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Riyadh: Saudi officials are considering increasing the cost of expatriate workers for the private sector, as a way of tackling rising unemployment and making the recruitment of young Saudis more attractive.
Foreigners, mainly Asians who are willing to accept lower salaries and work longer hours, dominate the job market.
But the influx of expatriates since the 1970s - there are some 6.5 million foreign workers in Saudi Arabia - has created a 'lower equilibrium wage' pricing Saudis, who tend to seek higher salaries, out of the market, says Abdul Wahed Al Humaid, Deputy Minister of Labour.
"It is an economic problem and it needs an econ-omic solution," Al Humaid said. The answer, he believes, is "to increase the cost of expatriate labour to make it comparable to the cost of the Saudi worker".
Saudisation
The Saudi labour force is estimated to number 3.9 million people, of whom 3.4 million are working. Tackling unemployment is seen as crucial to the econ-omic and social development of the world's largest oil exporter, as well as ensuring that idle or restless youths are not lured into radical Islamist circles. Around 65 per cent of the population is under 25.
The government already has a programme of 'Saudisation' under which industries are supposed to employ a certain quota of Saudis.
But even as efforts are made to improve employment figures, the ministry has had to relax its rules on foreign workers to support large-scale infrastructure development fuelled by petrodollars - the government reported a record budget surplus of $70.7 billion (Dh259.5 billion) last year.
In the past 11 months, the ministry has approved 758,809 visas for foreign workers, compared with 352,924 in 2005.
In spite of the oil boom, Saudi unemployment has risen from 9.7 to 12 per cent since 2002, because of the number of students graduating and the unattractiveness of the private sector for young Saudis, Al Humaid says. There are also complaints that Saudis do not have marketable skills.
The labour ministry last year completed an employment strategy after consultations with the private sector and an independent research centre. The strategy, being discussed by the higher economic council, includes the possibility of raising expatriate recruitment costs, as well as other initiatives such as education reform, training workers and improving the work environment.
The ministry has no set figure for the expected increase in foreign labour for 2007, but it recently reduced quotas for the construction industry from 10 per cent to 5 per cent. If a company is working for the government it could have a zero quota, Al Humaid says. He believes the number of foreign workers this year could reach one million "because in the ministry of labour we are planning not to be an obstacle to this economic boom, even if it means more workers coming from outside".
The ministry's objective is to control unemployment in the short term, reduce it in the mid-term and in the long term create an economy in which the "Saudi worker becomes productive so the economy becomes more competitive internationally", Al Humaid says.
Scholarships
The government has already increased the number of scholarships it is funding for Saudis to study abroad - from China to the US - targeting subjects such as engineering, medicine and finance. This month, it also approved a six-year 9 billion Saudi riyal (Dh8.8 billion) programme to improve public education. But while some changes may be afoot, the labour ministry still has to deal with companies that have profited on the back of cheap foreign labour.
"We believe there must be a way the ministry divides the Saudi economy into sectors," says Saleh Ali Al Turki, chairman of the Jeddah Chamber of Commerce.
"It does not make sense to raise the costs in the industrial field where there is open competition. But where there is internal competition, like the service sector, yes you can impose Saudisation. But there's no advantage raising the costs for industry. If you raise the costs for industry you could kill industry."
Your comments
Creating more jobs is one way of solving the problem, but I am not going to hire a Saudi national because I will go bankrupt with their high salary scales.
Salah
Riyadh,Saudi
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