UAE Fuel price rise adds to cost of living

As new fuel prices in the UAE take effect from today, the expat view on rising costs resurfaces with a fresh context

ones who readily paid with sweat for the country may not always afford to pay with money

The United Arab Emirates recently lifted fuel subsidies, thereby deregulating its price and pegging them to the global level. Owing to the country’s cautious approach towards limited resources and its federal budget, the revision in policy has won the backing of credit rating agencies for the environment and economy alike. The revision in fuel prices will take effect from today at pumps across the UAE.

RELATED: Finally, UAE to end fuel subsidies

The low and controlled UAE fuel price had made us expats, especially Non-Resident Indians, the centre of jokes such as “you own an oil well in the backyard, don’t you?” Compared to my fellow countrymen who switch the ignition off at traffic lights and take to the streets at marginal increase in fuel price, we lead a cushioned life insulated from the vagaries of a bustling economy and a ‘full tank with fuller purse’. Or did we?

As an Indian growing up in the UAE with stories of struggle and dreams – some fulfilled and others falling short – this discourse is for the modestly salaried expat – a term I often use to depict a large, if not the largest portion of the 80% non-citizen population of the country fondly called home.

RELATED: UAE Fuel Subsidy Reform gets a thumbs up from Moody’s

Offsetting low fuel price

To argue that expats have reaped riches through controlled petrol prices is an extremely simplified one. In a YouGov survey conducted for The National newspaper in early 2015, around half of expats considered leaving the UAE due to high living costs.

According to the research –

When asked if they would consider moving away from the UAE because of the cost of living, 17 per cent said definitely yes while a further 33 percent said probably yes. Only 21 percent said no, while the rest were unsure.

According to the research manager  –

The majority of expatriates consider money and saving for the future as an important factor in moving to UAE. But the rising costs of living are increasingly holding them back from safeguarding the financial security they have been looking for, which makes moving out of the UAE a serious alternative.

Relief from paying extra for the fuel never obviated the stress caused by exorbitant amounts paid for house rent, utility bills and school fees, and the better part of a modestly salaried expat’s life is a testament to this.

Eking out a living vs living a life

“The cost of living in the area is increasing drastically which isn’t helpful at all.  Life’s becoming quite tough in the UAE generally … people are just surviving these days”

This was the response of a British expat to Gulf News on fuel deregulation. In the life of expats, some of the grave and at times humorous family ‘strategies’ feature a regular stream of cost-saving instructions from parents and similar talks from relatives in gatherings. In the metro rides too, conversations between my countrymen often drift into morose discussions of struggling with a low paying job and the ever-rising expenses. Reflecting on our lives in this country that has otherwise been a splendid host makes me question: have we really succeeded in living a life, or are we just eking out an existence? In a bid to prepare for the next bill, have we settled with mediocrity and the mundane instead of striving for a more fulfilling experience?

To their credit, the financial acumen of the expat generation that first set foot in the UAE laid the foundations for the ones to come. The country’s rapid advancement brought with it new opportunities for the expats, who – instead of splurging on short-lived pleasures – shared the fruits with their people here and back home. Their decision to stay on and serve the country without a real stake provided us with a safe environment – something our home-country provides in little supply. Though navigating through the deeper questions of identity and excellence is an individual challenge – and that deserves a commentary of its own – the opportunity cost paid by the community to live here is little if anything at all.

Counting the real cost

The cost of fuel subsidies does not just dent the federal budgets, but also contributes to negative externalities in the economy and the environment. Ms. Pranita Lele, a teacher of Economics and a resident of UAE for 12 years, says that all good economic policies are never populist policies.

Commenting on the new policy –

There will certainly be an effect on the budget but the impact can be controlled wisely.  Subsidies are never a long run solution for any good economy.  Petrol subsidies had to be removed sometime or the other, so this decision is not shocking at all. There will be long-term positive environmental impact and sustainable development is of paramount importance. Scarce resources have to be protected.

Mohit Purswani, a recent Engineering undergraduate whose father started off as a textile worker in Dubai in 1990, is already preparing to factor in budget tweaks in his first ever job. He sees in the new policy two opportunities that should drive the efforts of the government and its subjects –

I take public transport to work and I wouldn’t say it’s adequately prepared for the potential increase in commuters, especially during peak hours and in areas like Al Nahda where roads are clogged severely. Increased use of metro combined with efficient bus routes should play a key role in the post-deregulation times. One may also have fuel economy as one of their checkboxes when buying a car, which wasn’t of much importance in the UAE so far.
With this in mind, a nuanced criticism of this policy will be traversing a difficult path considering that benefits outweigh costs. A worthy attempt to tackle costs strongly in the UAE lies in a sector that pays immediate dividends and cannot be short-changed or substituted to cut corners.

Education – fuel for the mind

report by Emirates 24|7  shows that UAE is the most expensive for high school.

If we split it country-wise, private schools in the UAE are most expensive, with fees ranging from an average of $6,000 [Dh22,038] for Indian schools to $13,797 [Dh50,676] for British schools.

Previous studies highlight that most parents are unhappy about the fees that schools charge and some maintain that it is becoming difficult for them to keep up with the annual fee hikes.

Tagged with extra tuition fees, cost of books and other co-curricular activities, a child’s time in school alone chips off the elusive savings in large chunks.

Khalid Al Ameri, an Emirati social columnist and commentator, wrote this passionate piece on supporting the interests of the country for a better cause at some cost of our own. Just a day later, he authored a strongly worded article rightly questioning the motives of private educators in the country.

Schools owners and business leaders might think it is simply parents complaining and being tight on their expenses, but in reality it is the children who pay the ultimate price. They either have to settle for a sub par education, parents who are constantly stressed with ever growing costs that are yet to see a limit, or even being home schooled and never getting to experience life as a real student, making lifelong friends, supporting their school’s sports team, and being part of a wider community.

Exploitative practises in the education & knowledge sector can unite people of all spending power. Higher fuel costs may keep some cars off the road for the better, but higher tuition fees keep students off quality education – and that’s a grim thought to deal with. As expats grappling with the challenge of rising costs, our objections can be directed towards that which blatantly flouts moral fairness in transactions.

Education remains crucial for a healthy society and does not take a backseat in priority, be it that of the hosts or the home country. Urgency requires that stronger regulation for curtailing school fees be implemented so that it helps parents decide which school & curriculum the child will be a part of. Finally, an easier and economical access to good education is not an exclusive issue, but one that resonates with the local hosts and will garner their support too.

In the light of new developments, it’s possible that more expats may sweat it out in public transport to accommodate the valid needs of the host country. But in an effort to reap business rewards, let schools not forget that the ones who readily paid with sweat for the country may not always afford to pay with money.

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