Saudi Arabia pays price for crackdown on foreign workers

More than 200,000 foreigners deported in recent months. long-term effects on economy likely to be positive

(Photo for illustrative purposes only)

(Photo for illustrative purposes only)

A government crackdown on illegal foreign workers in Saudi Arabia has disrupted the lives of tens of thousands of people and made it harder for some businesses to operate. But ultimately it may create a stronger, more diverse economy.

Thousands of foreigners - over 200,000, according to an unnamed passports department official quoted by the al-Hayat daily last week - have been deported from the country over the past few months.

People stopped going to work at some businesses in major cities such as Riyadh for fear of being caught by government inspectors. Parents at some private schools said there were unscheduled holidays because teachers were staying home.

The turmoil was so great that last Saturday, King Abdullah ordered a three-month suspension of the crackdown, to give foreigners time to sort out their papers. Many people remain fearful of trouble with authorities when inspections resume.

Some businessmen in Saudi Arabia complain privately that the government should have launched its campaign more carefully, coordinating closely with companies to reduce their uncertainty over staffing levels.

The crackdown is likely to have an economic impact far beyond the country's borders, since foreign workers from south and southeast Asia remit billions of dollars home to their families every year.

But within Saudi Arabia, the economic costs are likely to be outweighed in the long run by the benefits of reducing excess manpower, creating upward pressure on local wages and moving Saudi citizens into private sector employment, analysts said.

"Most of the illegal labour is unskilled labour, extra labour that in fact creates inefficiency in the economy. So these people are more than the economy needs," said Abdulwahab abu-Dahesh, a Saudi economist.

"Proper policies to reduce inefficiencies will create more competitiveness in the economy."

Since its 1970s oil boom, Saudi Arabia has imported growing numbers of foreign workers for its energy, construction and service industries. In many cases, Saudi citizens have not been willing to perform the strenuous jobs or accept such low wages.

There were almost 6 million foreigners in a total workforce of nearly 11 million people in 2012, according to official data. The number of illegal foreign workers has been estimated by analysts at an additional 1 or 2 million, conceivably more.

The remittances sent abroad by these foreigners have averaged $18 billion a year over the past decade, or 6.2 percent of gross domestic product, making the kingdom the world's second biggest source of such money flows after the United States, the International Monetary Fund said in a September study.

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