Jobs For Saudis

It has been announced that over a million jobs are to be created for Saudis in the next two years.

We would like this to be true. Saudis need those jobs — especially young Saudis. According to government statistics, the Saudi youth unemployment rate in 2009 (the most recent year figures are available for) stood at 30 percent, three times the national average.

But on past experience, we have a certain difficulty believing a million jobs are going to happen. This is not the first time there have been bold pronouncements that have more to do with hope than reality.

Two decades ago, the aim of the 1990-94 development plan was the creation of 215,00 jobs for young Saudis with a further 220,400 Saudis replacing foreign workers. Since then, there have been plans to half the number of foreign workers, others to reduce them by one percent a year and yet other bright predictions that all would be well on the labor front. Moreover, we have been told it was happening. Officials have said that the number of foreign workers was being reduced and the number of work visas being issued was going down.

So how come the number of expatriate workers is going up? In the 2004 census, the country’s population was put at 22.7 million of which 6.1 million or 27 percent were foreigners. Last year’s census showed that the population had not only increased to 27.1 million but that the number of expatriates had increased as well. Moreover, at 8.4 million, it was now 31 percent of the population. The number of foreign workers is rising faster than the number of Saudis.

There is clearly a disjoint between reality and what officialdom wants to believe.

A million jobs in two years is an extremely tall order. According to the National Competitiveness Center, SR1.1 trillion has been invested in recent years in Saudi-foreign joint ventures in the Kingdom. These investments have created a total of 375,000 jobs. That is good news although questions have to be asked how many of these jobs, most of them in manufacturing, have gone to Saudis as opposed to expatriates. But leaving that aside, the figures show the real cost of job creation. On that basis, it would cost nearly a SR3.7 trillion to create over a million jobs. The private sector cannot call on those resources, certainly not within two years. As for the government, the figure is twice Saudi Arabia’s foreign reserves.

There are alternatives, such as creating a million extra spurious jobs in the state sector. But that would cost at least SR24 billion a year — again, unlikely.

The latest from the Labor Ministry is that there are to be new Saudization rules. Private companies that do not implement them will be punished. This is not new, either. New rules have been announced before which failed to materialize — famously the complete Saudization of taxis. Threats, too, have been made before but rarely followed up. The real problem is that the private sector does not offer high enough salaries to attract Saudis. The only way to change that is a minimum wage for everyone in the country, Saudis and expatriates alike. That way, foreign workers would no longer price Saudis out of the market.

So far there is no sign of that. But at least the issue is being addressed.