Foreign workers pushed out by ‘Saudisation’ drive

Sunday 08/05/2016
A man leaves a mobile phone shop in Riyadh on March 21st.
The sign reads: “Saudi employees are wanted. Sellers, programmers and maintenance technicians.”

Riyadh - The use of expatriate work­ers in many industries in Saudi Arabia could be greatly reduced through the government’s un­compromising Saudisation pro­gramme, an initiative replacing foreign workers with Saudi nation­als in the private sector to address the country’s rising unemployment rate.
The latest field to see the shift in its labour force is the mobile phone industry. The Ministry of Labour shocked the expatriate community when it announced in March that, after a six-month grace period, for­eigners would be banned from sell­ing and maintaining mobile phones or accessories related to them.
According to Labour Ministry spokesman Khalid Abalkhail, the mobile phone industry changes will affect about 20,000 workers.
He said the ministry’s goal was to create 1.3 million jobs for Saudis. “There are plans for gradual na­tionalisation of other sectors such as taxis, travel and tourism, real es­tate, jewellery and vegetable mar­kets,” he added.
With things moving quickly, the government has scrambled to train Saudi nationals to work in the mo­bile phone industry. The kingdom’s Technical and Vocational Training Corporation (TVTC) launched cell phone maintenance training pro­grammes in six regions.
According to TVTC, which is sub­sidised by the Human Resources Development Fund, the demand for the programmes was unprece­dented. More than 55,000 people — both men and women — applied to fill the 20,000 job vacancies creat­ed by the Saudisation programme.
However, opportunities created by the efforts of the Labour Minis­try are not being utilised by some segments of the kingdom’s youth population. A false sense of enti­tlement, a side effect from the oil boom from past decades, has been blamed.
A recent report in the Saudi fi­nancial daily al Eqtisadiah high­lighted the reluctance of some Saudis to work in the mobile phone sector because of low salaries and fears of lack of sustainability of the work, leading to calls for a mini­mum wage to attract Saudi youth. The International Monetary Fund (IMF) estimates unemployment in Saudi Arabia at 11.6%, with un­employment among Saudi women estimated at 32.8%, the highest in the world.
The effects of Saudisation on the expatriate community will be pal­pable, with declining oil revenues exasperating the situation. Saudi Arabia cut government spending after posting a record $98 billion budget deficit in 2015. The king­dom has introduced a number of financial measures, including in­creasing domestic petrol prices more than 50%. Water, electricity, diesel and kerosene prices also in­creased.
Austerity measures are expected to save the kingdom about $7 bil­lion annually, according to Riyadh-based Jadwa Investment. The firm said revenues from the kingdom’s hike on diesel are estimated at $2.75 billion a year and petrol lev­ies are expected to add $2.5 billion.
Foreigners accounted for 10.1 million of the overall Saudi popu­lation of 30.8 million in 2014, ac­cording to official data. The money they sent home was important for their native countries. They remit­ted $9.1 billion from Saudi Arabia in the third quarter of 2015, central bank figures show.
“The economic changes have started to pressure the labour mar­ket and this has triggered the start of the migration of a large segment of foreign workers,” said Saudi economist Fadl al-Boainain.
“Declining corporate profitabil­ity has made the foreign workforce a target for managements seeking to cut fixed financial obligations.”
The government is wagering a lot on its Saudisation drive and, as a consequence, is looking at setting incentives for companies that im­plement quotas, with the Labour Ministry looking at factors such as the Saudisation percentage, the number of women employed and the level of average wages among other considerations.
Saudi Arabia on April 25th is to announce its “vision” for future social and economic development, including a “National Transforma­tion Programme” aimed at diversi­fying the economy away from oil.