Iran-Israel conflict puts UAE, Saudi Arabia's foreign workers under strain

Steve Geoffrey, one of roughly 30 million foreign nationals in the Middle East, considers himself lucky to still be able to support his family in Kenya.

The 38-year-old, who works for a hospitality firm in the Qatari capital of Doha, sends about 150,000 shillings ($1,159) home to his wife and two children each month. That’s nearly twice the average earnings in Kenya, allowing the family to cover his younger brother’s school fees and unexpected expenses.

“We keep praying and hoping for the best,” Geoffrey said of the more than three-month war, during which cities across the Gulf came under attack from Iranian missiles and drones. “Returning home hasn’t crossed my mind. I won’t know where to start.”


The conflict has cast a spotlight on one of the world’s largest migration corridors, putting billions of dollars in remittances at risk and testing an economic model that relies on foreign workers to keep Gulf economies running.

While almost all Iranian attacks were intercepted, the war disrupted travel and tourism, choked exports through the Strait of Hormuz, raised import costs and strained supply chains. Some countries rolled out measures to help residents weather the crisis, including loan deferrals, but job insecurity rose across sectors from hospitality to construction.

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Even as the US and Iran engage in talks aimed at reaching a permanent peace deal within 60 days, economists expect growth in the region’s major economies to slow this year.

Migrant workers in the six Gulf Cooperation Council countries sent an estimated $124 billion home in 2024, supporting families from Asia and the broader Middle East to Africa. Their anxieties are already showing up in the data: Western Union Co. reported an acceleration in outbound remittances from the Middle East during the early phase of the conflict.

In India, where the United Arab Emirates alone accounts for about one-fifth of inward remittances, money sent home by overseas workers rose more than 28% in the three months through March. Bangladesh and Sri Lanka also reported increases.

Heightened uncertainty arising from the conflict “could have triggered a surge in remittance inflows, as expatriates rushed to repatriate funds to India for safety and liquidity purposes,” said Madhavi Arora, an economist at Emkay Global Services Ltd.

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That initial rush was not uniform across countries. In the Philippines, remittances grew at their slowest pace in almost four years in April, a worrying sign for a country where such inflows account for about 10% of GDP and where about 2.4 million citizens work in the Middle East. Central Bank of Kenya data show private transfers from Gulf states rose in March as some 500,000 workers rushed to send money home at the onset of the war, before falling 18% in April.

“There are clear signs of financial strain,” said Daré Okoudjou, chief executive officer of cross-border payments platform Onafriq. While transaction volumes have increased, their average value has fallen about 12%, he said, and wage delays are forcing some workers to draw on savings.

“For the first time since the 2020 pandemic, an estimated 40% of senders are drawing from their emergency reserves to maintain remittance levels,” he said. “This is a fragile resilience because once those savings are depleted - estimated by the third quarter of 2026, if the conflict persists - we expect a sharp collapse in total volume.”

The Gulf became a magnet for migrant workers more than 50 years ago, when a surge in oil sales boosted government revenues and triggered large-scale infrastructure spending. Combined with relatively small domestic workforces, this created a sustained demand for foreign labor that has persisted as regional economies expanded and private sectors matured.

More recently, the cash-rich nations have pursued ambitious diversification plans, seeking to build domestic ecosystems in finance, technology, healthcare and, increasingly, artificial intelligence.

That has largely been underpinned by immigration. Foreign workers built much of the Gulf’s modern infrastructure and still account for the majority of private sector employment in several GCC states.

The conflict is exposing vulnerabilities that long predate the war. Most Gulf states offer limited paths to permanent residency or citizenship, while many lower-paid workers have little access to unemployment support or welfare benefits if jobs disappear.

Just one month into the conflict, Human Rights Watch reported that some workers were struggling to cover “everyday expenses” because of income losses, rising costs and limited access to social services and welfare programs. The group has called on Gulf governments to protect migrant workers from income losses, compensate affected workers and ensure employers uphold contractual obligations despite the conflict.

“The decline in remittances or any kind of risks associated with remittances would immediately translate into economic difficulty and social difficulty,” said Dilip Ratha, the chief executive officer of advisory firm Ratha Global.

Historically, higher oil prices have supported hiring and wage growth across the Gulf. This time, however, the war-linked increase stems from disrupted production, damaged infrastructure and blocked trade routes, limiting the benefits for workers, according to a World Bank report.

Gulf governments are expected to ramp up investment in reconstruction, logistics networks and infrastructure projects designed to expand oil and gas export capacity that bypass Hormuz. That could help cushion labor markets.

Globally, migrants have sent more than $5 trillion to low- and middle-income countries over the past decade, according to IFAD, a United Nations agency. For many developing economies, remittances support consumption, stabilize exchange rates, finance imports and ease external financing pressures.

Any disruption would reverberate far beyond public finances, especially as major donor countries turn inward and inflation pressures rise. Remittance flows to low- and middle-income countries already exceed foreign direct investment and official development assistance.

Unlike many other forms of capital, remittances go directly to households, helping cover basic needs and, in many cases, transforming lives. A decade-long study found that families receiving remittances in rural Thailand and Vietnam were more likely to afford flush toilets, improving sanitation and reducing the risk of stunting, wasting and underweight children.

Remittances are becoming increasingly important for developing countries across Africa, Asia and Latin America, said Ratha, who spent more than 30 years covering remittances, migration and diaspora financing at the World Bank. “The smaller the country, the poorer the country, the more fragile the country, the more of a financial lifeline remittances are.”

The risks are not all immediate.

“Historically, we have seen similar patterns that then revert themselves if the conflict remains extended for some period of time - where there’s less migration into the region, there’s less opportunities for people economically, and thus the overall volume of outbound remittances begins to shrink,” Devin McGranahan, CEO of Western Union, said in an earnings call in late April.

South Asia illustrates the scale of the vulnerability. The region accounts for about 9 million workers in the Gulf, roughly 90% of whom are low-skilled and generally earn less than migrants from other regions, according to Patrick Kirby, a senior economist at the World Bank. “This means they have the least financial resilience to absorb a loss of income, and their families back home have the thinnest buffers of savings to fall back on.”

Satheesh Rajan, an Indian swimming coach in Qatar, embodies both the opportunities migrant work can create and the uncertainty that a renewed outbreak of conflict could bring.

“My big dream was always to build a house that was completely paid off and after years of hard work, I actually managed to do it,” Rajan said, adding that he sends about 30,000 rupees ($318) home each month.

While he welcomed the peace talks, Rajan said “we never expected this ordeal to last this long, and beneath the relief, a persistent nervousness remains.”