Expat Exodus: 'fake Saudisation' failing to tackle rampant unemployment

Expat Exodus: Saudi crown prince's 'fake Saudisation' policy failing to tackle rampant unemployment
3 min read
09 July, 2018
The government-engineered 'expat exodus' has failed to bring down unemployment, which instead increased in the kingdom, as locals shun 'demeaning' jobs in agriculture, retail and services.
Unemployment among Saudis remains high despite expat exodus [Getty]
Saudi-government pressure on expatriates has led to an exodus of skilled workers and has done has done little to tackle rampant unemployment in the kingdom or provided more jobs to nationals, according to official statistics.

Unemployment has actually increased in Saudi Arabia, with locals shunning 'demeaning' jobs in the agriculture, retail and services sectors.

Official statistics show that more than 234,000 expats have been effectively forced out of the kingdom in the first quarter of this year, following a the government's stricter enforcement of 'Saudisation' of jobs across the economy - which sees expatriates replaced by nationals in workplaces.

This policy has not brought down the alarmingly high rate of unemployment among Saudis, which currently stands at 12.9 percent, according to the Saudi Gazette.

Earlier this year, Saudi Arabia's ministry of labour and social development issued a new decree limiting retail and other operational jobs in 12 different sectors to Saudi nationals.

The nationalisation initiatives are intended to create nearly 1 million jobs over the next decade, but the poor results are forcing a re-think of the policy.

According to a draft proposal reported by Arab media on Sunday, the ministry of labour is considering re-allowing expats into a number of sectors, especially in technical and retail roles.

The government may revise plans that ordered most retail businesses to replace all foreign workers with Saudis, reducing the percentage of nationals to 70 percent, according to al-Watan newspaper.

One reason for the re-think and persistent unemployment could be that Saudis are not interested in "low-status" jobs and favour middle to upper management positions.

Saudi businesses are complaining that locals are not interested in "low-status" jobs, which is "creating a real problem for the economy", according to a report by Business Insider

The report said that the heads of chambers of commerce and industry in the kingdom are now calling on the government to exempt the private sector from full Saudisation.

Many companies are circumventing the policy's local employee quota requirement by hiring Saudis and paying them small salaries to stay at home, the report added.

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.

Bassnawi warned that this "fake Saudisation" could "create a generation of young men and women who are not interested in finding a job and who prefer to get paid for doing nothing".

The more muscular approach to Saudisation is part of powerful Crown Prince Mohammed bin Salman's attempt to end the country's reliance on oil revenues through his Vision 2030.

Part of this plan involves persuading unemployed Saudis, used to comfy state sector jobs, to take up the new vacancies in the private sector.

Saudisation has led to the dismissal and even deportation of thousands of foreign workers, who constitute about a third of the population.

The government has hiked up fees on companies employing non-Saudis, putting further pressure on the private sector, already feeling the pinch of low oil prices.

Exapatriates are also having to pay a tax for family members living in the kingdom.

"Dependents fees for lower income expatriates as well as greater efforts to nationalise the workforce make it less economically opportune for foreign workers," John Sfakianakis, director of economic research at the Gulf Research Center, told Bloomberg Monday.