Saudi to limit work permits to help locals


RIYADH (Reuters) – Saudi Arabia will not renew the work permits of foreign workers  who have spent six years in the country as part of its plan to create jobs for nationals, its labour minister was quoted as saying on Monday.”The current situation calls for strong cooperation between the government and private sector in solving the problem of unemployment with hundreds of thousands looking for work,” Adil Fakieh was quoted as saying by the pan-Arab newspaper al-Hayat.

Let's put the "Saudi" in Saudization

Fakieh did not say when the decision would be implemented or whether it would be applied to all foreign workers or to specific jobs.

Unemployment among nationals in the kingdom, which sits on more than a fifth of global oil reserves and is the world’s biggest oil exporter, is currently 10.5 percent, he said, adding that 28 percent of the unemployed were women and 40 percent high school graduates.

Fakieh said there were currently eight million foreign workers in the kingdom of whom six million work in the private sector. Remittances from foreign workers total 100 billion riyals ($27 billion) a year, he said.

Saudi Arabia does not regularly publish data on unemployment, a sensitive issue since it highlights fissures in wealth distribution in the absolute monarchy with no elected parliament, where newspapers tend to carry the official line.

King Abdullah offered Saudis $93 billion in handouts in March to stave off unrest of the kind rocking other parts of the Arab world. This followed a $37 billion package announced in February in an initial move to ease social tensions.

Despite its wealth, unemployment in the Gulf Arab state has risen as an outdated school system focused on religion and the Arabic language produces graduates who have difficulty finding jobs with private firms.

Companies favour workers from Asia, prepared to work long hours for low salaries, or well-paid foreign experts.

Many Saudis work in the public sector but, in contrast to other Gulf oil producers such as Kuwait, citizens do not automatically get a job because of the rapidly rising population, which now stands at almost 19 million.

In 1994 the government began a “Saudisation” plan, setting quotas for the number of nationals private firms must hire. The programme failed to achieve a significant increase in the participation of nationals in the private sector, where Saudis still account for only 10 percent of employees.

Almost 70 percent of Saudis are under the age of 30, and the population is increasing by around 2.4 percent annually.

In an attempt to create thousands of new jobs and diversify its oil-dominated economy, Saudi Arabia launched a $400 billion five-year spending plan in 2008, the largest stimulus relative to gross domestic product among the world’s 20 leading nations.  (Reporting by Jason Benham, editing by Tim Pearce: REUTERS/ May 30, 2011 at 14:02 )

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6 thoughts on “Saudi to limit work permits to help locals

  1. What if I apply for the job of sales or as a accountant because I did MPA and currently I am working as a Area Sales Manager(Rose Petal Tissue)

    • Usman,

      You can apply whatever work you are capable of doing, it only depends whether the employer will hire you or not. However, I am sure that this new Saudi nationalization policy will work out compared to the past policies.

      Bong

  2. DAMMAM/JEDDAH: Labor Minister Adel Fakeih on Tuesday urged expatriates in the Kingdom not to press the panic button regarding reports about the six-year visa limitation issue.

    Talking to Arab News at Asharqia Chamber, the minister said companies in the Kingdom will have until Sept. 7 to achieve a prescribed quota of Saudi employees.

    Afterward they will fall under the Nitaqat policy that will put companies into three categories, of which one — the category of complying companies — will be able to recruit foreign workers from the other two categories, he said.

    He also mentioned that there is a platinum category for companies that have exceptional track records in employing Saudis.

    The minister’s clarification comes a day after newspapers quoted him as saying that all expatriate workers will have a six-year cap on their work visas.

    His statement on Tuesday clears the air that there is nothing to worry for the expatriates: the six-year cap applies only to workers in the categories of companies that are not in compliance under Nitaqat.

    Furthermore, those workers will be able to be recruited by complying companies, which do not have the six-year cap.

