Saudization: The Objective Is Clear, the Means Are Not

Saeed Haider • Gulf Bureau
Publication Date: 
Sun, 2003-07-13 03:00

DAMMAM, 13 July 2003 — Saudi Arabia is home to a foreign work force of some seven million, who remit some SR21 billion to their home countries every year. At the same time, unemployment among young Saudis is at a record high and rising.

Against this backdrop, indigenization of human resources gathered momentum and the government made it known that it meant business. It drew up a list of professions for Saudis only and sectors where it wanted all foreign workers to be replaced by Saudis. They include the vegetable trade, real estate, the gold trade and the taxi business. The private sector responded positively to many decisions but had some grave reservations.

How realistic is the current policy on Saudization? Should Saudization come from the grassroots level or from the top? Is 100 percent Saudization in certain sectors practical? How could a balanced policy be achieved? Will mass departure of expatriates have adverse effects in the market?

With these questions, Arab News approached three top businessmen representing industry, trade and commerce and a top executive.

Abdul Aziz Qasim Kanoo is the deputy chairman of the Kanoo Group. A septuagenarian, he has also been involved in several philanthropic projects.

He believes the current Saudization policy is achievable if it has the complete support and dedication from all involved, including the government, the private sector, schools and universities.

“Saudization should become part of everyone’s commitment to the well-being of the country and the economy,” he says.

In some sectors, 11 percent Saudization is mandatory. “While I don’t have any objection to this, it is extremely difficult to make a seamless transition to Saudization in a very short time. A sensible Saudization policy is one that allows a degree of flexibility in order to achieve the transition in a cost-effective and efficient manner and respects everybody’s dignity, including that of the expatriate work force.”

Kanoo does not believe that the quota system will hamper growth, far from it. “I take a positive view of this in the sense that it could form the basis for further implementation of Saudization.”

Nor does he think that a reduction in the expatriate work force will have an adverse impact on the economy. “If all expatriates who are replaced by Saudis leave the country, then the Saudis replacing them will be earning money which will be spent in the Kingdom and not remitted abroad, and that could have a beneficial impact on the balance of payments and on the economy in general.”

Khaled M. Al-Zamil is the president of Zamil Steel and director of H. Al-Zamil Group of Companies. He was also chairman of the Eastern Province Chamber of Commerce and Industry. By profession an engineer, Al-Zamil is forthright in his comments.

“Policies are general guidelines and the implementation of Saudization has some flexibility,” he says. “Having said that, no matter what the policies are, if we don’t combine that with the tools, the training and the education required, we cannot implement Saudization in its entirety.”

Al-Zamil says a national consensus on the matter is “not a luxury, it is a necessity.”

While some companies are actively training Saudi staff, others are not as committed, and they need help from the top.

“The government’s push for 100 percent Saudization in certain sectors is mainly because those sectors are essentially service sectors and the Saudization campaign there has been very slow,” he explains. “Personally, I still do not agree with the 100 percent Saudization. The training and expertise of expats are necessary in the early stages of the development of a company.”

But he, too, does not think that the quota system will hamper economic growth. “If a company is sincere in its efforts, the Ministry of Labor will adopt a flexible attitude. They need to see a good outcome of the Saudization plan, and I think they are aware of the ground reality and problems faced by the private sector.”

Education and training are the factors that present the greatest challenge. “We have many young Saudi graduates from both the universities and technical colleges that are looking for employment. In most cases, they are not able to find jobs because their education and training are not compatible with the demand.”

There must be an orientation and adaptation program in universities and private training centers to prepare Saudi graduates for the job market.

“The establishment of the Human Resources Development Fund was a big achievement and a cornerstone in the Saudization drive because companies can now utilize this fund and train young Saudi graduates for almost free,” Al-Zamil says.

But to achieve Saudization, it is necessary to make the economy grow and improve annually on a level that is higher than population growth. “Once we achieve that, we would be able to create a lot of new jobs for Saudi graduates.”

It would also minimize the negative impact due to departure of expatriates. “The competent and the experienced non-Saudi employees should be retained in the country for the transfer of technology and to share their experience and expertise.

“So, in principle, the expats’ attrition will come at a slow pace that will not affect the economy.”

Abdul Aziz Abdul Hadi Al-Qahtani is chairman of the Al-Qahtani Group of Companies. He was also a member of the board of directors of the Eastern Province Chamber of Commerce and Industry. Al-Qahtani is a proponent of modernization and has a practical approach to the role of private sector in Saudi economy.

He believes the current policy on Saudization is realistic in regard to the percentage of Saudization, but adds that it requires more proper planning.

“Also, such a percentage should be categorized, since some production lines and technical jobs require more training and preparation prior to Saudization.”

He thinks Saudization from the grassroots level would provide greater stability, while Saudization from the top would be more superficial and counterproductive for business as well as the country. “The 100 percent Saudization in any sector is an exaggerated objective and in most cases is just not practical,” he explains. “There is no such thing as 100 percent self-sufficiency.”

“I think that the present system under which private sector companies have to employ a certain percentage of Saudis will be counterproductive unless proper planning and training are taken into consideration.

“I have reservations on any artificial and imposed solutions. I believe that the private sector must take responsibility in contributing to the Saudi manpower stability and must contribute to providing the proper job environment to stabilize jobs.”

Saleh Al-Humaidan is managing director of the Al-Youm Publishing Group. Formerly an assistant secretary general of the Eastern Province Chamber of Commerce and Industry, Al-Humaidan has the distinction of revolutionizing the activities of the chamber. Frank and outspoken, Al-Humaidan was in the panel which wrote the revised labor law. He is also in charge of the human resources group at the chamber.

“There is hardly any definite policy on Saudization,” he says. “The objective is clear to replace the foreign work force with the nationals but the means and manner in which it should be achieved is not clear. The basic need is to have a definite policy on Saudization. The policy has to define the role of the private and public sectors and take into consideration the increasing unemployment.

“What is happening today is that many companies are implementing Saudization purely for cosmetic reasons or they are being forced to do it. A clear policy has to be written with the participation of the private sector, Ministry of Commerce, Ministry of Finance and all those related with it.”

Saudization is not about employing Saudis but about creating more jobs, rejuvenating the economy and participating in the international market.

“What the country lacks is information. We have to have information to bring about a change and write a policy. So it is important to create a databank. It is very strange that we do not know how big the manpower demand is and how big the supply.

“Unless there are joint efforts from the private sector, administration and the government, there will be no real results. What we have today is individual efforts and forced law.”

Before anything can be achieved, however, change has to come from the grassroots level. “Our education policy has to match the market requirements. There have to be incentives for the private sector to hire Saudis. Otherwise, the forced Saudization will continue.”

Al-Humaidan says the 100-percent requirement in some sectors had nothing to do with Saudization. “One reason was to stop cover-up businesses like in the vegetable and gold trade. For the limousine drivers, it was done purely for security reasons.

“We have to be absolutely clear that forced Saudization will not help the cause and will impede growth. The private sector has to feel the necessity of Saudization not just for the national interest but also for its own sake. Instead of the labor office telling businessmen to hire a particular percentage of Saudi staff, it should be the businessmen who should want the change.”

By the same token, the quota system is not very practical, he says. “Manpower requirements vary from company to company and from one geographical area to another,” he explains.

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