ASK any Saudi businessman or official "Why Saudization?" and the same answer comes back: The 150,000 young Saudis graduating from schools and universities each year, all of them with expectations of a job and a reasonable standard of living.
Some add another reason, another incentive to Saudization: The scale of remittances abroad by foreign workers. Anticipated this year to amount to SR34 billion, they are a heavy burden on the balance of payments.
Some university graduates go abroad to continue their studies and even acquire specialized skills which allow them to find suitable employment on their return. But for all the newcomers to the job market, the Kingdom takes seriously its duty to find and provide employment opportunities. It is a duty which they too expect the authorities to fulfill.
But what has been happening is anything but clear-cut. There is a wide gap in the achievement of Saudization between the private and public sectors. The latter, along with mixed sector organizations such as the banks and Aramco, is one story — and a very encouraging story at that. If one looks, for example, at the story of the developing aerospace industry in the Kingdom, it is a tale of extraordinary achievement in skills transfer: Saudi nationals now occupy technical and management positions throughout the industry.
The private sector, however, is a different picture. There is no point pretending that Saudization is going according to plan here. Despite the best of intentions, it has encountered severe difficulties: It is not meeting the targets. It remains excessively dependent on foreign labor. Statistics show that while the expatriate labor force fell by 100,000 between 1980-85, it has continued to grow ever since. It currently accounts for 65 percent of the workforce. Unemployment among Saudis, on the other hand, is running at between 15 and 20 percent.
For the private sector, there are four key impediments: The cost of Saudization, the lack of trained people, particularly those with vocational skills, the problem in matching people to available jobs and, lastly, a reluctance to take certain jobs — the attitudinal issue.
Profitability and return on investment are the prime considerations for private companies. They want to help as best as they can; but they cannot afford to be philanthropic. Salaries of expatriates are lower than those of Saudis. The Sixth Development Plan (1995-2000) was realistic about the problem: The private sector had not employed Saudi nationals largely because of the availability of cheaper foreign labor — and often better-qualified and more dependable foreign labor at that. "There is only one way to deal with this," commented one senior member of the Jeddah business community. "If the government wants me to employ more fellow Saudis it will have to subsidize the costs. But they are not going to do that, because they can’t afford to." The only alternative, he said, was to force the issue by sending expatriates home and refusing to allow new ones in. "They won’t do that either, because we need them. We haven’t got enough skilled people."
That leads to the next problem, the question of skills.
"I need the right person for the job," says Dr. Bander Hamooh, director at one of the Kingdom’s technology transfer showpieces, Glaxo Saudi Arabia’s pharmaceutical factory in south Jeddah. "There are Saudization targets, but we need trained pharmacists. If we cannot get Saudi pharmacists, what do we do? We have to go for someone with the right skills, regardless of nationality."
The authorities are perfectly understanding about this. They agree that there is no point damaging nascent industries by forcing the pace of Saudization. But they are no less determined to see it happen. The answer, they agree, is training — and they are investing heavily in it. Even so, there are other problems.
Saudization is, in the view of many company executives, hampered by the lack of a strong recruitment business in the Kingdom. "There is a problem of matching people to jobs," says Glaxo’s Hamooh. People are applying for any job regardless of the skills they have. He recently advertised for packaging engineers. The number of replies was massive, but they were from people who had no experience for the job. "There are too many people with the right skills but applying for the wrong job," he said. It seems that people are so desperate for a job that they will apply for any one that appears to look interesting, regardless of whether they are qualified to do it or not.
Other businessmen say the same. The number of people searching for jobs far outstrips the number available. Zainel Alireza, of Alireza Umrah, recently advertised three jobs on a new Arabic and English Internet recruitment site — bayt.com — which may address some of the problems Hamooh raises. The posts were: A maintenance manager, an assistant general manager and an IT administrator. For the first, 450 people applied, the second 219 and the third 860. At present, one of the posts has been filled using the medium, which Zainel considers a tremendous boon.
