THE telephones have stopped ringing in the plush front offices of luxury home builders in Kerala. At many places, half-finished residential towers have begun sporting colourful cloth banners that read: A few more flats available. There have been few takers for high-rise apartments nearing completion, and land deals and new projects have been put on hold. A gloom has enveloped the ambitious construction sites on the information technology (IT) corridors in Kochi and Thiruvananthapuram.
Even as earthmovers and cranes lie inert at many boom-city neighbourhoods, the first reports of migrant labourers from Bihar, West Bengal and Tamil Nadu losing their jobs are heard from many locations. Like thousands of their Malayalee counterparts now in the Gulf countries, these labourers too had to put themselves in debt and hardship to travel and make a living far away from their homes. Will they find other jobs in Kerala soon? Or will they too have to leave?
The real estate boom in Kerala, sustained mainly by remittances from the United Arab Emirates (and to an extent from the IT and tourism sectors), had been but a poor imitation of Dubais construction boom which, in the past six years, rode spectacularly on a bubble of debt and speculative investment rather than oil wealth.
When the bubble does burst the large-scale unemployment and the tighter laws favouring natives are perhaps the first pointers to this happening the Gulf-non-resident Indian (NRI) remittances that buoyed the Kerala economy from the mid-1970s and contributed to 80 per cent of the ongoing constructions are under the threat of drying up.
The future of these projects and the States economy depends on whether the ordinary Malayalee workers without jobs now in Dubai and the other Gulf states are able to find alternative employment or have to come back with their savings (if any), unemployed. It would also depend on how far Keralas other hot linkages with the world economy, such as its traditional spices, cash crop and fisheries exports, software and human resource exports, and tourist arrivals are hit by the global recession.
In mid-February, the only clear indication within Kerala of a possible return of migrants from the Gulf was the steady stream of inquiries in some reputed schools, especially in Kochi, by parents seeking admission for their children from the next academic year. The manager of Toc-H Public School in Kochi, Dr K. Varghese, for example, said his institution had received at least 60 such inquiries over phone and in person since January. The last parent to approach him was an engineer, a site supervisor in Dubai who lost his job and was seeking admission for his three children before he could go back and find other employment in the Gulf.
Schools in Thiruvananthapuram and Kozhikode that Frontline contacted said they had received only a few admission requests. For a while now, Dubai has been tightening immigration laws and offering meagre salaries, forcing employees to send their families home while they toiled alone in the UAE. The worry now, given the sudden spurt in admission inquiries, is that the breadwinners, too, are coming home.
Indias Consul General in Dubai, Venu Rajamony, refused to comment on or reply to an e-mail questionnaire seeking clarifications, especially about reports in the Dubai media quoting him as saying that airlines operating from India to the UAE had received bulk bookings from construction firms to fly home 20,000 of their employees in March. His office later told Frontline that he would not like to offer a comment or confirm or deny the reports because the facts are still being gathered.
Sheela Thomas, the Secretary to the Chief Minister and the Non-Resident Keralite Affairs Department, said that but for reports in the media, the State government did not have an accurate picture about how many people had been affected or how many would return. But it was seriously considering measures that would soften the blow if large numbers of people were indeed forced to return, she said.
Efforts to contact representatives of major recruitment firms and construction and marine engineering companies in Dubai did not bear fruit. According to H.A. Munaff, Air Indias station manager in Thiruvananthapuram and chairman of the Board of Airline Representatives in Kerala, reports about an exodus from the Gulf have not yet been reflected in the traffic figures of airlines. There was not much change in the figures for the six months up to January 2009 compared with that during the same period up to January 2008. There was, however, a small variation in the current figures from Dubai. Slightly more numbers of passengers are coming back from Dubai now, he said. He was also unaware of bulk bookings in airlines.
Manpower exporters in Kerala say recruitments to the Gulf countries have dropped dramatically by between 70 and 80 per cent in the past six months. M. Shaji, director of a travel agency in Thiruvananthapuram, said: Airline officials claim that the traffic to the Gulf has not come down needs to be seen against the sharp cut in fares to the UAE in recent months. Why are they reducing fares if the flights are full?
Sunny Kuruvila of a Kochi-based firm, which sends a sizable number of job aspirants to the Gulf countries, has compiled a list of about 45 major construction projects in Dubai that have been either put on hold or cancelled. Each of these projects costs millions of dollars and employs a large number of Keralites, among other expatriates. In the projects on hold, employees have been forced to take a 20 to 50 per cent cut in salaries or go on long leave. Once they reach home, they are informed that their visas have been cancelled, he said.
