RIYADH, 5 March 2003 — A decision to bar foreigners from working as salesmen and administrators in jewelry showrooms took effect throughout the Kingdom yesterday.
The measure, introduced as part of efforts to create more jobs for Saudi nationals, affects 6,000 jewelry shops and is expected to create 20,000 new job opportunities. The gold and diamond sector employs more than 50,000 people nationwide, including skilled and technical staff — categories which remain open to foreigners.
Apart from the 6,000 shops, more than 2,000 small factories and workshops handle an estimated 200 tons of gold annually, which is worth more than $2 billion.
The new measure was briefly implemented in July 2001 but was subsequently suspended following protests from businessmen. According to a quota decided then, Saudis are now supposed to make up half of the manpower in the jewelry sector.
The authorities were quick to act against jewelers that failed to comply.
Authorities closed more than 50 percent of the gold shops in the Dira gold souk in Riyadh for their failure to meet the Saudization target. This caused panic among the gold showrooms in other parts of the capital, compelling expatriate employees to stand by around the shops.
The new regulation drew criticism from retailers contacted throughout the Kingdom yesterday by Arab News reporters.
Jamil Ali Farsi, dean of the Jewelers’ Association in Jeddah and chairman of the Gold and Jewelry Committee at the Jeddah Chamber of Commerce and Industry, said he supports the principle of Saudization fully, but feels that as applied to the gold sector it is being done with the best of intentions but little understanding of the specialist knowledge unique to the industry.
“Individual jewelers gave up a great deal of time voluntarily to structure a training program to equip young Saudis to enter the business,” he said. “High school students have little experience of real business life.
“They need some toughening up before they enter the business world. The gold business is based on small, high value items and long-term relationships with clients. An entrant straight from high school simply doesn’t have the attitude, training or the developed sense of responsibility that is needed to succeed in the trade.”
Hamza Rizk echoed many of Farsi’s sentiments. “I have to be able to trust my employees,” he said, “not just their honesty, but their ability to talk to and develop clients and to have a sound knowledge of the products.”
He felt that Saudization was a good idea.
“It will certainly give more work to Saudis, but will take a long time to be fully effective. It takes a long time to train for the trade. Many of the foreign workers have huge experience and knowledge. That will take a long time to replace.”
Mohammed Fitaihi, board member of the Fitaihi group, a leading jewelry retailer in the Kingdom, said that many of the workers in jewelry stores were Yemeni. “Technically Yemeni, many of these people were born and raised in the Kingdom,” he said. “It’s not as if they are recent immigrant workers.”
He suggested one option might be to amend the new legislation to include foreign workers who were born in the Kingdom as well as Saudi nationals as workers in the industry.
Fitaihi agreed that a sale of jewelry at the top end of the market is a very specialized profession. Clients like to buy from people with whom they have a long term relationship or who have a similar cultural background. “But there aren’t enough Saudis in the Jeddah area wanting to join the trade,” he said.
In Riyadh, a check of gold shops in the Al-Batha area revealed that the level of Saudization had reached 50 percent. In some shops, Saudis were seen working alongside Arab expatriates, mainly Yemenis, some of them wearing the Saudi thobe.
However, shops which cater mainly for expatriates from the subcontinent still have a mix of Saudis and Indian salesmen. The reason given is that since a majority of their customers are Indians, it would be difficult to Saudize their workforce 100 percent.
The inability of Saudis to communicate in English has been cited as a major reason for retaining the expatriate employees.
A Saudi executive in Riyadh, who did not want to be named, told Arab News that his showroom — with a workforce of 35 — employs 16 Saudis and 19 non-Saudis. The Saudi salesmen, who are between 24 and 30 years old, are paid SR3,000 per month, while expatriate salaries average SR1,500.
Instructions from the Ministry of Interior that expatriate workers employed in the showrooms should not be less than 40 years old seem to have been overlooked, as long as the Saudization quotas are being met.
This was apparent during a visit to the Al-Fiyadh for Jewels showroom located in the Al-Rajhi Buildings in the downtown Al-Batha district. This shop has three sales assistants, two of whom are Saudis. Abdullah Hassan Al-Minhali, 19, is a Bedouin who moved to Riyadh from his hometown Kharkhir in Najran four months ago.
Abdullah, who studied up to class eight, told Arab News that this is his first job and he draws a monthly salary of SR3,400.
Although gold shop owners in Dammam and Alkhobar reported business as usual, they admitted that the real effect will be felt after a week. “It is a major decision and certainly will have adverse effects on the business,” said Ghassan Al-Nemer, chairman of the Ghassan Factory for Gold and Jewelry. He added that, although the new rule has been implemented for retailers only, the same law was on the way for manufacturers.
Gold retailers say that their business was bound to suffer due to the switch.
“We have customers who feel comfortable with certain salesman and now, if that salesman is not at the counter, the customer is bound to lose interest,” said a partner of Al-Madinah Jewelry in downtown Alkhobar.
Dozens of jewelers in Dammam and Alkhobar have their own workshops, where mostly Indian goldsmiths are employed.
These retailers say that once the rules are implemented for goldsmiths as well the entire trade will be ruined. “In such a scenario we will have to shift our workshops to Bahrain until we train Saudi goldsmiths,” the manager of Al-Mulhim Jewelers in Alkhobar told Arab News.
There is already talk generally of shifting business to Dubai which is considered the region’s central gold market.
— Input from Roger Harrison in Jeddah, Javid Hassan in Riyadh and Saeed Haider in Dammam
