Oil-rich states in the Middle East have long depended on migrants from countries such as India and Bangladesh to fill the demand for labor in capital-intensive projects and protected indigenous labor by promoting large civil service classes. But global inflation has reduced real wages while increasing the price of goods, with effects magnified for those countries with currencies pegged to the falling US dollar, and this reveals flaws in the migrant-labor system – reducing the purchasing power of remittances sent home from migrant workers, leading to financial disincentives to work in the Gulf, wage inequality and unrest. The Indian government has responded by instituting a minimum wage, to retain indigenous labor for its own capital-intensive projects. Members of the Gulf Co-operation Council must engage in some economic planning, designating priority areas for skill development and devising incentives that draw indigenous workers to those areas of need rather than the bloated bureaucracies. – YaleGlobal
Labor Pains in the Middle East
Inflation and skills shortages threaten the Gulf
The Economist, 1 April 2008
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