    Fakeih is expected to face a tsunami of protests from the business community if he imposes the six-year limit on all expatriate workers working for companies that are not complying with Saudization rules.

    Those companies fall into two categories: The yellow category for companies that have not reached Saudization quota levels of employment and the red category for companies that have flouted Saudization rules altogether.

    The minister said in the case of the companies falling in the red category, their foreign employees will not be able to renew their work visas with those companies.

    In the case of the companies in the yellow category, the visas of their employees, who have spent six years or more, will not be renewed.

    In this category, employees will have their visas renewed up to six years.

    The minister, however, assured expatriate workers employed by red and yellow companies that they would be allowed to move to green-category companies if those companies are seeking foreign workers.

    Under the current system, foreign workers require a no-objection certificate from their employer in order to switch jobs.

    Employers in yellow or red categories will no longer be able to block their foreign workers from switching jobs to companies in the green category.

    This decision acts as an incentive to employers because recruiting foreign workers locally costs less as employers are not required to provide periodic round-trip tickets for home visits or pay international labor-recruitment fees.

    Asked by Arab News what are the chances of the red category companies getting employment in those in the green category, the minister said: “Nearly 50 percent can be absorbed by the green-category companies.”

    The minister urged all companies to join hands with the ministry in implementing the program in letter and spirit.

    He admitted that there would be pluses and minuses, pros and cons while implementing the new program, which comes into effect within the next two weeks.

    The minister fielded dozens of questions from the Eastern Province businessmen and women who turned up in large numbers at the chamber to listen to the explanations of the new program from the minister.

    The minister urged everyone with any problem to write to him at his e-mail address: afakeih@mol.gov.sa

    “My ministry will see to it that every single query of yours is answered. Without your support, the new Saudization drive will not succeed. Unemployment is a serious problem and therefore we are making serious efforts to solve it,” he said.

    Employers that use foreign labor often complain of their inability to recruit Saudis at the level of wages and benefits given to foreign workers.

    An unmarried foreign construction worker, for example, might be paid as little as SR1,000 a month, live in on-site communal housing and live off roti and ful.

    Such a salary and living arrangement would be unimaginable for a Saudi, especially if he has a family.

    The private sector has no minimum wage.

    The government, which is the largest employer of Saudis, only recently mandated a SR3,000 monthly minimum wage for government employees.

    Abdullah Al-Otaibi, the owner of a contracting company in Jeddah, told Arab News that Saudi contractors are facing difficulties to obtain visas for the recruitment of foreign workers to carry out projects on time.

    “We try to get visas through official channels, but often it takes time. Some contractors then borrow workers from others while some others make use of workers available in the market, who may be illegals. But the contractors are forced to employ them to complete their projects without delay,” he explained.

    Saleh Al-Saedi, another contractor, said the ministry’s pressure would have dangerous consequences on the contracting sector.

    “Although the government depends a lot on this sector to carry out massive projects, how can they work properly in the backdrop of these pressures?” he asked.

    He said the ministry’s new Nitaqat system would hamper contracting firms.

    Businessman Muqed Al-Sareehi from Madinah rejected the Nitaqat system as “unjust” and said it would make the situation of contracting companies from bad to worse.

    He criticized what he called the government’s ‘double standards’ toward foreign and Saudi contractors.

    “If a company falls in the red category it would totally undermine its business as it would not be allowed to recruit any foreign worker,” he said.

    Khaled Al-Suleiman, a Saudi writer, also criticized Fakeih’s plan and said it would affect quality of work in the country.

    Faleh Al-Motairy proposed that the ministry employ Saudis in jobs offering SR5,000 salary, which are currently occupied by expatriates.

    “Since the number of the unemployed in the Kingdom is less than in other countries, it is very easy to solve,” said Mousa Al-Sibyani.

    He urged the ministry to conduct a survey of jobs suitable for Saudis in the private sector.
    Faris Al-Amri asked the ministry to implement its previous decisions such as privatization of administrative, secretarial and public relations jobs.

