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Saudi urged to sack one million expatriates

September 9th, 2010 Leave a comment Go to comments

Saudi Arabia believes it could eliminate its festering unemployment problem by sacking one million expatriate workers although they are favored by Saudi employers, local newspapers reported Thursday.

The papers quoted Saudi deputy Interior Minister Prince Ahmed bin Abdul Aziz as saying the Gulf Kingdom’s new Labor Minister should give priority to tackling the joblessness problem caused by a rapid population growth, unstable economic growth due to volatile oil exports and preference of foreigners.

The Prince said Saudi employers prefer expatriate laborers for lower salaries and other factors and called for measures to encourage them to change that attitude. He proposed a “blacklist” of national workers who quit their jobs in the private sectors within government attempts to encourage them to stay.

“There is a big gap between the private and public sectors…the expatriate labor is favored by the private sector,” he said.

“I believe that in case we manage to dispose of one million foreign workers and the Saudis who will replace them can do their jobs properly, then the Kingdom will be able to shut the unemployment file completely.”

In a report released last month, the Saudi Ministry of Labor accused the private sector of sacking more than 147,000 national workers in 2009 in defiance of a long-standing government policy of replacing expatriates with Saudis.

The report, which attracted official criticism, showed 147,600 workers in the Saudi private sector, the largest in the Gulf, lost their jobs in 2009 while 829,200 foreign workers were recruited in the same year.

From 829,100 at the end of 2008, the number of Saudi workers in the private sector plunged by nearly 17.8 per cent to 681,500 at the end of 2009, Saudi newspapers said, citing the Ministry of Labor’s data.

In contrast, expatriate workers in the sector grew by around 15.2 per cent from 5.4 million to 6.2 million in the same period.

“Most of the Saudis who lost their jobs last year were males, accounting for nearly 97.7 per cent or an estimated 144,500 men,” said Abdul Hameed Al Umari, a member of the Saudi Economic Association.

“What complicates the problem is the absence of a law setting a minimum wage for workers…this is encouraging private sector establishments to give priority to expatriate workers as they are paid much less.”

Saudi Arabia, the world’s largest oil exporter, is suffering more from unemployment than other Gulf oil producers given its large population and the slowdown in its economy in some years.

As the public sector has become redundant, the government has sought help from the private sector to create jobs for Saudis.

Citing figures by the Ministry of Labor, a key Saudi bank said the Kingdom’s unemployment rate edged up to around 10.5 per cent in 2009 from 10 per cent in 2008 because of what it described as tightened market conditions.

“Private sector firms favor non-Saudi employees, who comprised about 90 per cent of the workforce in 2008, up from 87 per cent in 2006-2008,” Banque Saudi Fransi said in a study last month.

“Saudi Arabia’s unemployment rate reached 10.5 per cent in 2009, up from 10 per cent a year earlier, as market conditions tightened…. data from the Ministry of Labour indicate the number of foreigners hired by the private sector is nine times higher than that of Saudis.”

Early last month, Saudi Arabia approved a massive five-year development plan aimed to create nearly 160,000 jobs for its citizens in the private sector.

Saudi officials said the strategy includes a two-year plan, a medium-term scheme for three years and a long-term plan stretching for 20 years.

Quoted by local newspapers this week, the officials said the target of the first plan, staring in 2011, is to bring unemployment in the Gulf Kingdom under control while the second phase is to reduce the joblessness rate.

But analyzes said the plan faces challenges given the rapid growth in the Saudi population and the reluctance of the private sector to employ nationals.

“The number of unemployed Saudis has exceeded 500,000 at a time when we have over seven million expatriate workers in the country,” Prince Ahmed said.

“These expatriates are favored by the employers because they accept less wages…another factor is that the employers can not exercise control on national workers as they do with the expatriates…I think we need to create a blacklist of the names of Saudis who quit their jobs in the private sector without any justification and in a way that results in losses for the employers.”

Saudi Arabia, the largest Arab economy, put its population at 27.1 million at the end of April, including around 19 million Saudis and eight million foreigners.

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