Dubai:1,500 foreign worker visas revoked every day
The global economic crisis is having a strong impact on commercial activity connected to foreign consumers. The drop in oil prices is lowering the cost of food after the spikes of 2008.
Dubai (AsiaNews/Agencies) - In the most populous and best-known Arab emirate, 1,500 residency permits are canceled each day for foreign workers. It is the effect of the global crisis that is impacting, in the first place, the multinational companies in Dubai. The labor ministry expects the cancellations to increase in the upcoming months. The phenomenon will affect recently fired workers, who are having a hard time finding new jobs after the major companies have frozen hiring.

Together with the increase in firings of foreign workers and the revocation of residency permits, the ministry is also registering an unprecedented number of worker complaints. Officials at the ministry say that they have received claims from workers who have not been paid, have been subjected to unpaid trial periods, or have been fired without the agreed severance.

For now, the global crisis has had a limited effect on the population of the emirate. The sectors most affected by the economic crisis are those that are connected to foreign consumers. Luxury stores have shown a steep drop in sales with the beginning of the new year. The heads of the main boutique stores and shops for foreign brand products say that in December of 2008, purchases were down by 70% compared to the same period in 2007.

Michael P. Niemira, director of the International Council of Shopping Centres, says that these numbers should be interpreted in relation to the economic recession in Europe, the United States, Canada, and Japan, which "has to have an effect on buyers and travellers to the Middle East."

Some analysts maintain that the negative trend will mean changes and cuts for most stores that rely on foreign consumers. This involves a significant proportion of the commercial activity and employment in which the emirate has invested a great deal recently. In November of last year, the Dubai Mall was opened, which should host more than 1,200 stores at full capacity. The Mall of Arabia, projected to be the largest in the world, should be opened by 2010.

Despite the numbers for the end of 2008 and the beginning of 2009, representatives of the leading international brands are not yet speaking of a crisis in the sector, but rather of a revision of commercial policies in anticipation of a rebound. An initial test for the real conditions in the sector is offered by the Dubai Shopping Festival, which begins on January 14.

The automobile sector has also shown signs of a serious crisis, beginning at the end of 2008, especially after the announcement of the crisis among the Japanese manufacturers. The drop in sales in the sector - which so far is mostly affecting the dealers - has also contributed to the decision of banks in the region to raise the minimum salary required for loans to fund purchases or small and medium-sized businesses.

Food prices are going in the opposite direction. Thanks to the drop in the price of oil and the value of the dollar, staples have stopped weighing so heavily on family budgets. Inflation reached record levels in March, and the following month the government reached a price freeze agreement with the major food retailers.

In the country, which imports 80% of its food, the new economic conditions have meant a drop in prices, which in the early months of 2008 had spiked as never before: the price of a ton of rice went from 650 dollars to 1,000 dollars, the most substantial increase in the past 25 years.