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Student Publications
Author: Nedal Al Obidan
Title: Economics of the Labor Market
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Introduction
In this essay we will briefly
discuss the definitions of the
Economics, the
concept of the Opportunity Cost ,
the Supply and Demand, and will
focus on
one of the most important issue in
the Saudi Labor Market which is the
Nationalization (Saudization).
Economics: - the study of the
allocation and use of scarce
resources to
satisfy unlimited human wants.
The Opportunity Cost:- the
forgone alternative of the choice
made or what
you would have done had you not done
what you did.
Modeling Opportunity Cost using a
Production Possibilities Frontier
before we go farther, there are some
terms we need to define the meaning
for
them:
�
Production Possibilities
Frontier: - a graph which
relates the amounts of
different goods that can be produced
in a fully employed society.
�
Model:- a simplification of
the real world that we can
manipulate to explain
the real world.
�
Simplifying Assumption:- an
assumption that may, on its face, be
silly but
allows for a clearer explanation.
�
Scarce:- not freely available
and infinite.
�
Resources:- anything we
either consume directly or use to
make things that
we will ultimately consume.
4
Increasing and Constant
Opportunity Cost.
Increasing opportunity cost exists
when the additional resources
required to
produces an additional unit grows as
more output is produced. Likely to
occur
when people are different in their
skills.
constant opportunity cost exists
when the additional resources
required to
produce an additional unit remains
the same as more output is produced.
Likely to occur when people are
identical in their skills.
Supply and Demand
The definition of the Demand and
Supply:
Demand is the relationship
between price and quantity demanded,
ceteris
paribus.
Supply is the relationship
between price and quantity supplied,
ceteris
paribus.
The law of Demand is the
relationship between price and
quantity demanded
is a negative or inverse one, but
the law of Supply is the statement
that there
is a positive relationship between
price and quantity supplied.
5
Determinants of Demand
The Determinants of Supply
� Taste
� Price of Inputs
� Income
� Technology
� Price of Other Goods
� Price of other potential output
� Population of Potential Buyers
� Number of Sellers
� Expected Price
� Expected Future Price
6
Description
�
In this essay I wil discuss the
Nationalization or what we call it
in Saudi Arabia the
Saudization, why we need it? What is
the effect of not have it and, where
we can
apply it?.
1. Strong Economy and productive
Manpower :
The main topic of this essay is not
only the employment of Saudis, but
creating a strong and prosperous
economy supported by appropriate
productive elements, including
labor. Such a vital economy is able
to create
jobs in accordance with market
mechanisms that place the right
person in the
right place, and identify the most
productive element for producing
particular
goods or service. There are people
who find that employment of manpower
instead of machines is the most
suitable element according to market
facts
such as cost, revenues and profits.
There are people who find it more
appropriate to expand the use of
machinery and equipment instead of
manpower. Some other may find that
it is more appropriate to intensify
the
use of technology or other elements
of production and materials used in
the
production process.
We, as economists, believe that the
relative advantages available to a
country often determine the
productive elements used in
production, product
quality, and the way the product is
produced. India, for example, is a
country
that has tremendous surplus of
manpower, and thus is expected to
focus in
the production of goods that depend
on intensive production techniques
to
use manpower. This is cheaper in
terms of cost which would enable
them to
sell their products at low prices
and enter into competition with
others. It is
often said that India has
comparative advantage in production
of goods that
rely on manpower element. A country
like the United States or some
European Union countries which have
the capital but not enjoying the
same
degree of surplus of manpower
available to India or some
developing
countries, their relative advantage
is not in the production of goods of
intensive techniques to use manpower
but rather in those products, which
depend on capital, machinery and
equipment
7
The subject matter in this book is
then: how can we build for a strong
and
productive Saudi economy, based on
sound and solid foundation which
grants that economy the ability to
grow accumulatively in the context
of its
comparative advantages? and not
according to provisional facts
governed
by conditions that may change at any
moment, such as recruiting
temporary manpower we suppose
through its presence with us we can
produce the same way that India,
Bangladesh, Sri Lanka or other
countries can produce by substantial
surplus of labor, then wake up one
day of a tragic fact that we were
living on the production of others
and
imagining that we were the
producers, and we invested in others
who
excelled us and returned to their
countries with the experience they
have
acquired from us; while the doors
been closed in the faces of our
young
men on pretext that they do not have
expertise.
