Wednesday, June 09, 2004

Saudization

I realize that the two articles cited below aren't as fresh as can be, but in my defense I'll point out that the subject matter isn't one that witnesses rapid and dramatic changes. Nonetheless, it is an important one - in a country in which easy oil riches fostered a state of mind in the general populace that their lot was by right of birth a life of gilded indolence, what is one to do when uncontrolled population growth and low oil prices bring an end to the salad days?

From article I:

RIYADH, 23 March 2004 — Despite the government’s Saudization efforts, foreign workers keep pouring into the Kingdom. “Every day I bring 20 to 25 new arrivals from the airport. I know they are newcomers from the conversation they have with the people who welcome them,” Mohammed Razak, a limousine driver, told Arab News.

He said his experience and that of colleagues was that job-seekers keep coming on free visas, although such visas have been declared illegal. New arrivals from south and Southeast Asia include both professionals and unskilled workers. They enter the Kingdom on a work or other category of visa and then change their job description to land a job reserved for Saudis. All they have to do is pay SR1, 000at the Labor Office.

Only 500, 000Saudis are officially said to be working in the private sector, which is where the majority of the Kingdom’s six million expatriates work. This puts the level of Saudization of the work force in the private sector at eight percent, far below the 30 percent target set by the government.

According to Hisham Ferhat, a sales executive, companies have adopted a new ruse to artificially boost the level of Saudization of their work force.

“They sign a contract with a Saudi firm, which agrees to act as the expatriate employee’s sponsor. The actual employer pays the Saudi firm a fixed amount. This reduces the official foreign workforce of his company and pushes up the level of Saudization to the required level,” Hisham said. An executive said despite the ban recruitment of unskilled manpower continues. He attributed this to influence peddling or “wasta”.

[............]

Dr. Syed Khwaja of the Health Ministry said the main problem is one of mindset. “While it is true that a section of the Saudis are sincere and hardworking, unfortunately a sizable section of them have a laid-back attitude. They while[sic] away their time on phone calls, socializing and spending more time on prayers than is necessary. This is the reason why the private sector resists calls for Saudization and cuts corners wherever possible,” he adds.
While from the second article we have the following heartfelt statements of self-criticism:
Admitting the existence of a problem is the first step towards fixing it. In Saudi Arabia, we have a large and worsening unemployment problem. Two thirds of the population is under thirty with over 60 percent born after the 1991 Gulf War. Too many high school and college graduates can’t find suitable jobs and Saudis are still a minority in the private sector.

The first question that comes to mind is: How come we have seven million expatriates yet have an unemployment rate (males only, worse for women) estimated between8 - 30percent (depending on whom you ask and how you calculate)?

The solution, so far, has been Saudization — foreigners out, Saudis in. The trouble is we are dealing with only the symptoms; the disease lingers.

Let’s face it, our kids are not trained well enough for the real world. They study more theories than science; learn to memorize, but not to research; sit in class more than in labs, workshops and libraries; and speak barely more than Arabic.

When they enter the job market, they discover how poorly prepared they are.

State departments cannot take all the made-for-easy-chair graduates, so we throw them on the private sector in forced employment programs.

[............]

You hire a manager today but tomorrow he leaves for a better job. Your shop is suddenly closed, since the person you trained, hired, and gave all your trade secrets to had a better offer from your competitor.

The young man hired to run your jewelry shop runs away with millions worth of diamond and gold. You run to the authorities and they ask you to bring him over yourself. And if you are lucky and bold enough to do so, they release him the next day on bail and direct you to overloaded courts.
Command economics has never worked, for the very simple reason that people generally prefer to act in line with their own private incentives, whatever some potentate might wish; furthermore, people are cleverer than bureaucrats give them credit for being, and even the mightiest of police states cannot reliably keep an eye on all the people all the time. Anyone who kept these things in mind could have predicted from the start that "Saudization" was doomed to fail, just like all the other indigenization programmes that have preceded it elsewhere in the world. Were the Saudi government to force the issue by expelling en masse the foreign worker population, they would rapidly discover what Idi Amin's Ugandan citizens learnt the hard way - that it is far from being the case that there is a fixed share of jobs and wealth to go round, and foreigners can actually be a benefit to a society rather than a burden.

Saudi Arabia's rulers haven't been as rash as the late Lord of All the Beasts of the Earth and Fishes of the Sea (to whom they so generously provided hospitality for a great many years), but their Saudization policies would bring about much the same result if they were ever to be enforced with any success; the al-Sauds ought to count themselves lucky that their businessmen have been so clever in getting around their decrees. Putting all that aside, however, there still remains the problem of what to do about unemployment in a nation where population growth continues to gallop along at an annual rate of 3.3%. Even a nation with a vibrant economy would be hard-pressed to absorb such numbers of new jobseekers as the Saudi populace continues to bring forth, and Saudi Arabia, with its economy so heavily dependent on the price of oil, and hard limits on how much oil it can pump without oil prices falling so low that total revenue actually falls, is far from vibrant. As long as Saudi Arabia continues to churn out disaffected young men who think any form of exertion is beneath their dignity, the West will continue to have a major problem on its hands, and one day the Saudi kettle is bound to boil over.