800,000 expat exodus leaves Saudi Arabia facing a hiring crisis

The push by Saudi Crown Prince Mohammed bin Salman to create more jobs for Saudis has backfired as expatriate workers are leaving the kingdom by the thousands and businesses struggle to hire locals.

Creating jobs for Saudis is a key target for the government and it introduced several measures aimed at making it harder for expats. Authorities imposed more fees on foreigners, losing part of its petrodollars allure as 800,000 expats left the Kingdom in the last year.

Saudi Arabia has long been viewed as a hardship posting compensated by its tax-free status among high-earning Western professionals. Still, the majority of foreigners in the country are from the Middle East and Asia, many employed in low-paid jobs in the sectors now earmarked for Saudis.

The exodus would seem to in be line with the government goal of replacing expats with nationals in the private sector. However, this policy has backfired, leaving Saudi Arabia in the middle of a hiring crisis.

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

In Saudi, public employees work around 35 hours each week, take two days off each week and enjoy generous health and pension provisions.

That contrasts with a 48-hour week in the private sector, only one day off each week and no automatic national or religious holidays.

A number of heads of chambers of commerce and industry had called on the government to exempt the private sector from some of the hiring rules, especially for posts that are hard to fill, such as in construction, amid concerns that many businesses may close down.

In a three-month period over 5,000 fines were issued to businesses bending the rules in sectors ranging from telecoms to hotels to car rental, according to local media.

Many companies are reported to be circumventing the policy’s local employee quota requirement by hiring Saudis and paying them small salaries for what are in effect bogus jobs.

Pedro Gonçalves
Pedro Gonçalves is Financial Correspondent at International Investment.

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