Then there is the attitudinal problem. Why are there so few Saudi plumbers, so few Saudi electricians? They are well-paid professions. In the US and the UK plumbers earn fortunes. They can afford to take skiing holidays in Switzerland and cruises in the Caribbean. Perhaps the mercantile culture runs too strongly in the Kingdom. Those who do not go into the government sector want to be businessmen or managers. So they graduate in the Kingdom, then possibly acquire higher management degrees from the West and return in the hope of finding such lucrative positions. In fact, according to Jeddah Chamber of Commerce Chairman Abdullah Zainal, businesses are generally happy with their Saudi managers. "Some Saudis at management and middle level positions are so good that you just cannot replace them," he says. Nonetheless, the fact is that too many young men see being a mere plumber or an electrician as beneath them. "They do not want to get their hands dirty," an expatriate business manager commented. "Until young Saudis change their attitudes, the country is going to remain overdependent on foreign labor," he added.
And there is plenty of work for plumbers and the like. "I want to employ Saudi carpenters and electricians. I have work for them," said Mohamed A. El-Khereiji, chairman of the El-Khereiji Group. "But the few that are being trained are snapped up by Aramco and the army."
That points to two related problems. Saudis prefer to work in the public sector. Not only are wage levels higher, the jobs are seen as secure and prestigious. The result is that while an estimated 95 percent of non-Saudi labor works in the private sector, some 80 percent of the working Saudi population is employed in the public and mixed sectors. A mere 13 percent of the Saudi workforce is employed in private businesses with 10 or more people.
The other problem is vocational training.
JCCI Chairman Zainal — whose affable attitude belies a will of steel — is categoric when asked whether there is sufficient vocational training being provided. "No," he said with a firmness that indicated that he is determined to get things changed. "Our investment in training is a commitment to the future of this country. Our Saudi managers already have an excellent track record, so there is no doubt that other young Saudis can shape up well when employed, provided they are properly trained."
The current Seventh Five Year Plan (2000-2005) lists a number of initiatives, including the development of private employment offices providing labor market information, the expansion of specialized and "on-the-job" training, and a cutback in foreign recruitment, permitting only "qualified" or necessary personnel to be brought in from abroad.
As might be expected, the plan talks about developing human resources, ensuring an increasing supply of manpower, upgrading efficiency through regular training and replacing non-Saudi with Saudi manpower. It calls for an increase in the share of Saudi manpower in total employment and for expanding the job opportunities available to women in accordance with the teachings of Shariah.
The question is: Will all this have been achieved by 2005?
Zainal’s bullish stance is encouraging. It indicates a healthier approach to job creation — one where the problems are not only frankly acknowledged but, more importantly, frankly addressed.
But what makes it most encouraging is because the country’s chambers of commerce have the pivotal role in creating new jobs for young Saudis as well as Saudizing those presently in the hands of foreigners. The chambers represent the private sector — and the private sector is where current employment is overwhelmingly expatriate. And it is the private sector that has the wealth to create new jobs. The state sector cannot afford to do so. With oil prices being pushed down, the government is hard put to maintain the state sector. There is no financial room for expansion.
In the JCCI, around Zainal, are several people who are looking into concrete ways of expanding job opportunities for Saudis within the private sector.
Ziad Al-Bassam, who heads the JCCI’s small and middle-ranking businesses support group and a businessman himself, wants an extension of the franchise system. He believes that in addition to the creation of job opportunities it could prove to be a boon to budding entrepreneurs. "Young Saudis would be able to launch their own with their own plumbing, electrical or whatever businesses and workshops."
But that again will involve training — and training on more than one level. Without multiple skills, there will be failures — as seen in an anecdote from Hamooh of Glaxo Saudi. He tells of someone with whom he was acquainted who had trained as a mechanic. But instead of putting the skills he acquired to direct use, he set up a company, employing Filipino mechanics. He wanted to be a businessman. After a year, the company collapsed because he had no idea of administration, of cash flow, of the need for capital. He had been trained as a mechanic. "The trouble is that you train someone to be a plumber or an electrician, but he wants to be a businessman. He has to stick to what he knows."
