Jobs for citizens and growing remittances

The world bank reported recently that remittances from Saudi Arabia reached SR 100.13 billion in 2011 with an increase of 6.5 percent over 2010. It was expected to grow by a similar rate in 2012.
It is probably noteworthy that the rate of increase is more than the rate of economic growth.
This is a clear sign of misalignment of the Saudi economy and another indication of the limitation of added value creation in the economy.
The remittances amounted to SR 727.5 billion from 2000 to 2010. The Ministry of Labor (MOL) has been pursuing a policy of replacement of sorts in a simple policy orientation to reduce Saudi unemployment.
The under-reported aspect of the Saudi labor history is the fact that the rate of increase in expatriates is higher than the Saudi population growth rate over the last several years.
There is controversy and there are differences around the Labor Ministry’s Saudization policy. The nature of the policy and the measurements of its success or shortcomings has become a football for the pros and cons of this or that aspect.
The more effective yardstick to measure performance is the foreign exchange leakage that reflects the relationship between the national and non-national labor composition and types.
This financial bleeding proves the damage to the national economy. Hence, it is a key tool be used in assessing the ministry’s performance.
The Labor Minister stated that the Kingdom is going through an exceptional stage in infrastructure expansion, especially in construction, hence the demand for expatriate labor growth is of temporary nature, but he didn’t emphasize that the government’s employment expansion has reduced the number of Saudi nationals available for private sector employment.
He also didn’t refer to the Saudi government’s new flexible organizations and programs that are more hospitable to employing non-nationals.
The expatriates hired in these new roles such as consultants are sometimes with questionable value, especially when the key policy and strategies have not been well thought out.
The reason for these new hires cited ranges between the reasonable and the bizarre.
There is almost a barrel of governmental functions.
The relationship between remittances and nationalization is intrinsic but we hardly hear about it.
The reason is lack of comprehensive institutional thinking to development.
The better evidence is the ministries of economy and planning and finance seem to be happy over not being involved in the morass.
It is time for a cooperative effort between the Ministry of Finance and Ministry of Labor to monitor foreign exchange leakage and report it on monthly basis and use it as a key tool to assess the success or lack of the ministry’s performance and a wider Saudi economic performance.
One key advantage of using this tool is to ensure that there is a degree of uniformity in achieving the goals and objectives of the Labor Ministry’s policies.
Another would be to increase the funds available in the local economy, which is a small step to incremental value creation.
— Fawaz H. Al-Fawaz is an economy consultant.