Failure to launch: A call to overhaul Saudization

Failure to launch: A call to overhaul Saudization

Minimum wage and financial incentives for the private sector must be included in Saudization strategy. Arab News delivers some home truths.

May 11, 2011 11:59 by Arab News

It is refreshing to hear Labor Minister Adel Fakieh stating a few home truths about Saudization—that the number of unemployed is probably higher than the official figures; that the number of expatriates in the Kingdom is in fact growing at double the Saudi population growth rate; and that, so far, Saudization has not worked.

Saudization is crucial to the well-being of the country. Jobs have to be found to meet the aspirations of the growing population. If they are not, the consequences could be dire.

The harsh truth is that Saudization has been an abject failure. Despite two decades of government campaigns, companies in the private sector continue to employ foreigners rather than Saudis—indeed do so in ever increasing numbers.

That is because expatriates are far cheaper to employ than Saudis. They can also be sacked easily. There is an issue too about Saudis’ work ethic. There may be plenty of voices protesting that Saudis are as dedicated workers as anyone else, but there is an undeniable problem. If there were not, why are there Saudi companies that refuse to employ Saudis? (Saudi men, that is; Saudi women are welcome.) Or employ them so that the numbers look right on the books, but tell them to stay at home? It happens.

There is also the issue of the lack of appeal of certain jobs. Few Saudis see themselves as plumbers or electricians and certainly not street cleaners or waiters.

Despite repeated Saudization campaigns and warnings, the authorities cannot avoid their responsibility in the failure. According to the 2010 census, there were 8.4 million expatriates living and working in the Kingdom last year, compared to the 2004 census figure of 6.1 million. It has not simply kept in line with the rise in population, it has exceeded it. This could not have happened without the authorities issuing the necessary extra visas and iqamas.

The latest campaign may make some difference with its threat not to renew iqamas of expatriate employees in companies that fail to Saudize. But on past experience, that is questionable. There have been previous attempts to crack down on firms not employing sufficient numbers of Saudis — to almost no effect. Wielding the stick does not work when companies know they can find ways around the rules.

Over the next 20 years, it is estimated that there will be between 300,000- 400,000 extra Saudis looking to start their working life every year. It is unfeasible that such a number of new jobs can be created annually. Jobs held by expatriates are the obvious answer.

Threats alone will not work. It has to be in companies’ interests to employ more Saudis. The financial and contractual advantages in employing expatriates over Saudis need to be eliminated. The work ethic needs to be changed.

The authorities cannot be expected to fix work ethics but there is a lot they can do. There is a minimum wage in the government sector. If it were introduced into the private sector, for Saudis and expatriates alike, expatriates would no longer be able to undercut Saudis. That would probably do more to increase the number of Saudis in employment than any amount of stick wielding.