THE challenge of getting Saudis into jobs that are currently done by foreigners is ongoing. The issue primarily involves the private sector. The government first tried to promote Saudization, by simple persuasion, to no great effect. It then imposed a blanket minimum ratio of Saudi workers on employees. This had little impact, because in its very rigidity, it failed to take account of the very different skill sets required by different business sectors.
A more flexible regime was introduced permitting some areas of business more leeway in terms of hiring foreigners, than others. This has proved more successful. According to the Ministry of Labor, 380,000 jobs for Saudis have been created as a result in just 10 months.
Nevertheless, it has become clear that the key issue here is money. Expatriate workers are simply cheaper, in some cases, significantly cheaper than Saudis. It has been estimated that 90 percent of employees in private firms are not Saudis. This, despite the protests of employers that their costs are being driven up when they employ locals, is clearly a deeply unacceptable state of affairs.
So the government has this week responded by trying to make foreign workers, in excess of the allocated ratio for a particular business area, more expensive to hire. Employers will be required to pay a fee of SR 2,400 ($640) a year for every expatriate worker over and above the company’s sectorial allocation.
The question of course is, if SR 2,400 is really enough of a penalty, to persuade employers to start hiring Saudis? On balance the answer has to be that it is not. Surely, only by imposing a sum that is equivalent the full cost of a Saudi employee, will there be any likelihood that the foreign workers will be abandoned in favor of locals ? As it stands, the present penalty is in reality a mild increase in cost, which will probably be absorbed by businesses, without too much discomfort.
In essence, the remedy lies with a more thoughtful enforcement of work permits for expatriates. Somehow or another, it is clear that some firms have been avoiding their obligations under the Saudization program, yet have been able to keep their excess expatriate employees in the country. Given the strictness with which even ordinary business visas are issued, this seems a puzzle. Perhaps part of the problem is that there is a lack of joined-up government here. The Ministry of Labor which is trying to implement the Saudization campaign, is not availing itself of the data on expatriates that are held by the immigration authorities.
A proportion of the nine million foreigners in the Kingdom, is of course illegal workers, who have overstayed their original employment or Haj visas. However it cannot be that their numbers are truly significant. Therefore the core facts on who is working here and for which sponsoring businesses have to be available. Those firms that are clearly in breach of their obligation to employ a set number of Saudis, could therefore be warned that the accreditation of their “excess” foreign workers will be revoked. Given sufficient time to make the adjustment, ideally both by employing more Saudis and trimming the number of expatriates, businesses ought not to suffer any disruption. For sure their costs would go up and inevitably, much, if not all of the increased expenditure will be recouped from their customers, many of them here in the Kingdom. However what employers need to grasp is the long-term social and economic costs to Saudi Arabia, of having an unemployment rate of 10.5 percent, a figure which many regard as totally unacceptable in an economy that is performing as strongly as is the Kingdom’s, at this time.
There is, however, one big argument, frequently made by employers, that needs to be addressed. It is that potential Saudi employees lack the skill sets and sometimes also the motivation to make an effective contribution in the workplace. The work-shy are a problem for economies the world over, with no obvious solution. The matter of qualifications is altogether another matter. Given the expenditure that the Kingdom has devoted to education and the wide range of post-elementary qualifications that is available, there ought to be no reason whatsoever for Saudis lacking the necessary skills.
It may be that what the employers maintain is a problem, has actually arisen in part through their own failings. It has been shown in other countries that companies need to engage with education systems, to ensure that the young people that are passing through them, are being trained in areas where the economy needs their talents. This combined with apprenticeships and on-the-job training could end what appears to be a serious disconnect in the Kingdom.
Editorial: Saudization — work in progress