How such experience can be acquired
while we open our doors to bring in
cheaper labors from any labor market
over the world that offers us
"appropriate labor wages"? as if the
fate of our young men is to compete
with all the world's workers to
secure jobs within our national
economy.
How can our economy accrue
experience and create local
industrial
traditions if the labor employed is
immigrant and unstable and soon
return
to their countries even after a
while?
The existence of cheaper foreign
manpower distorts the market
mechanisms and the production
decisions would be away from local
reality with its facts. Such
manpower does not reflect the
abundance,
scarcity or distribution of
productive resources of the country
but rather
creates false reality that has
nothing to do with map of the local
economy.
Hence a distorted economy linked to
foreign labor markets would emerge.
We can realize through a fake
caricature when imaging the social
panic
over looming on Saudi homes whenever
Indonesia or the Philippines
announce, for example, restrictions
on our recruitment of drivers and
domestic workers from these two
countries. What happens to us if
those
countries which export labors
decided suddenly for one reason or
another,
to stop sending their labor to work
in our factories, farms, bakeries,
markets and construction projects,
etc.? Certainly our life will
discontinue
entirely if such event occurs.
8
The first step to establish a
strong and healthy economy is to
care of our
national workforce. Even in the
countries adopting methods of
production of
intensive capital, attention to
labor force is becoming significant
because
large machinery and capital
equipment do not operate if not
heralded
regardless of the number of
manpower. For that reason, most
countries pay
significant attention to development
of their manpower and raising
worker's
productivity as a way to create
strong economy capable to produce
with
maximum efficiency, and thus
creating a competitive economy
outside the
borders as well as capable to
compete with imported goods in the
areas in
which the country has relative
advantages.
For these reasons I repeat saying
that the topic of this essay is not
Saudization itself, but to discuss
how to evaluate the Saudi economy on
solid and sustainable bases derive
its strength and durability of the
nature
of productive resources in our
country first, and foremost of which
is the
National Manpower.
The idea which this book revolves
around is that; since recruitment of
foreign labor is widely open, our
national economy will continue to
suffer
from structural imbalance and no
hope of treatment but only to return
to the
root of the problem which is
recruitment of foreign workforce.
All other
solutions are palliative solutions
which deepen the problem than
resolving it
because it takes us eventually to a
condition of addiction of these
palliative
solutions.
The strong economy is based only on
a strong private sector. The private
sector, not the government
bureaucracy, is aware of the meaning
of
production and understands the
market language. All countries which
imagined one day that the public
sector can not be a substitute for
the
private sector, have realized the
devastating failure to meet the
needs of
consumers and ultimately forced
disposal of the public sector
projects
through privatization, which shifted
the ownership of these institutions
to the
private sector. On the other hand,
private sector can't work but only
in
accordance
9
with the rules of economic
competition determined by official
regulations and
such must be logical. We, for
example, can't ask private companies
to employ
Saudis while can employ foreign
labor for wages lower than those
paid to
Saudis. If any company has to employ
Saudis the cost of its production
and
services would be higher than the
costs of its competitors. Thus, its
prices will
be higher than their prices and it
will not find consumers to buy its
products
and hence will eventually suffer
from bankruptcy and failure.
Remedy of such imbalance does not
come through blaming private
enterprises often prefer foreign
labor to local workers, but through
structural
reform of the Saudi market through
limiting the foreign workforce
inflow and
upgrading Saudi workmen skills
through training and rehabilitation
which will
allow our market interacts with the
reality normally. Of course,
Saudization
will initially be painful after
perpetuating foreign labor. It will
be painful for the
businessman who has been accustomed
to the way foreign labor works and
has built his economic calculations
on the basis of such employment when
first thought of launching his
business. Saudization is also
painful for Saudi
consumers who may find that that
labor had achieved some advantages
including lower costs of service.
But, the cost of living and
consequently the
rate of inflation in the economy
might rise. However, all these will
disappear
or decrease in the medium and long
runs because the economy will
eventually familiarize as the case
is always.
