Can We Dispense With Expat Workers? Saudi Arabia's Economy And Planning
02 February 2018By Dr. Ali Al-Ghamdi
Saudi Arabia's Minister of Economy and Planning Muhammad Al-Tuwaijri has
announced that the Kingdom will launch 10 programs within its Vision 2030 over
the next few months, in addition to dispensing with the external support being
extended by expatriate workers. He made these remarks in an interview with Al-Arabiya
Channel on the sidelines of the World Economic Forum held recently in Davos,
Switzerland. Okaz newspaper published this interview under the title
"Dispensing with expatriates is the priority."
Al-Tuwaijri said in the interview: "This year will be a year of implementation
because the planning phase is over, and as such one of the priorities of the
ministry is to implement projects and programs as much as possible by taking
advantage of the local capabilities, in addition to dispensing with external
support from expatriate workers. Likewise, the ministry will contribute to
implementing the economic diversification drive away from dependence on oil."
The minister added: "We saw in Davos a great passion on the part of foreign
companies to work along with Saudi Arabia." He also pointed out that over the
coming years the Kingdom will seek to reduce the unemployment rate to seven
percent as about a quarter of a million Saudi graduates enter the labor market
each year. He said that the Kingdom's statistics and figures provide more
optimism than those of the International Monetary Fund.
In this article, I want to focus on two points mentioned by the minister in
his interview. The first point is: How will it be possible to dispense with
expatriate workers? Has the ministry carried out any studies that indicate
that the country no longer needs expatriate workers and what are the areas of
the economy that can rely fully on a local workforce without depending on
expatriate workers?
I think that if the minister examines the five-year plans drawn up by the
Ministry of Planning, he will find that those plans have not yet been fully
realized. It should also be noted that expatriate workers have played a key
role in materializing the major goals of these plans.
The Kingdom is still in need of expatriate workers, particularly in some
sectors, such as construction, industry and maintenance. Is it possible to
dispense with expatriate workers in these sectors and what is the current
percentage of the contribution of the Saudi workforce in these fields? We need
much more time to achieve self-reliance in these sectors. There are also
several other important sectors, such as medicine, pharmacy, accounting and
marketing where we still need the support of expatriates because of the lack
of Saudi manpower.
I recall the order issued to implement total Saudization in the limousine
sector while the late Dr. Ghazi Al-Gosaibi was the minister of labor. The
minister set a deadline for enforcing the directive of banning non-Saudis from
working as limousine drivers. This resulted in worsening the situation in the
public taxi sector and led to an exorbitant increase in limousine fares,
reaching 200-300 percent. This forced the minister to withdraw the decision
and the situation was restored to its previous state in this sector.
We have still not achieved self-reliance in the limousine sector, but the
situation may change or has already started changing with the launching of
Uber and Careem as well as with the entry of a large number of Saudi youth to
provide service in their own cars through registration in one of these two
companies.
My second point pertains to the minister's intention to reduce the
unemployment rate to seven percent. He did not mention how he will be able to
attain this goal with a quarter of a million Saudi graduates entering the
labor market every year. I think that his assumption is that these graduates
will replace expatriate workers. This is a beautiful idea in theory but will
difficult to implement.
It should be noted that large numbers of expatriates and their families have
decided to leave the Kingdom as a result of the fees imposed on these workers
and their dependents. The unemployment rate among Saudis has not decreased but
has actually increased mainly because some service companies have been
negatively affected by the departure of expatriate workers and their families.
Similarly, some private schools, where Saudis were working, have closed due to
the exit of students and their families.
I believe that the unemployment rate will not decrease by eliminating
expatriate workers. In fact, a reduction in the unemployment rate will only be
made possible through the launching of mega projects that will create huge
numbers of job opportunities. Expatriate workers will be required for such
projects in the initial years, and gradually they will be able to be replaced
by Saudis.
If there is no change in the structure of fees imposed on expatriates and
their dependents, it will be impossible for them to stay in the Kingdom and
will result in their departure on final exit. Subsequently, thousands of
residential apartments will become vacant and this will have a negative impact
on the real estate sector.
We must not forget the positive role of expatriate workers in the nation
building process and in the remarkable growth and development achieved by the
Kingdom.
— Dr. Ali Al-Ghamdi is a former Saudi diplomat who specializes in Southeast
Asian affairs. He can be reached at algham@hotmail.com
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