Saudi Arabia ramps up efforts to replace 60,000 expat workers with nationals

Saudi Arabia has stepped up its efforts to replace 60,000 expats with nationals before January by mounting an aggressive ‘saudisation’ campaign in four retail and wholesale sectors. However, the lack of skilled Saudi labour remains a challenge.

The Ministry of Labour and Social Development announced the gradual plan to restrict employment in 12 sectors to Saudi nationals over three phases, the first of which to begin this month.

The plan aims at reducing unemployment among Saudis, currently standing at 12.8%, and reduce the public sector wage bill by bolstering private sector employment.

Under the reform agenda spearheaded by crown prince Mohammed bin Salman, the government seeks to reduce unemployment to 7% by 2030.

On Tuesday, inspectors from the ministry started the first phase by monitoring the implementation of the ‘saudisation’ in car and motorbike showrooms, shops selling ready-made garments for men and children, home and office furniture shops and shops selling kitchenware, local media outlet Middle East Eye reports.

The Kingdom aims to reach a 70% ‘saudisation’ level in these four sectors. However, the country is facing a hiring crisis.

In response to the new restrictions, many shops have either closed business or reduced their number of branches, due to the higher costs of employing Saudis and the lack of skilled labour, economic daily Al-Eqtisadeya reported after interviewing shop owners.

Foreigners occupy approximately 70.5% of jobs in wholesale shops, according to the General Authority for Statistics.

Pro-government Saudi economic analyst Abdelhamid al-Omari said that at least one million foreign workers will leave their jobs over the coming three months, and 425,600 will be deported.

This would mean that more than 3.5 million expatriates have left the kingdom in only two years, he added.

Replacing expats with Saudi nationals are expected to spike hiring costs by 30%.

The first phase aims to unlock 30,000 jobs for Saudi men and women, who would replace expatriates, according to the Ministry of Labour. The three phases aim at creating a total of 60,000 jobs, he source official source added.

ABOUT THE AUTHOR
Pedro Gonçalves
Pedro Gonçalves is Financial Correspondent at International Investment.

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