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Study shows labor exodus hurting Saudi economy

An Ethiopian worker argues with a member of Saudi security forces as he waits with his countrymen to be repatriated. (Photo by Reuters)

A new research shows that an unprecedented exodus of foreign workers is hurting the Saudi economy and this has already become a source of criticisms against a controversial domestic labor empowering initiative devised by Crown Prince Mohammad bin Salman.

The research that was carried out by the Riyadh-based Jadwa Investment said the lack of adequate workforce had badly affected the Saudi construction sector over the first quarter of 2018. 

It emphasized that this was the result of the departure of around 221,000 foreign workers – mostly unskilled and on low wages – over the same period.   

Besides, the number of foreigners leaving the market was not equally met by the number of Saudis hired, probably due to the wage gap between Saudis and expats.

The primary factors that have led to the exodus of foreign workers from the kingdom have been cited as expat dependent fees as well as a controversial Saudization drive - essentially the creation of a more productive local workforce.  

Both are central themes in Prince Salman’s plans to wean the country off its dependence on oil through economic diversification.

In related news, the media earlier reported that the unemployment rate among Saudi citizens edged up to a record 12.9 percent in the first quarter of this year.

The figure was the highest recorded by the official statistics agency since 1999 and showed the difficulties which Saudi Arabia faces as it pushes through austerity steps to close a big state budget deficit.   

Over the past few months, criticisms have been growing that Prince Salman’s Saudization drive have failed to solve the problems in the job market and that the kingdom’s rules and regulations do not support it.

In February, a number of heads of chambers of commerce and industry were reported to have called on the government to exempt the private sector from “100%” — or full — Saudisation, especially posts that are hard to fill, such as in construction, amid concerns that many businesses may close down.

As of April, more than 800,000 had left the country since late 2016, alarming domestic companies concerned that the foreigners cannot be easily replaced, according to media reports.

There have been other reports that Saudi business owners are having difficulty getting locals, accustomed to undemanding work in the state sector and generous unemployment benefits, to work for them.

Reports suggest many Saudis are put off by what they regard as poorly paid, low-status jobs.

The recruitment problems have seemingly sparked so much concern that they have been played out on the pages of the Saudi Gazette, the government’s mouthpiece, which normally features anodyne stories about life in the kingdom. 

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