A recent decision by the Ministry of Labor bans small businesses with ten or fewer employees from hiring workers from outside the Kingdom. This has been done as part of an official policy for training Saudis to take over jobs and limiting the recruitment of foreign workers to special cases.
The news reflects a feeling of nationalism and concern for the future of local jobseekers. Seven years ago, however, the authorities directed that all businesses with 20 workers or more should implement Saudization at the rate of five percent annually. This meant that small businesses were not obliged to abide by those instructions at that time but now, seven years later, they find themselves forced to Saudize, not at the rate of five percent annually but at 100 percent.
The five percent policy introduced seven years ago has failed. Figures show that instead of decreasing, the actual number of workers recruited from abroad has increased. Saudization rates in small businesses may go up as a result, but the overall figures for foreign workers are increasing rather than decreasing.
The reason is not hard to guess. It is not because small businesses are less patriotic or because they hate to employ Saudis; the reason is that we lack a qualified national work force able to meet market demands and also because the overwhelming majority of foreign workers are doing menial jobs that Saudis do not want because those jobs don’t fulfill Saudi expectations.
Banning small businesses from recruiting foreign workers should have been followed by another step obliging big companies to adopt a minimum wage system so as to encourage Saudis to take up menial jobs. The problem is that big companies refuse to introduce such a system because a minimum wage could result in an increase in the price of goods and services, thus triggering economic inflation, a situation that may not help Saudis secure the basic needs they have taken for granted.
At the same time, banning small businesses from hiring foreign workers could also result in inflation because the ban could force many firms to close down. This means the firms would not be able to provide any jobs at all which of course means an increase in the number of unemployed. Big companies would then find themselves forced to do the work formerly done by small businesses but at higher costs. Again, this would not serve the economy’s best interests.
Instead of following the general trend of the world economy, we are proceeding in the wrong direction. At a time when the whole world is encouraging and helping small businesses to flourish, we are tightening the noose around our small firms, choking them with a range of new decisions. All big companies began as small companies. Why should we prevent the small from growing big?
