‘Saudisation’ failing to fill gaps left by largest exodus of foreign workers

Crown Prince Mohamed Bin Salman’s grand vision to “Saudise” his country’s workforce is not going to plan. According to labour market survey released last week by the government, Saudis are not filling the roles being vacated by foreigners even though half of those unemployed in the Kingdom are graduates.

The government’s own data indicates that Saudi Arabia is experiencing the biggest ever outflow of foreign workers in its history and at the same time failing to fill jobs vacated by expats despite unemployment being the highest on record; 12.9 per cent.

More than 667,000 foreigners are said to have left the country since the beginning of 2017. Their exodus followed the introduction of a monthly $26.70 fee on expats and dependants a year ago. With a gradual rise of the fees to $106 a month by July 2020 Saudi is likely to become even less appealing to foreign workers.

READ: 670,000 expats to leave Saudi Arabia in 3 years

For decades foreigners played a crucial role in the oil-rich Kingdom’s economy. They account for about a third of Saudi Arabia’s 33 million population and more than 80 per cent of the private sector workforce. At the current outflow rate of foreign workers and their dependence, the Kingdom is likely to have lost 1.5 million, which is five per cent of the country’s population in just one year.

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The news has led some to speculate that the “Saudisation” programme is doomed to fail. The Financial Times reported HSBC saying: “Despite the strong policy push to create more private sector Saudi jobs, and to reduce reliance on foreign labour, the latest labour market data indicate that these efforts have not been sufficient to meet the burgeoning Saudi demand for employment.”  The international bank admitted that structural change was always going to take time but added that the impediments to more rapid “Saudisation” have not been overcome.

Economists cited by the FT said they expect the exodus of foreign workers to continue as they face rising living costs as a result of the government’s reforms.