    By SIRAJ WAHAB AND MOHD AL-SULAMI | ARAB NEWS
    Published: Jun 1, 2011 00:14 Updated: Jun 1, 2011 00:32

  3. Minister explains expat time-bar plan
    By ARAB NEWS

    Published: May 31, 2011 00:36 Updated: May 31, 2011 00:36

    DAMMAM/RIYADH/JEDDAH: The Ministry of Labor on Monday clarified press reports that quoted Labor Minister Adel Fakieh as saying that the government would not renew iqamas of expatriates who have completed six years in the Kingdom.

    “What Labor Minister Mr. Adel Fakieh meant by his statement was that the measure would be applied on those foreigners who work for companies in the yellow category,” said Hattab Al-Anazi, official spokesman of the ministry.

    He said that companies in the yellow category that did not fulfill Saudization conditions, should correct their status in order to get the iqamas of their workers renewed.

    However, the spokesman emphasized that iqamas of those foreign workers in red category companies would not be renewed at all, irrespective of the years they have spent in the Kingdom.

    “The new Nitaqat system allows renewal of iqamas without any condition for expatriates who work in companies in the green and excellent category,” Al-Anazi told the Saudi Press Agency.

    He said the new measure would not apply on house servants as their iqamas would be renewed without considering how many years they stayed in the country. “They are not at all linked with the Nitaqat system,” he explained.

    Speaking to Jeddah businessmen earlier Sunday, Fakieh said companies not employing enough Saudis may find themselves without foreign workers and expatriate employees may be limited to six years of employment in the Kingdom.

    Reports in two Arabic newspapers said Fakieh did not say when the decision would be implemented.

    Businessmen across the Kingdom differed on their views on the minister’s statement. While many businessmen found the plan unfeasible, others refused to comment on the issue.

    A credible business journalist who works for a sister publication of Arab News and who attended the minister’s meeting with the group of businessmen and women said the minister was not very clear about the six-year work visa limitation.

    According to the journalist, all that the minister focused on was his ministry’s “Nitaqat” program, which is expected to be applied in two weeks. Under this program, private companies and establishments will be classified across three colors — green, yellow and red — according to the number of Saudis they employ.

    The green companies will be given a number of advantages, including recruitment of manpower from foreign countries and the transfer of employees in the yellow and red categories without their companies’ consent.

    “The current situation calls for strong cooperation between the government and private sector in solving the problem of unemployment with hundreds of thousands looking for work,” reports in the local newspapers quoted the minister as saying.

    The minister expected Nitaqat to end 99 percent of black-market work visas and said that with a little help from the private sector, this market would be totally dissolved. “The program will also put an end to the commercial concealment where foreigners run businesses under Saudi cover,” he said.

    Quoting latest statistical figures, Fakieh said there were about 500,000 unemployed Saudi men and women against the presence of eight million foreigners, of whom about six million are employed by the private sector. “The foreigners transfer about SR100 billion every year to their countries,” he said.

    Unemployment among nationals in the Kingdom is running at 10.5 percent, he said, adding that 28 percent of the unemployed were women and 40 percent high school graduates.

    None of those who worked informally with the minister on a number of proposals to end unemployment was willing to comment on his remarks.

    “This is his prerogative,” said one planner, but he added that there are many issues that need the consent from the top to go ahead. “Some of the proposals can be implemented by the minister by using a ministerial decree; some others require the consent of the Ministry of the Interior, and yet others will have to go to Custodian of the Holy Mosques King Abdullah for approval,” he noted.

    That was perhaps an oblique reference to the six-year work visa limitation issue. Such a decision would have to come from the very top.

    “This is a sensitive topic,” said one Dammam-based businessman. “I don’t want to get into any controversy,” he said. “I have seen the reports in local newspapers just as you have, and they did say that the minister wants to bar foreigners from working more than six years in the Kingdom.”

