As the major players in the international arena prepare themselves for the World Trade Organization (WTO) meeting, developing countries are required to mobilize economists, legislators, security and defense specialists, educators, physicians and engineers. The WTO rules and regulations must be studied and accepted by experts and authorities and are made available to governments with appropriate suggestions and recommendations.
I would like to mention an article recently published in a Saudi daily. The article said that it was important for the government to set a minimum wage which would be applied in the private sector. This is seemingly the correct step and, if implemented, would boost production, improve performance and foster competition. In fact, however, if this is not done, the Saudization program will never achieve any of its aims.
A minimum wages has to take into account the cost of living and in order to set a minimum wage, the matter must be studied and carefully evaluated as to the implications for indiviudals and the entire economy. The Saudi economy is ostensibly free but it naturally has some shortcomings. Thus if we are to discuss a minimum wage, many things have to be taken into account, such as rents for both residential and commercial properties.
In fact, many countries except for those in Europe and other industrial ones, do not have a minimum wage. The minimum wage, is dependent upon market realities and forces, including the qualifications and experience of the workforce.
Business houses are also subject to increase or decrease in the volume of production and this is another factor that has to be taken into consideration in establishing a minimum wage.
The concept began in Latin America in order to ensure that black workers could make the transition from being slave workers to being free ones. Interestingly, the concept still survives in many Latin American countries despite a quarter century of inflation.
The purchasing power of most currencies leaves no room for any benefits of a minimum wage for workers. Fortunately, the Saudi economy has not experienced any inflation despite high prices for certain commodities and services. The riyal remains strong and the Kingdom’s balance of payments is sound enough in comparison with other countries. In fact, Saudization is a term devoid of meaning; we all agree that Saudis should replace non-Saudis who were recruited when there were no qualified Saudis. We cannot reasonably expect Saudization to occur overnight but to happen over a much longer period of time.
It is also important that the Saudization program be implemented so as not to disturb production or upset the national economy. At the same time, those non-Saudis who are being replaced should be treated fairly since if they are not, this will surely affect production.
As for unemployment, it is clear that the number of unemployed is greater than the market can absorb and that the number is increasing every year. In order to create new jobs, new plans and ideas must be produced, the economy must be stimulated, technical and vocational training must be encouraged and youth must see national development as a duty incumbent upon them and in which they must all play a role.
The international economy is moving toward abolishing restrictions and barriers including customs tariffs and preferential treatment for national industries. The Kingdom’s national industry will have to find ways of keeping costs down or our goods will be unable to compete in international markets.
The minimum wage concept has never boosted production but in fact it goes against many market forces including supply and demand. We have foreign manpower in the Kingdom because it is paid more here than it would receive in its home country.
In addition to this, the abolition of customs fees coupled with a minimum wage may well have an adverse effect upon performance and production.