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Thu 6 Mar 2003 04:00 AM

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Saudi Arabia scales back on foreigners

KSA has placed a long term cap on the number of foreigners allowed in the country

|~||~||~|Poverty, a burgeoning budget deficit and widespread unemployment have forced Saudi Arabia to place a ceiling on the number of expatriates allowed in the kingdom. Barely a month after the Shoura Council shot down a proposed 10% income tax on expatriates, the Saudi Labour Office issued a directive that would reduce foreigners to 20% of the total population by 2013 and ensure workers from a single foreign country would account for no more than 10% of the workforce within the next decade.Abdul Wahid Al-Humaid, secretary general of the Manpower Council, told the Saudi Press Agency, “Interior Minister and Chairman of the Manpower Council Prince Naif issued a decision fixing a ceiling for the number of expatriate workers and their dependents in the Kingdom. They should not exceed 20% of the total population in Saudi Arabia.”Current estimates are that foreigners make up 7 million of the 21 million population and 4.8 million of the 7.3 million workforce. The decision, according to Saudi analysts, was therefore inevitable.“We have no other choice but to adhere to the ceiling and make sure that it will move downward,” says Saudi economist, Ihsan Ali Bu Hulaiga. “We have to remember that in the second half of the 1990s the five year development plan proposed to reduce the number of expats by 320,000 from 1995-1999.”The Kingdom’s development has been overseen by a series of five year plans, the first of which was the 1970-75 plan, and the most recent is the seventh five year development plan (2000-2005). These plans, according to Johnny Abedrabbo, a senior economist at the National Commercial Bank, are designed by the Ministry of Planning and approved by the Council of Ministers. “In these development plans, the government sets goals and targets for the various aspects of the economy from GDP growth, government finances and infrastructure development to job creation policies,” says Abedrabbo. “The government is supposed to keep these development plans in mind while formulating its various policies,” he adds.But the targets have not been met. Talking about the plan to reduce the number of expatriates by 320,000 by 1999, Bu Hulaiga says, “They missed the target by almost 380,000, meaning that not only could they not reduce it, but that the number of expats had increased.” The Saudi daily Okaz quoted Prince Naif as saying, “The employment of expatriates should not be at the expense of Saudi job seekers. More than 100,000 young Saudis enter the job market annually. We have long depended on others. Expatriate workers remit no less than $13 billion abroad annually.” The prince went on to say that expatriates increase the burden by placing, “pressure on infrastructure facilities and increasing crimes.” Bu Hulaiga, who agrees with the prince, says in order to ease what he says is a distortion in the labour market, the only way is to reduce the number of expats. “We generate roughly 50,000 new job opportunities a year but we have 100,000 new Saudis entering the market. The difference should be made by making sure that we are making do with less and less expats; otherwise, there is no horizon to reduce unemployment among nationals.” The government has already reserved 22 job sectors for its nationals. Bu Hulaiga says the new jobs retained for Saudis include administrative managerial positions and their assistants, procurement managers, secretaries, car showroom salesmen and public relations jobs. The government also intends to Saudise taxi driver jobs within two years, a move that will affect nationals from Pakistan, Egypt, Sudan and Syria. The ceiling is perhaps a necessary step to combat unemployment amongst Saudis, but in concept not a new one. “The seventh plan we are in right now stipulated that the expat work force needs to be reduced by an average of 2.25% per annum,” says Bu Hulaiga.
“So what was announced is not a total surprise and to Saudise the work force means two things: to substitute Saudis for non-Saudis and to reduce the number of expats.”The income tax on expatriates was seen as one way of reducing their numbers by making them more expensive to employ. Employers, it was assumed, would take up the burden of the tax, closing the wage gap between expatriates and Saudi nationals. But Bu Hulaiga says he does not see any link between the decision to refuse the tax bill and this latest move. “The two are not related really,” he says. “Saying that we have to have a ceiling is not a response to the rejection of the income tax.”Bu Hulaiga believes the new directive will be largely aimed at those expats with marginal skills or no skills at all. “Only 15% of the expat workforce in Saudi Arabia is highly skilled, meaning those with degrees or anything beyond a high school education,” he says. “This reduction will be directed toward the excess. It is widely believed here that the market is saturated with non-Saudis. There are even indications that among the expats we have unemployed and they will compete with Saudis for opportunities.”Johnny Abedrabbo at National Commercial Bank says the proposed tax on expatriates was dismissed primarily due to its unfeasibility. For the ceiling plan to succeed, Abedrabbo says, “a proper training strategy is required, in order to qualify Saudi youths to take on many of the jobs that will be created by this decision.”||**||

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