    Another businessman said: “We have had such proposals in the past. Now the question is: Are they feasible? I don’t think so. For example, let us take the case of accountants. Almost all the accountants working in Saudi Arabia have been here for more than six years. If we send them back home tomorrow, do we have enough accountants to replace them? These questions need to be asked,” he said.

    He said he would wait for the minister’s presentation at the Eastern Province chamber on Tuesday. “I would like to hear from him directly. He is certainly well-intentioned, and we would like to hear what he has to say,” he said.

    Economist Ehsan Buhaliga, a former Shoura member, too concurred that the minister’s statement on the limits on expatriates was not clear, but added that every Saudi is hoping to see more such initiatives to control the job market.

    “I do not want to make any comment on the minister’s decision as it comes as a part of a package program to create more jobs for Saudis. It would be difficult to make a statement on the iqama renewal issue as things are not yet clear and I would like to have a clearer picture of the whole program,” he said.

    Buhaliga said strict control of the job market was necessary to solve the unemployment problem among the Saudis. He said the huge influx of foreign labor posed a big challenge for Saudi job-seekers “who had to face not only the foreigners already occupying jobs but also those going around looking for jobs.”

    Another economist who requested anonymity described the minister’s statement like a Ramadan riddle. “Everybody wants the job market to be controlled but what we hear about new programs every day reminds us about the Ramadan Fazzoura (riddle). We should have a clear picture in order to find an excellent solution for this problem,” he added.

    John Sfakianakis, chief economist at Banque Saudi Fransi, said the total number of foreign workers in Saudi Arabia as of 2011 exceeds 8.5 million. According to 2009 official figures, the total private labor force was 6.895 million of which Saudis comprised 681,000 – slightly less than 10 percent.

    On the minister’s reported statement, Sfakianakis said there is a need for more details and granularity at this point.

    “The proposal does not limit the inflow of expatriates. Once the six years are over fresh expatriates will be able to work in Saudi Arabia; hence the problem is not solved as the inflow of expatriates is not limited, and dependence on foreign labor will continue. The economy also could benefit by having highly trained and experienced expatriates stay in Saudi Arabia as they contribute to the economy given that it is already challenging to attract good expatriates into the Kingdom.”

    He, however, felt that it was more of a knee-jerk reaction as the measure does not limit the total inflow of foreigners but only limits the tenure of existing foreigners.

    As to whether such an idea is feasible, Sfakianakis said: “If there is commitment it could be realized, but differentiation will be needed. Not all expatriates contribute the same way, and if all exit the implications for the economy could be negative.”

    Jeddah-based businessman Yasin Alireza said that only growth and development and not bureaucratic decisions would help provide a solution to unemployment. “It is the overall economic development and growth that plays a major role in decreasing and perhaps solving unemployment, not more bureaucratic decisions that hinders the private sector. The ministry could harm local business here instead of benefiting it with this decision. I do not see the logic or benefit from it when companies spend time and the effort in recruiting and training their workers with expertise to work in the country, and have to replace them in six years,” Alireza said.

    Another Jeddah-based businessman Ahmad Al Faroqi too expressed fears that such a decision would impact negatively on the Saudi business sector. “This decision will create many obstacles as many businessmen depend on qualified expatriate workers to run their businesses. Many jobs here require qualified expatriates, and at the same time, there are no Saudis ready to do these jobs,” he said.

    But young Saudis welcomed the minister’s reported statement with unconcealed glee. “This is the best decision, and we want it to be implemented fully,” said Ahmed A., a university graduate who is planning to launch his own business this year. “This is the only way to solve the issue of joblessness. We have no jobs, and as long as foreigners are well-entrenched in the market we will never get a fair chance,” he added.

    — Siraj Wahab, Maher Abbas, Sultan Al-Tamimi and Ibrahim Naffee contributed to the report

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