Business, Finance & Economics

Financial crisis sends Lebanese packing ... for home


BEIRUT — Twenty-eight-year-old Rony H. moved from his native Lebanon to Dubai in 2003. The city was in the midst of a decade-long building boom, its famous glitzy towers and man-made islands still under construction. Rony eventually settled for a job as a broker in the red-hot real estate market in 2007.

“I was making more than $10,000 per month,” he said. “It was easy money.”

But a year later, the bottom fell out of the real estate market as the global financial crisis hit the gulf. The company Rony worked for folded; his job disappeared. He kicked around in Dubai for six months, looking for work. His high-rolling, nightclub-loving ways (“every night was a weekend,” he said) saddled him with $27,000 in credit card debt and personal loans. Now, he’s back in Lebanon, unemployed.

“I spent all my money. I’m going to start from zero,” he said, asking that his full name not be used to protect him from creditors.

Rony is one of perhaps thousands of Lebanese who have returned jobless and near penniless from Dubai, a phenomenon that could drastically reduce the remittances that fuel Lebanon’s economy.

Last year remittances from millions of Lebanese expatriates working and living everywhere from Kuwait to Australia totaled more than $6 billion, an amount equal to more than 25 percent of the tiny country’s gross domestic product. Thirty percent of Lebanon’s labor force resides in Arab Gulf states like Dubai, according to Standard Chartered Bank.

No one knows for sure how many Lebanese are unemployed — or how many have returned to Lebanon — because of the economic crisis. Lebanon’s Central Bank has planned for a worst case scenario of a 30 percent drop in remittances, said Central Bank Gov. Riad Salameh, although he said it’s still too early to tell how severe the effect will be.

“Up till now, we haven’t seen really a negative affect or big change in remittances, and maybe it’s too soon for we are at the beginning of 2009,” Salameh said. “They are a pillar of stability and source of funding of private and public sector; that’s why we give them importance.”

Lebanon has so far dodged the bullet of the global economic crisis, mainly due to the Central Bank’s conservative banking rules. But if remittances drop, Lebanese families will have less to spend. Rony used to send $500 to $1,000 home every month to help pay for bills or insurance. Now thousands like him, and their families, will be forced to survive on much lower salaries than were once available in Dubai.

“I need to find a job ASAP,” Rony said, indicating he’d readily accept a far lower salary than his previous job in Dubai. “At least $1,000 per month, as a start.”

Others have been lucky to find a job as soon as they return to Lebanon. Charbel Karam, 26, is one of them. He lost his job in January as a graphic designer at one of the top advertising firms in Dubai. With his top-notch experience, Karam quickly found a new job in Lebanon as an art director, which gives him more responsibility. But he’s making about a third of what he made in Dubai — mainly, he said, because there is a glut of people just like him.

“At this agency when I was trying to bargain with the salary, I was trying to play my ‘gulf experience card,’ saying, listen, I have three years of experience,” he said. “The managing director was like, ‘actually, I was hoping not to bring this up, but there are a lot of you.’”

Karam said he considers himself lucky to find a job as quickly as he did.

“Over there I had a lot of payments to make, life is more expensive in Dubai,” he said. “[The Beirut salary] still doesn’t match up, even with the cost of living, it’s less money. But I wanted to come back to Lebanon. So I’m home, you know.”

Karam has yet to buy a car in Lebanon, because he’s still trying to get rid of the one he owns in Dubai. He thinks he’ll probably have to sell his late-model Chevrolet Lumina for less than he owes on it — which is about $25,000. It’s hard to sell cars in Dubai today. Thousands of fleeing, unemployed expatriate workers are rumored to have abandoned vehicles around the city, glutting the market with cars. Rony H. is in the same position, trying to sell his car in Dubai through a friend.

Meanwhile, the Lebanese Central Bank has tried to cushion and capitalize on the return of so many young expatriates by creating business start-up loans for entrepreneurs and small business owners, many of whom may be returning from the jobs abroad.

And the crisis may help reverse what many Lebanese lamented as “brain drain,” when fresh Lebanese university graduates would flock to the gulf for better salaries and benefits.

Companies from the gulf "used to come and recruit at universities,” said Nassib Ghobril, who is in charge of economic research and analysis at Lebanon’s Byblos Bank. "It was so bad that we were finding it difficult to recruit people here."

He points out that many of those graduates will now be competing with Lebanese returning from overseas for the same positions, which may glut the market with overqualified job candidates.

But some returning Lebanese aren’t finding the financial adjustment so hard. It’s returning home to live with the family that is presenting more of a challenge.

“For six years I wasn’t living with my parents. And so it’s so weird. I’m a big guy now,” Rony said. “I’m not comfortable. So once I get a new job and good salary, I will move.”

Related GlobalPost dispatches:

Lebanon bankers cool in a crisis

Going downhill fast — and loving it

Related Stories