Little impact of Saudi labour law on India's remittances, but...

Written by Huma Siddiqui | New Delhi | Updated: Nov 12 2013, 18:13pm hrs
Remittances IndiaIn the long run this would mean other countries in the Gulf region, which also have a huge Indian diaspora, may reassess their labour policies on similar lines affecting India's remittances. Reuters
The return of close to 1,34,000 Indians from Saudi Arabia, who took advantage of the royal reprieve, may not impact

India's remittances in the short term, but in the long run it would mean other countries in the Gulf region, which also have a huge Indian diaspora, may reassess their labour policies on similar lines.

The signs are already beginning to show. Kuwait, where around 700,000 Indians work, announced a policy to reduce the number of expat workers over a 10-year period. Apart from Kuwait, UAE is also considering changes in its labour laws to attract more locals to the private sector.

According to a CII study, With labour laws being reformed across the Gulf, the future of Indian expats, especially those in semi-skilled or unskilled categories, will be seriously affected. But India as well as the Gulf countries can still find new grounds that are mutually beneficial.

According to MEA joint secretary (Gulf) Mridul Kumar, From Kuwait, this year we had roughly about 4,500 to 5,000 people who have been deported. But this is again an ongoing process. Every year this happens.

Since it began, our view has been that this is a programme internal to Saudi Arabia and therefore it is the view of the sovereign government of Saudi Arabia to reorganise the labour market as it deems fit. However, our view has always been that there will be adverse effects in terms of humans involved. And we have always been in touch with the Saudi government to try and ameliorate the human dimensions of this programme. And it is in response to us and several other countries previously that the Saudi government had extended the deadline twice, said Syed Akbaruddin, official spokesperson of MEA.

Approximately 1.4 million Indians had used the opportunity to adjust their status in Saudi Arabia. In addition, approximately about 1,30,000 decided to return to India.

The Kerala government will operate chartered flights to Saudi Arabia to repatriate illegal workers from next week. The first of these flights is scheduled for November 20.

According to a government report High Level Committee on the Indian Diaspora, 70% of Indian expats in the region are semi-skilled and unskilled workers, while white-collar workers and entrepreneurs make up the remaining 30%.

Sheikh Nahyan bin Mubarak Al Nahyan, UAE minister of higher and scientific research, said: The reason for strong India-UAE relations is because the Indian community contributes to the building of the local community.

The Saudi Arabia government introduced Nitaqat in June 2011 whereby all companies operating in the country were required to reserve 10% of jobs for the Saudi youth.

Commenting on this policy, Abdul Wahid bin Khalid Hamid, deputy minister of labour, Saudi Arabia, said in an interview that it is part of the governments long-term strategy to create enough jobs in terms of number and pay, leading to full employment of human resources in Arabia in 25 years.

R S Kannan, additional secretary in Keralas NRK (Non-Resident Keralites) affairs department, said, The impact of the Nitaqat on India, especially on Kerala, is not as bad as feared. Initially, we had anticipated a big influx like during the Kuwait war. Though Kerala has the largest single expat community in Saudi Arabia, hardly 6,000 persons applied for emergency certificates.

According to Reena Sehgal of Observer Research Foundation, Nitaqat has achieved some early success as it has been able to generate jobs for the Saudi population. But its long-term success is open to question. There are other issues that will affect the implementation of this law. One such issue is the high cost of Saudi manpower as compared to foreign nationals.

The private sector makes a significant profit from cheap labour provided by non-Saudi workers. There are also some social and cultural perceptions that make Saudis reluctant to pursue certain kinds of jobs like in restaurants, hotels, barber-shops and other direct services to customers.

Prince Saud Al Faisal, the longest-serving foreign minister in the world, said what Saudi Arabia has done is in the interest of Indian workers. The procedures that we have taken are absolutely in the best interests of Indian workers.