The Global Financial Crisis: Impact on Lebanese Expatriates in the Gulf

Abstract

As was the case during the Great Depression, some countries have been hit hard from the outset, while others have experienced a ripple effect later on. Others, like Lebanon, believe they can weather the storm largely unaffected. However, financial experts believe that although Lebanon has remained largely unscathed by the initial impact of the crisis, this good performance can essentially be traced back to sufficiently available liquidity and bank deposits. Experts from the International Monetary Fund (IMF) warn against Lebanon’s overly optimistic stance, particularly as more Lebanese expatriates in the Gulf are being threatened by the economic crisis and might face short term layoffs, pay cuts, or extended periods of underemployment. This study takes a critical look at these assertions, and examines the impact that the economic crisis has had on Lebanese in the Gulf. The economic situation in the Gulf Cooperation Council States (GCC) - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates - has been directly affected by the global crisis. Major development projects, which have required the recruitment of hundreds of thousands of foreign employees until recently, have been halted, which in turn is leading to significant labor force downsizing. Approximately 350,000 Lebanese expatriates working in the GCC, particularly in the financial, construction, and hospitality sectors, are potentially at risk of losing their jobs. It can be assumed that Lebanese expatriates are well informed of the actual state of Lebanon’s economy, especially with respect to its labor market and the fragility of its socio-political state of affairs. There is evidence to suggest that some Lebanese in the GCC whose employment situation has changed for the worse are not returning home, but rather are finding employment opportunities in their host or neighboring countries. As a contribution to an emergent geography of labor, this micro-scaled paper will a) offer a glimpse into the situation of Lebanese expatriates working in the GCC; b) survey the coping strategies currently being employed and the various ways these expatriates are dealing with the uncertainties and their actions and reactions to the labor situation and the new circumstances they find themselves in; c) discuss why returning to Lebanon is not an option; and d) assess the applicability of development projects, which have required the recruitment of hundreds of thousands of foreign employees until recently, have been halted, which in turn is leading to significant labor force downsizing. Approximately 350,000 Lebanese expatriates working in the GCC, particularly in the financial, construction, and hospitality sectors, are potentially at risk of losing their jobs. Hirschman’s theory Exit, Voice and Loyalty to the expatriates’ response. Due to lack of statistical information in the sending country and to lack of access to data in the host countries, the original data used in this paper was gathered through the use of a largely quantitative email-based survey with expatriates employed in the GCC, along with additional interviews with banking, economic, and policy experts in Lebanon and in Abu Dhabi.