Workers on a trading ship in Dubai, UAE. Photo: fleshmeatdoll (flickr)

Despite efforts by the local media to paint an optimistic picture, tough economic realities are quickly catching up with the ambitious, fast-growing city of Dubai. One indication of the gathering storm is recent news that approximately 53 percent of the planned $1.28 trillion worth of construction projects in the United Arab Emirates’ most populous city are now on hold.

Feeling the worsening global slowdown, many of UAE’s companies — mainly in the property, construction and financial sectors — have laid off hundreds of workers. Construction companies have delayed or canceled projects, banks are tightening lending and tourism is slowing. Some companies have given their employees a period of two to three months to look for alternative work — but jobs are rare because most companies are freezing recruitment.

This alarming new reality is most noticeably taking a toll on those who’ve come from other countries to seek work in Dubai. Foreigners make up about 85 percent of the local population and 99 percent of the private work force. According to the Ministry of Labor there are 4.5 million foreigners in the country, compared with 800,000 Emirati citizens. About two-thirds of the foreigners are South Asians, including most of the 1.2 million construction workers.

According to figures accumulated by Dubai’s Indian Consulate from airline records, a total of 20,000 workers from the construction sectors are leaving the UAE next month. Approximately 3,000 Filipinos out of the 300,000 in the UAE lost their jobs over the course of a single month because of the global financial crisis. And it is estimated that about 1,500 work permits and visas are being canceled in Dubai each day.

This mass exodus is causing a curious problem in the long-term parking lots of Dubai International Airport: Over the last four months, Dubai police have found at least 3,000 automobiles abandoned outside the airport.

But not all of those with grievances are exiting Dubai. The Dubai Ministry of Labor has been flooded with thousands of labor complaints, mostly from Indian workers. A local newspaper reports that many are seeking advice about pressing charges against their employer after being forced to take pay cuts, or suing for unfair dismissal.

“There are some real tragedies happening,” said Tony Maalouli, the managing director of a firm that has recently seen labor lawsuits increase by 20 percent. “Small to medium businesses are simply closing down and management is running away because of their liabilities. What they are doing is illegal, they are escaping their obligations. This is happening a lot.”

There are increasing signs that the expatriates who once flocked to Dubai in the last years are leaving. A Western diplomat notes, “There is no way of tracking actual numbers, but the anecdotal evidence is overwhelming. Dubai is emptying out.”

As the International Labor Organization predicts that the wages and jobs of more than 1.5 billion workers worldwide will be somehow affected in 2009, we can only anticipate more bad news coming from Dubai.

Dubai's Construction Skyline at Night. Photo: twocentsworth (flickr)

The financial crisis is crimping construction in the Middle East and other places that had been experiencing a building boom, Der Spiegel reports.

Developers in Dubai — once synonymous with high profit margins and high-concept architecture — have delayed lavish developments, including a chain of palm-tree-shaped islands and a $600-million Trump hotel and tower.

The slowdown has affected the migrant workers who make up the core of Dubai's workforce, 43 percent of whom call India home. The Times of India reported that thousands of laid-off construction workers have applied for visa cancellations.

Der Spiegel says developers elsewhere in the Middle East, namely Qatar, Bahrain, Kuwait and Saudi Arabia, are scaling back as oil prices fall.

And in Moscow, developers halted construction on what was to be Europe's tallest skyscraper. The Russian economy is "a house of cards that is built on Western loans and which is now collapsing," German architect Peter Schweger told Der Spiegel.