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Saudi job nationalization plan to help expats

An aggressive scheme to be launched by Saudi Arabia next week to force the private sector to give jobs to its citizens will benefit expatriate workers as it will allow them to switch jobs without having to leave the Gulf Kingdom.

The ministry of labour said Nitaqat (limits) programme, which has sent shivers across the dominant expatriate labour in Saudi Arabia and other Gulf oil producers, also includes new initiatives to support its foreign workers by upgrading recruitment centres and introducing a wage protection system.

“Nitaqat does not pose any threat to the expatriate workers in the Kingdom…on the contrary, in case the private sector managed to absorb Saudi job-seekers, there will be a continuous need to support this sector with more expatriate labour,” the ministry said in a statement carried in the official media.

“This scheme is mainly intended to absorb Saudi job-seekers in the private sector, re-organize the labour market and correct imbalances in the job distribution ratios in this market, considering that Saudis do not exceed 10 per cent of the private sector’s total work force.”

The ministry said Saudi Arabia, the largest Arab economy and the world’s top oil exporter, recognizes the efforts exerted by expatriates in domestic development, adding that it issued more than two millions work visas for foreigners in 2010.

In a statement on Saturday, Saudi labour minister Adel Faqih said the Kingdom would launch Nitaqat on June 11 and that more than 300,000 local companies would be classified in accordance with their job Saudization efforts.

He said the ministry would give four different classifications to firms operating in the Gulf Kingdom, including “excellent and green” to those complying with job nationalization and “red and yellow” to failing companies.

Addressing local businessmen in the eastern port of Dammam, Faqih said nearly 20 per cent of those firms could find themselves in the red zone.

In its statement on Sunday, the ministry of labour sought to assuage fears by the expatriate workers that they could be expelled from the country after completing six years with companies that are classified red.

“The ministry would like to clarify that the new rule does not necessarily mean the foreign worker must leave the Kingdom after six years,” it said.

“On the contrary, Nitaqat programme will give a chance to expatriate workers to improve their job conditions by contracting with companies that are classified green without having to get prior approval from the previous employer.”

The ministry revealed that it was working on what it described as new initiatives for the expatriate labour, involving upgrading of labour recruitment establishments in the Kingdom and a wage protection system for foreign workers.

“They also include compulsory health insurance for domestic workers and multi-language liaison centres to receive any complaints from expatriate workers who face problems or other emergency cases.”

Saudi Arabia has around eight million expatriates, constituting nearly 30 per cent of the total population of about 27 million. But they account for more 90 per cent of the private sector jobs as most local companies prefer foreign workers on the grounds they are cheaper, more experienced and work longer hours.

Faqih put the official unemployment rate in Saudi Arabia at around 10.5 per cent at the end of 2010, nearly 450,000 people. But he noted female joblessness largely exceeds that rate, standing at 26.6 per cent. Unemployment among high school graduates is also as high as 40 per cent.

Saudis themselves are also reluctant to take up private sector jobs as they favour the public sector for more attractive financial benefits.

Official figures showed more than115,000 Saudis quit their jobs in the private sector to give way to expatriates in 2009 despite a hectic government drive to lure them into that sector and tackle the unemployment problem.

In turn, expatriate workers in that sector increased by nearly 15.2 per cent to 6.2 million at the start of 2010 to maintain their position as the dominant workforce.

Saudi officials said last year there are plans to create nearly 160,000 jobs for citizens in the private sector within a long-term strategy intended to tackle the unemployment problem and replace foreigners with nationals.

Citing figures by the Ministry of Labour, a key Saudi bank said recently the Kingdom’s unemployment rate edged up to around 10.5 per cent at the start of 2010 from 10 per cent a year earlier because of what it described as tightened market conditions and the fact that companies prefer to hire foreigners.

“Private sector companies in the Kingdom favour non-Saudi employees, who comprise about 90 per cent of the workforce,” Banque Saudi Fransi said.

“Data from the Ministry of Labour indicate that the number of foreigners hired by the private sector last year is nine times higher than that of Saudis.”

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