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Wed 29 Apr 2015 04:56 PM

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Expat hiring model 'no longer working', says Saudi investment head

Prince Saud Bin Khalid al Faisal calls for fresh efforts to make working in the private sector more appealing for Gulf nationals

Expat hiring model 'no longer working', says Saudi investment head
Calls have been made for fresh efforts to make working in the private sector more appealing for Gulf nationals. (Photo for illustrative purposes only)

The “plug and play” model of recruiting expats to swell the private sector in the Middle East no longer works, according to one of Saudi Arabia’s most senior investment officials.

HRH Prince Saud Bin Khalid Al Faisal, deputy governor for investment affairs at Saudi Arabia’s General Investment Authority (Sagia) on Wednesday called for fresh efforts to make working in the private sector more appealing for Gulf nationals.

In the kingdom particularly, he said, Saudi nationals have historically been employed by the public sector.

The private sector, on the other hand, has been overly dependent on the recruitment of vast numbers of foreign expats who work for a while then leave, taking their skills and savings with them.

“The historic ‘plug and play’ model, where the private sector is largely dependent upon expats, is no longer working,” Al Faisal declared.

“Private companies need to hire more Saudi nationals by offering them an attractive working environment, viable career path and so on.

“Without this, all you are left with [to retain staff] is pay, which means as soon as people are offered a higher salary the chances are they leave.

“Saudi, Dubai, the GCC in general, was originally a nation of traders. We must encourage people to go back to their entrepreneurial roots while at the same time making the private sector more attractive to work in.”

Al Faisal was speaking at an event organised by The Economist in Dubai to discuss the future of work in the Middle East.

He conceded that greater efforts must be made in instilling a strong work ethic in young Arabs in Saudi and elsewhere in the Middle East.

“When you look back at past generations’ [work ethic] it strikes me how much has changed over the past 50 years.

“Take the head of [the world’s biggest oil producer] Saudi Aramco, where I used to work. He made his way up the ranks of the company from nothing. It’s those sorts of inspirational stories that the Saudi generation of my age and younger need to hear more of.”

However, Al Faisal was more ambiguous in his comments about women in the workforce in Saudi, saying each country has “its own culture” and each segment of society “has what it is comfortable with”.

He said: “Historically the education and healthcare sectors have been the most active to target females in terms of recruitment. If the government could step in and encourage women to explore other [employment] routes, then that could spur the process [of increasing the number of women in the workforce].

“However, it’s important to remember that we have our own culture and are not interested in following others’.

“We are moving at our own comfortable pace – which is actually quite aggressive on the whole – and it is up to us to use the skills of the amazing ladies we have in the kingdom.”

Saudi Arabia has in recent years instigated a strict Saudization policy known as ‘Nitaqat’, under which 75 percent of private sector employees must be Saudi nationals.

However, it has faced challenges in enforcing the policy and in most sectors the actual rates are thought to be much lower.

Meanwhile, much of the Middle East continues to suffer from high youth unemployment rates – in the Gulf around one in every three 15-29-year-olds are unemployed, Al Faisal told The Economist event.

“Observers have identified a skills gap between school and college leavers and the needs of a modernising labour market, and this must be urgently addressed,” he said.

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SPPS 5 years ago

Agreed. Nationals need to be shown the money in Banks and Private sector. Currently they are not familiar with the bonus schemes.

Matt 5 years ago

@SPPS: that's because most companies (including Western companies including in the financial sector) don't have/can't afford bonus schemes. And unless you are highly skilled - it is rather unlikely that you will get a bonus over AED10,000 a year.

IGK 5 years ago

Would GCC have reached the growth levels it has without Expats - No Manpower (Expats) No Growth

Peter 5 years ago

If the locals would want to go through all the stages most expats did, like working hard for a moderate salary, education after work hours, living with the fact that tomorrow they could be without a job, less holidays and so on, then they would be integrated in the private sector. But the expectations in position, image and money after leaving school are just to high!!!

Telcoguy 5 years ago

That is not really the point. The point is that the current model is broken, I think most people agree with that. Solutions are of course harder to agree on

tfg 5 years ago

Correction: The GCC wouldn't reach this growth level without its visionary leaders.

No leaders, no growth, no ingrate expats remitting money to their starving families living in corrupt to the core governments.

Paul King 5 years ago

It would be interesting to calculate the cost of productivity in an expat free Saudi Arabia.

IGK 5 years ago

@tfg why not deploy the big saudi population in saudi first than gcc - good idea but does it work (or do they work)

Telcoguy 5 years ago

@tfg, KSA has (roughly) the GDP per capita of Portugal and less than 10% higher than Greece.
I think the Greek citizens will be glad to know about how wise their leaders are!

In the meantime the GCC still has an open issue on how to handle the workforce for a future where oil is no longer the main revenue source.