When Gomer left the Philippines as a fresh graduate engineer for Dubai, he had high hopes of a prosperous career in the then booming emirate. But now five years on, his aspirations could hit a dead-end street as the emirate, once dubbed "the Singapore of the Middle East," is reeling from a debt crisis that could choke businesses and cause salary cuts or layoffs among millions of foreign workers, who have been the lifeline of the economy.
"Because of the problems in Dubai, I feel scared now," Gomer said, standing outside a gleaming skyscraper, for which the interior design was made by his company. "My boss wants to reduce my salary from 4,500 dirhams (1,226 dollars) to 2,500 dirhams (681 dollars). He told me this month and he told me he wants to make the company survive," he added.
Last week, Dubai World, the emirates development and investment arm, said it was seeking to restructure debt worth 26 billion dollars ahead of a December 14 deadline for repayment of a 3.5 billion dollar loan owed by its property subsidiary Nakheel, developer of the flagship palm-shaped islands luxury residential and tourism project.
The announcement shook international markets and local markets, caused panic among investors and cast doubt on the soundness of the economy of the emirate, part of the seven-member UAE that has enjoyed a six-year oil-fuelled economic boom. And as the debt crisis spills over into other sectors, hampering companies' expansion - that has been driven mainly by relatively easy loans - Gomer and other expatriate workers, could be at risk of having their salary reduced or even losing their jobs.
A site manager for a Turkish construction company, who identified himself only as Kaan, said his firm has started to layoff workers that are no longer needed as many projects are coming to an end with no others in the pipeline. "Just in this past week, we let go of 50 workers out of a total of 300 because of the latest development in the (debt) situation," Kaan said, wearing a white helmet and a yellow phosphoric vest.
"We sent the labourers away because of the crisis, because we dont have any upcoming projects in Dubai," he added. The global financial crisis and the ensuing economic slowdown has hit Dubai hard, resulting in a sluggish real estate sector and a stock market rout. Multi-billion dollars worth of projects were put on hold or cancelled all together and hundreds of foreign workers lost their jobs and were forced to leave the country.
"Workers especially in the construction sector have been hardest hit with several projects shelved off half a way with delayed salary payments," Samir Pradhan, a researcher at the Dubai-based Gulf Research Center, said. "While the hardest hit realty sector, financial services, mortgage firms are pursuing hiring freeze at the moment, other sectors may layoff due to the process of downsizing in order to address the impending financial challenges," he noted.
Pradhan said that the current crisis might hurt Dubai as it could lead foreign workers to stay away from the emirate's job market in the future. But people like Janice, a Filipina sales assistant at an electronics store, say they would like to stay in Dubai. "We are praying that we will be OK. Even though we are not Emiratis we consider Dubai as 'we' as we are part of this. So if Dubai goes down, we will have to move on to another place we don't know where," she said.
Gomer, for example, said he is currently searching for another job in case he was laid off. "This crisis will maybe last for six months or one year and after that, it will become better," he said. "I came here after I had freshly graduated and everything I learnt, I learnt from here. So I want to stay here and I hope I could find a better job."
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