RIYADH/JEDDAH, 22 February 2004 — Yesterday was the final day for jewelry shop owners to replace some 25,000 foreign workers with locals under the government’s Saudization drive, sparking fears that the business could suffer setbacks as a result of the loss of qualified manpower.

Inspection squads were expected to go from shop to shop to ensure that owners are complying with the order, said Dr. Abdulaziz Al-Hazaa, director of the National Program for Training and Employment in Makkah, last week.

Violators will be fined twice; after the third violation their shops will be closed and the foreign workers deported, he told Al-Madinah Arabic newspaper.

“There will be no postponement and no extended period for the implementation of the decision (concerning the gold sector) and no nationality will be spared,” a Manpower Council official said.

Indians and Yemenis top the list of expatriates facing the ax in jewelry shops across the Kingdom.

The SR15-billion gold and jewelry business was targeted in 2002 and given a year to comply but the deadline was extended last year.

“It is too early to say if the Saudization of the gold sector is proceeding smoothly but the feedback we are getting from the field so far is encouraging,” the secretary general of the Manpower Council, Abdul Wahid Al-Humaid, said hours after the ban went into force.

About 60 percent of the gold shops in Riyadh’s central Batha district were closed yesterday as the government began enforcing the ban.

Saudi economist Ihsan Bu Hulaiga noted that the jewelry sector “was already an almost 100 percent” Saudi affair in the Eastern Province, where a tradition of passing the trade from one generation to another had been kept alive.

But he added employers “tend to prefer foreigners because they accept lower wages, and they cannot really be blamed so long as their employees enjoy legal status.”

In Jeddah there was no sign of an expected 56 inspectors from the National Program for Training and Employment, a number of gold dealers told Arab News.

“Things are exactly the same,” said Fouad, who has been a Saudi gold dealer at Jeddah’s International Market for the last two years.

“Most of the dealers here have Saudized their stores. It was not done overnight,” he said.

Mohammed Al-Mousan agreed. “Most of the stores were ready last month.”

He said it would take some time until the inspectors made their presence felt. “You don’t want everybody nervous from the start, but they have a job to do.”

Surveying the mall Arab News saw no foreigners in any of the gold stores, except stores that have a license to sell watches only. However, some did have on display a number of pieces of jewelry.

But some dealers expressed fear that a black market in gold may emerge staffed by foreigners who have lost their jobs. “For some of these people that is all they know,” Mohammed said.

Gold salesmen who are well trained and experienced in this trade have been discarded. “This could lead to more gold being sold on the streets, and there is no way of monitoring the quality. That’s is just bad for business,” Mohammed added.

But Al-Humaid, commenting earlier on such concerns, said: “These are merely fears, speculation — bearing in mind that no country in the world can fully control the black market, or what is called an ‘underground economy’.”

The Saudi gold market consists of some 6,000 retail jewelry shops. Jeddah is the largest single one with nearly 1,300 shops or 21.7 percent of the total number in the Kingdom.

The Jeddah Chamber of Commerce’s gold and jewelry committee, in a move to increase employee professionalism, has made an agreement with the World Gold Council in a cooperation pact to establish the first institution for teaching and training young Saudis as goldsmiths.

Jameel Farsi, the president of the committee, said the committee had met with World Gold Council members and defined the syllabus for both training and the institution that will be established in Jeddah. He told Arab News that the meeting discussed the participation of the World Gold Council in a program for retail training as well as participating in improving the fronts for gold shops in Jeddah.

Yesterday’s move is the first in a series providing for the Saudization of 25 economic activities — mostly in retail — over three years.

Under the plan, employers in each of the designated activities must hire at least one Saudi national within a year. Fifty percent of their workforce must become local by the second year, and the proportion must go up to 75 percent in the third year except in cases where 100 percent Saudization may be required.

Travel agencies are next on the list, with an estimated 10,000 of 25,000 jobs targeted for Saudization.

— Additional input from agencies