) saddled him with $27,000 in credit card debt and personal loans.
“I spent all my money. I’m going to start from zero,” he said. Rony asked that his full name not be used in this article to protect him from creditors in Dubai.
The Lebanese Central Bank has tried to cushion and capitalize on the return of so many young expatriates by organizing new start-up loans to entrepreneurs and small businessmen, many of whom may be returning unemployed after losing jobs abroad.
The central bank has tried to capitalize on returning expatriates by organizing new business loans
Minds on the move
And the crisis may help reverse what many Lebanese lamented as “brain drain,” when fresh university graduates would flock to the Gulf for better salaries and benefits.
“[Companies from the Gulf] used to come and recruit at universities. It was so bad that we were finding it difficult to recruit people here,” said Nassib Ghobril, head of economic research & analysis at Lebanon’s Byblos Bank.
He points out that many of those graduates will now be competing with Lebanese returning from overseas for the same positions, which may glut the market with overqualified candidates.
But some returning Lebanese aren’t finding the financial adjustment so hard. It’s returning home to live with the family that is presenting more of a challenge.
“For six years I wasn’t living with my parents, and so it’s so weird. I’m a big guy now,” Rony said. “I’m not comfortable. If I have a lady come to my house, it’s bad. So once I get a new job and good salary, I will move.”
But adjusting to a new lifestyle is something the vast majority of Lebanese in the diaspora will probably not experience. The Standard and Poor’s analysis indicates Lebanon’s expatriate workers are “older, better established and, on average, more wealthy than the diaspora of other MENA countries,” according to Byblos Bank.
Younger Lebanese employees who lose their jobs, like Charbel Karam, may face the most problems in the coming year. Karam is thankful he lost his job early, so he could find a job in Lebanon before an onslaught of expats start returning home.
“Everybody is moving back, so whatever [employment positions] are available now are going to get filled up pretty soon, if they’re not filled up already,” he says.