Expat exodus: Rising unemployment in Saudi Arabia

Expat exodus: Rising unemployment in Saudi Arabia
3 min read
10 December, 2018
As Saudi Arabia drives on with its programme of Saudisation, a mass exodus of expatriate workers has seemingly failed to remedy high unemployment among Saudi nationals.
Local Saudi workers are reportedly unwilling to fill jobs once occupied by expats [AFP]
As Saudi Arabia drives on with plans to transform its oil-dependent economy, policies related to Crown Prince Mohammed bin Salman's Vision2030 scheme have already proven problematic for the country's ambitions.

One area in particular has been the kingdom's drive to replace expatriate workers with Saudi nationals - a programme dubbed as the "Saudisation" of the country's workforce.

Under plans announced in January, for example, Saudis must hold 70 percent of sales jobs at outlets selling 12 or more types of items.

The first phase, which came into force in September, hit automobile and motorbike showrooms and shops selling items including ready-made clothing for men and children, home and office furniture, household goods and utensils.

The second phase beginning on November 9 applied to outlets selling electrical and electronic appliances, watches and glasses.

A third phase will come into force from January 7 for shops selling medical equipment, construction materials, auto spare parts shops, carpets and confectionery.

Expat exodus

Riyadh has required expat workers since 2017 to pay a fee for each dependent member of their family in the kingdom. The fee, which started at 100 riyals ($27) a month per dependent, is scheduled to increase by 100 riyals each year.

Since January, businesses have also been required to pay a monthly fee of 300 or 400 riyals ($80 - $107) for each foreign worker they employ.

The policies have in effect forced a huge exodus of foreign workers, many of whom occupied roles that local Saudis have not rushed to fill.

Saudi Arabia's non-Saudi workforce decreased by close to 900,000 from the second quarter of 2017 to the same period in 2018, according to the General Authority of Statistics. This meant a decrease from 10.78 million to 9.89 million foreign workers in the country.

Saudi businesses have complained that locals are not interested in "low-status" jobs, "creating a real problem for the economy", according to a report by Business Insider published earlier this year.

According to Bloomberg, despite the mass departure of foreign workers, Saudi unemployment has reached its highest level in a decade at 12.9 percent.

'Fake Saudisation'

As private sector firms have struggled to meet Saudisation requirements demanding that a majority, or indeed all, staff must be Saudi nationals, some have found loopholes in the system.

Many companies are reportedly circumventing the policy's local employee quota requirement by hiring Saudis and paying them small salaries to stay at home, according to a report published earlier this year by Business Insider.

This phenomenon has been dubbed "fake Saudisation".

"Employers say young Saudi men and women are lazy and are not interested in working and accuse Saudi youth of preferring to stay at home rather than to take a low-paying job that does not befit the social status of a Saudi job seeker," Saudi columnist Mohammed Bassnawi wrote in December. 

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