Saudi aims to create 160,000 jobs in private sector

Saudi officials said the strategy includes a a medium-term scheme and a long-term plan

Saudi Arabia is planning to create nearly 160,000 jobs for its citizens in the private sector within a long-term strategy intended to tackle a festering unemployment problem and replace foreigners with nationals.

Saudi officials said the strategy includes a two-year plan, a medium-term scheme for three years and a long-term plan stretching for 20 years.

Quoted by local newspapers this week, the officials said the target of the first plan, staring in 2011, is to bring unemployment in the Gulf Kingdom under control while the second phase is to reduce the joblessness rate.

“The third long-term stage is designed to upgrade the competitiveness of the Saudi economy relying totally on the national human resources,” said Fahd bin Saleh Al Khuraisi, public relations director at the Saudi Ministry of Labour.

“Our first target is to get nearly 160,000 jobs for Saudis in the private sector…we are currently conducting studies to improve wages for Saudis in the private sector to encourage them to take up jobs in this sector.”

Khuraisi said the Labour Ministry is working on the strategy with the help of other government departments, including the Ministries of Education, Finance, Industry and Trade, Economy and Planning, and Social Affairs as well as chambers of commerce and industry, investment funds and other parties.

“We want to ensure that enough jobs are created for Saudis and create a balance between the number of those who enter and exit the labour market……this means we need 160,000-180,000 jobs annually.”

Khuraisi’s comments followed reports last month that more than 147,000 Saudi workers in the private sector quit their jobs in 2009 because of low salaries.

The report by the Ministry of Labour also showed that nearly 829,200 foreign workers were recruited in the same year.

From 829,100 at the end of 2008, the number of Saudi workers in the private sector plunged by nearly 17.8 per cent to 681,500 at the end of 2009.

In contrast, expatriate workers in the sector grew by around 15.2 per cent from 5.4 million to 6.2 million in the same  period.

“Most of the Saudis who lost their jobs last year were males, accounting for nearly 97.7 per cent or an estimated 144,500 men,” said Abdul Hameed Al Umari, a member of the Saudi Economic Association.

“What complicates the problem is the absence of a law setting a minimum wage for workers…this is encouraging private sector establishments to give priority to expatriate workers as they are paid much less.”

His figures showed the decline in the Saudi employees in the private sector depressed the total wages paid to them by nearly 28 per cent from around SR36.8 billion in 2008 to SR25.7 billion in 2009.

Despite the increase in the number of foreign workers, wages to them fell by around 12.5 per cent4 from SR65.2 billion to SR57 billion in the same period.

He said the decline was a result of lower salaries to the expatriate workforce, adding that this shows the private sector is violating its commitment to Saudization (nationalization) of jobs despite growing government incentives.

“The report which was published by the Ministry of Labour this week is horrifying…the problem is no longer that of laying off but sacking of nationals despite repeated warnings that this is only leading to worsening of unemployment among citizens, which in turn leads to instability and to starvation of nationals,” Al Riyadh Arabic language daily said in an editorial.

“It is time that the government uses its strong arm to tackle this problem…it should act by raising fees imposed on private sector employers for recruitment of foreigners so they will have no choice but to hire nationals…the situation has become unbearable and this should prompt all state establishments to act before it is too late and before this unemployment time bomb explodes.”

Saudi Arabia, the world’s largest oil exporter, is suffering more from unemployment than other Gulf oil producers given its large population and the slowdown in its economy in some years.

As the public sector has become redundant, the government has sought help from the private sector to create jobs for Saudis.

Citing figures by the Ministry of Labour, a key Saudi bank said the Kingdom’s unemployment rate edged up to around 10.5 per cent in 2009 from 10 per cent in 2008 because of what it described as tightened market conditions.

“Private sector firms favour non-Saudi employees, who comprised about 90 per cent of the workforce in 2008, up from 87 per cent in 2006-2008,” Banque Saudi Fransi said in a study sent to Emirates Business.

“Saudi Arabia’s unemployment rate reached 10.5 per cent in 2009, up from 10 per cent a year earlier, as market conditions tightened…. data from the Ministry of Labour indicate the number of foreigners hired by the private sector is nine times higher than that of Saudis.”

According to BSF, foreigners employed in the private sector earned SR764 on average, while Saudis’ pay stood at as high as SR3,137 per month.

“The huge divergence in salaries between Saudis and non-Saudis is obvious and without administrative measure taken the gap will always favor the non-Saudi wage earners,” said John Sfakianakis, Chief Economist at BSF.

He revealed that despite the global fiscal crisis, remittances by Saudi-based expatriates surged 20.3 per cent in 2009 from the year earlier to SR94.5 billion.

Between 2005 and 2009, money remitted home from workers in the kingdom jumped 84 per cent, in keeping with a notable jump in the number of new work visas issued, according to Sfakianakis.

 

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