Editorial: Saudization is worth the extra money

It is hard to sympathize with the claim that the transport sector cannot pay the new annual fee of SR 2,400 for the Iqama and work permits of foreign workers they employ as drivers, loaders and mechanics.
The National Chamber for Land Transport, said this week, through the Saudi Council of Chambers, that the road transport sector would be paralyzed as a result of these new payments and many companies, unable to afford them, would be forced to close down.
With the greatest respect to Saudi transport bosses, this is an exaggeration. The vast majority of these firms, which play such an important part in the Kingdom’s economy, employ expatriates to keep their vehicle fleets working and making deliveries.
The new charge will therefore apply across the board and can be passed on to customers, through a modest increase in transportation rates. Within a few months, the extra expense will have been absorbed and everyone will have forgotten about it.
The only transport firms that could possibly be put at a disadvantage by this slight upward adjustment in prices for the industry, are those that have already embraced the government’s Saudization program, and gone out of their way to give jobs previously done by foreigners, to Saudis. Their native-born employees will be costing them considerably more than an extra SR 2,400 a year extra to hire.
However, it appears that there are very few Saudis who have been given these key transport sector jobs. Yet this is precisely what the imposition of extra costs, on employers of disproportionate numbers of expatriate labor, was supposed to achieve. But oddly, in the protests that are coming from various parts of the business world, not simply transport, the core intention of the new employment regulation penalties, appears to be completely overlooked.
Yet, this is not some arbitrary exercise, designed to raise extra funds for the government. It is supposed to bring the dignity of employment and a regular wage, to those 10 percent of Saudis of working age — the majority of them young people — who do not have jobs. With work for workless Saudis, will also come greater social cohesion, stability and prosperity, from which every citizen in the Kingdom, including the transport company bosses, will benefit.
Yet in an odd way, which the transport chiefs do not perhaps appreciate, they are right to complain about the SR 2,400 charge per expatriate. The charge is indeed wrong. The charge is wrong, because it is way too little. In fact, in terms of the cash flow of some of our largest and most successful transport companies, it is barely noticeable.
The sort of annual extra cost that would make a difference, would be a mandatory charge equivalent to the cost of employing, say a Saudi in the place of a Bangladeshi trucker. An even more satisfactory outcome could be achieved by charges that actually make it more expensive to employ overseas labor in certain fields, than it would a Saudi.
It was understood, when this extra cost of hiring foreigners was first mooted, that the annual fee would be increased steadily. However, the fact that it has been introduced at such a modest level, serves to produce two unfortunate results. The first is clearly that employers do not really take it seriously, but dispute it as a matter of principle. This presages even more difficult confrontations, when the cost of employing foreign labor, is raised to a sensible level and really begins to bite.
The second, and perhaps actually more important point, is that by pitching the initial charge at such a low level, it looks as if the authorities themselves are not taking this element of the Saudization project with any great degree of seriousness. It could appear, to some areas of business, to be just one more awkward rule that can be honored in the breach.
Nor are sneering comments, suggesting that young unemployed Saudis are too lazy or under-motivated to take on work such as truck driving and vehicle maintenance, entirely correct. Employers also do not want to employ fellow Saudis, because not only are they more expensive but they are likely to be less tractable than foreign labor, and stand up for themselves when they feel they are being treated poorly.
In the end, Saudization is not about money. It is about the Kingdom itself, the sort of place it wants to be, with a people proud of their heritage and wanting to play as full a role as possible in the day-to-day life of society.