The picture is much the same in other chambers of commerce: A heartfelt determination to make Saudization work — and not just in chambers of commerce. There is no lack of suggestions from all sorts of quarters on how to help with Saudization. A teacher of English the other day asked an Arab News reporter why the vast majority of taxi drivers in the Kingdom were foreigners. There must be plenty of unemployed Saudis who could do the job, he thought. Surely it would be quite easy to limit the work to Saudis. After all, the government has ordered the Saudization of the jewelry trade. He estimated it would take a year, two at most, to change the workforce. All that is needed was determination on the authorities’ part. They could, he suggested, introduce a taxi drivers’ license, which only Saudis could hold and which would become mandatory on a particular date. Between now and then, would-be taxi drivers could apply, and be trained and tested on their knowledge of their city’s streets and districts, and then be let out on to the roads.
One sector that should see a major growth in jobs for Saudis is during the Umrah and Haj seasons. Business in Makkah already earns 40 percent of the country’s income from services and tourism. The authorities have played their part by changing the law to extend the Umrah season and setting up Umrah agencies. This ought to see a growth in business and jobs. Unfortunately, the international recession, the Sept. 11 attacks and teething problems in its implementation have prevented any early growth. "Job creation has not been noteworthy in Makkah," says Hussein Shobokshi, a member of the Makkah Chamber of Commerce and Industry. "We have been able to attract money, but it has not created a lot of jobs." There had been jobs created in the service industry, and with several thousand more hotels and furnished apartment blocks due to open in the next year and a half, more will come. But from a Saudization point of view, the picture is disappointing. "The number of jobs being created in the service industry going to Saudis is not as big as we would like," he said. But he is anything but despondent. His estimation of unemployment in Makkah — around 12 percent — is below the national average and he is confident that government predictions of seven million Umrah visitors a year in three to five years’ time will prove accurate.
Given that already over 50 percent of work in and around Makkah is "directly dependent" on Umrah and Haj, the anticipated six to sevenfold increase in the number of Umrah visitors from abroad cannot but have a "massive" effect on the unemployment figures. It cannot but create a wealth of jobs, he believes.
Cities across the Kingdom see tourism as a major future employer and intend to benefit from the growth in Umrah visitors. The aim is to attract people visiting to perform Umrah to spend a few more days elsewhere on vacation. Jeddah, being the port of entry to Makkah and Madinah, is particularly well located to pick up business and is already busy making plans to turn itself into a major tourist resort. Other cities, such as Abha, also hope to latch on to Makkah’s coat-tails and are similarly working to boost employment though tourism.
Relating to tourism and the anticipated rise in Umrah visitors, another area seen to hold out major job potential is transport. Plans to extend the rail network and bus services, especially to, from and within Makkah, could provide work for thousands. But it too depends almost entirely on the private sector and its willingness to invest in such projects. That raises the whole question of Saudi willingness to repatriate the estimated $750 billion invested abroad. But all the signs indicate that if there are projects in the Kingdom that promise a good rate of return, investors will not be difficult to find.
In which case, there is every reason for cautious optimism on the jobs front. The battle can be won in the strategic private sector; it can develop sufficiently to offer job opportunities to all those thousands upon thousands of young Saudis emerging from colleges each year.
There is that word "cautious". People talk about "a job for every Saudi". But this may be unrealistic, indeed economically unsound. No industrialized economy in fact believes in it. A strong economy needs a mobile and competitive workforce, not one where everyone has a job for life. That is the road to stagnation. A mobile, competitive workforce inevitably contains an element of unemployment. It is not unacceptable, providing it is short-term. But for the moment, that is not the issue here. The issue is job creation, on a massive scale.
The private sector is the only realistic place it can happen.