K. Sreenivasan, president of the Manpower Exporters Association, who returned from a visit to Dubai in early February, believes that Kerala will soon face a major crisis as recession and retrenchment are bound to spread to the other states in the Gulf. He said: Even candidates selected after interviews held last month have been refused jobs [in Dubai]. Hundreds of people have applied for transfer certificates for their wards from schools. Reports about employees who lost their jobs abandoning luxury cars and flats with huge debts on them and taking the first flight home are very true. For the average Keralite worker who took huge loans to even reach Dubai, the dream has turned sour indeed. There is no guarantee that they would get back their jobs in the near future.
Even otherwise, since the late 1990s there has been a steady decrease in the number of Keralites opting for jobs in the Gulf because of worsening working conditions, tougher immigration laws, high cost of recruitment procedures, escalating rents, saturation of the low-end labour market and competition from countries such as Bangladesh, the Philippines and Thailand.
Irudaya Rajan, Professor, Research Unit on International Migration at the Centre for Development Studies (CDS) in Thiruvananthapuram, points out that wages have come down in the Gulf states. A welder who was promised a pay of Rs.20,000 may be getting only Rs.5,000, while at present he can earn Rs.10,000 in Kerala. A Gulf job is not as attractive today as it was a decade earlier, he said.
Some of the results of Kerala Migration Survey 2007, conducted by CDS, are revealing in this context. For every 100 households in Kerala, there were 24.5 emigrants, and 89 per cent of its 1.85 million emigrants were employed in the Gulf states. Over 45 per cent of the Gulf emigrants from Kerala had only primary education. However, 25 per cent of the total NRI remittances to India are to Kerala. Deposits in NRI accounts in the State totalled Rs.31,865 crore in June 2008. But the ratio of NRI deposits to domestic deposits has come down by half during the period from March 2002 to June 2008, implying the declining importance of NRI remittances to Kerala. (In comparison, software exports from the State rose to Rs.1,200 crore in 2007-2008, and the total revenue from tourism, another growth sector, was Rs.10,000 crore.)
Unfortunately, the threat of a return of Gulf migrants en masse, a consequent fall in remittances, and the worsening unemployment situation come at a time when the signs of the global crisis are already visible in other sectors of the States economy. Historically, Kerala, with its export-oriented agriculture and underdeveloped industry, has been more integrated with the world economy than many other States of India. Its best bet for survival has long been its exports of cash crops, spices and fisheries, all of which are now facing falling revenues under the global crisis.
Tourism and IT, its other major revenue earners, too are affected. Gloom has set in in the States technology parks, and banks catering to the many companies in them confirm a drastic fall in monthly salary deposits. In both Kakkanad in Kochi and Kazhakkuttam in Thiruvananthapuram, centres of IT mega development, many of the newly built high-rise apartments are yet to find buyers.
Major booksellers are experiencing a drastic reduction in revenue because of the fall in demand for IT-related books.
Tourist arrivals are officially expected to go down by 30 to 35 per cent. Hotels are only half full, chartered flights have been suspended, and many more houseboats than before are being dry-docked.
Real estate development, the most visible sign of recent prosperity that provided jobs to 25 lakh people, has also come to a halt. Huge hoardings at city junctions announce the arrival of a whole new market for nano homes and nano villas. Big builders are aghast. Said S.N. Raghuchandran Nair, president of the Confederation of Real Estate Developers: The Kochi and Thiruvananthapuram markets are the worst hit. A lot of investment had been planned there on the basis of projected demand linked to the expansion of the technology parks. And then came the crisis in the U.S. economy. Our target was the NRI and IT segments. But now we have to do a lot of revalue engineering and build affordable homes for the domestic market.
Car and two-wheeler sales are down at most dealerships since December. There has been a drop of 30 to 33 per cent in sales in the mid-segment category, said the manager of a luxury car outlet in Kochi. With rising gold prices, jewellery shops of all places in Kerala are struggling for customers.
Elsewhere, the big retail chains that were out to conquer the Left-ruled State until the other day have shed their arrogance and opulence. Lean and mean, that is the new mantra in the world of Big Retail, said the manager of a retail chain. Sales have not been affected but frills are out. The air-conditioners have been switched off. And surely but silently jobs have been cut, a number of them from the back rooms, he said.
On February 18, two days before he was to present the State Budget, Finance Minister Thomas Isaac told the State Assembly that two lakh persons were likely to return to Kerala from the Gulf countries by June. But no one is sure.
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