JEDDAH — The head of the Jeddah Chamber of Commerce and Industry's commercial committee has claimed that government measures to ensure business owners hire more Saudis are too tough and often arbitrary. Nashwa Taher described the rule that stipulates SR2,400 fine for each foreign employee working in establishments that failed to achieve Saudization targets was “draconian”. “This is completely unacceptable. This decision has left us with no choice,” Taher was quoted saying in the local media. “Either we accept it or we leave the market. But nothing is encouraging us to remain in the market. “We support the government in its efforts to sort out the employment issue but the obstacles are increasing one by one each day.” The private sector suffers from a lack of appropriate investment atmosphere, she said, adding that a businessman is a citizen who deserves support instead of “being trapped by obstacles resulting from decisions that could inflict huge losses on him.” Meanwhile, Abdullah Al-Mubti, President of the Council of Saudi Chambers, said the construction and contracting committees in the council were currently reviewing the implications of the decision. The committees, he added, will demand at least a postponement of its implementation.
He hoped that the Ministry of Labor would consider the negative implications of its decision on these sectors and projects that are already under way. In a stepped-up move to lower unemployment among citizens, the Labor Ministry announced early this month it would fine private sector firms that employ more foreigners than Saudis. The policy, which came into force at the start of the new Islamic year on Nov. 15, requires private companies with majorities of foreign workers to pay a fee of SR2,400 a year for each excess foreigner. The fines will not be applied for foreigners with Saudi mothers, citizens of other Gulf Cooperation Council countries or household help. If it is strictly enforced, the policy could have a major impact on many firms. Roughly nine in 10 employees of private companies in Saudi Arabia are expatriates, according to official estimates. Businesses prefer to hire foreigners, many from south or southeast Asia, because they command lower wages than locals. This has helped to boost the unemployment rate among Saudi citizens to about 10.5 percent. Real Estate expert Abdullah Al-Maghlooth said the new policy would have an adverse effect on the contracting sector and might cause losses worth SR4 billion. He said the decision, if enforced, would stall many ongoing projects and result in the closure of 80 percent of the contracting companies. He said it would be nearly impossible to find Saudi nationals to replace foreign workers in the construction and contracting sectors. He also warned that the move would trigger another price rise in the country. Economic expert Naser Al-Fehaid claimed that the Ministry of Labor was taking arbitrary decisions. At the end of the day consumers will have to bear the consequences of such decisions, he said. Al-Fehaid said the ministry should not rush into issuing decisions without giving the market sufficient time to absorb the impact of previously-imposed regulations. He hoped that the minister of labor would consult experts in concerned sectors before taking such drastic steps that could have negative economic, social and even security implications. The Ministry of Labor is trying to change the private sector's culture from one of “importing cheap labor from abroad to one of developing national talent that is needed by the sector,” Moufarrej Haqbani, Deputy Minister of Labor for Planning and Development, was quoted as saying. The money generated from the fines will go to the Human Resources Fund and will be used to train Saudi youth for jobs, Haqbani said. “The aim of this decision is to increase the competitive advantage of local workers by reducing the gap between the cost of expatriate labor and local labor,” he added. The new policy will reduce the recruitment of foreign workers and curb the violation of sponsorship regulations where some workers take up various jobs, disrupting the demand and supply balance, Haqabani said. Each country gives priority to its citizens when it comes to the creation of job opportunities, he added. Saudi Arabia has a population of over 27 million, of which about 9 million are believed to be foreigners. In order to press private firms to hire more locals, the government last year introduced the Nitaqat quota system that imposes minimum numbers of Saudi employees on companies depending on their size and sector. Firms that do not comply face restrictions on obtaining visas for their foreign workers. The Ministry of Labor said in September that it had created 380,000 new jobs in 10 months through the Nitaqat system, which has also been criticized by some employers for raising their costs or disrupting their operations. In January, Labor Minister Adel Fakieh said the Middle East's largest economy needed to create 3 million jobs for Saudi nationals by 2015 and 6 million by 2030, partly through “Saudizing” work now done by foreigners.