The call for Saudiization of Saudi
market is a call to rationalize the
Saudi
economy and shift it from blurred
reality, if I am not false, to
reflect the true
reality of our economic situation
which could be an excellent, if
proper actions
were to be taken for the private
sector to operate according to
competition
and transparency of this situation
and customize its decisions and
projects
accordingly.
This call for the Saudiization is
not against anyone. We appreciate
the
contributions of others, and
fraternity brothers from the Arab
and Islamic
countries, because they came to us
at the invitation and common desire
in
the exchange of benefits between us.
When foreign manpower became
unneeded and when unemployment
amongst our young men has emerged
with its negative destructive
effects, therefore, it has become
necessary to
impose restrictions on recruitment
from abroad bearing in mind that we
are
not the first country to invent
resettlement of posts. Even our Arab
and
Muslim brothers have faced such
circumstances, but have imposed laws
protecting their local labor
markets.
In brief, the call for Saudiization
is a call for the advancement of
Saudi
economy based on the national
potentials that were not given the
opportunity
to interact naturally with its
surrounding as the case is in any
other country. 10
2. A dilemma Called Foreign
Labor
Germany, which opened its doors
after the Second World War to
receive
migrant workers from Turkey, Greece
and the Balkan countries and
provided
them with material incentives for
stability, including granting of
German
nationality, and offered encouraging
aids to increase the incentive to
have
children who later wil become part
of the labor force, is the same
Germany
which is now trying to get rid of
foreigners. Moreover, there are
German
organizations, parties and trends
who openly call for expulsion of
foreigners
and get rid of them. The reason is
not only the cultural and social
factors, but
also economic. Germany, like many
countries of the world, suffers from
high
unemployment. Many Germans think
that the presence of foreign
migrants in
their country is one of the main
reasons for this unemployment. Not
only do
America and the countries of Western
Europe, even third world countries
suffer from the presence of foreign
labor and immigrant citizens compete
for
jobs. Some of these countries are
labor-exporting countries, but they
themselves are not spared the advent
of immigrant labor. In Egypt, for
example, arose some time ago
controversy in the Egyptian press on
foreign
labor, which compete Egyptians in
some areas of work. This issue was
taken
up by a member of the Egyptian
People's Assembly, Attorney
Haidar
Baghdadi, who stated that the
number of foreign labor in Egypt
amounted to
about 2 mil ion workers, are mostly
from African and Asian countries,
and
also with other nationalities from
the Balkans, Eastern Europe and
elsewhere.
One Egyptian writer has commented on
the discussions in the Commission of
Manpower in the Egyptian People's
Assembly, saying that "discussions
have
shown that the unlawful foreign
employment that has taken Egypt as
almshouse and shelter has been
fiercely competing Egyptian workers.
They
benefit from our country but chase
us in their countries, and raise
their heads
as experts while our young men run
away from pursuing police force in
their
streets, they in our country receive
thousands of dol ars and depriving
our
children of the few employment
opportunities with the limited
salary.
In Jordan, there is also talk about
the competition of foreign labor for
Jordanian labor, and the need to
address the foreign workers, denying
Jordanian citizen the opportunity to
obtain work within his country.
Mahmoud
Khatib, a member of the Executive
Office of the General Federation of
Jordanian Trade Unions, spoke on the
Jordanian experience with foreign
labor in Jordan says "government
intervention in the local labor
market was to
stop the discrepancy in the equation
of supply and demand as it acts for
foreign labor favor, resulting in a
growing and persistent unemployment
rates
in the local manpower. Foreign labor
influx in the light of the slowdown
in
economic growth has become the main
factor in the persistence of
unemployment among local labor rows,
the existence of 250-300 thousand
workers in the local labor market,
and offset almost the same number of
local
manpower are looking for jobs is a
significant issue deserves but
requires
government intervention. Such
duplication in the local labor
market should be
corrected in the interest of
national labor first.
11
3. When Foreign Manpower becomes
the origin and the notional
is the exception
Through the history of the Arab
Peninsula, there were many
migrations
towards the outside searching for a
better life. Even to the immediate
past, the sons of the Arabian
Peninsula used to travel by ships to
India
and Abyssinia in search of a living.
The "camel riders" in their turn
were
shaking Backpacker to Palestine and
the Levant, Egypt and acting trade
between these regions.
The only exception is in such small
numbers that come for one reason or
another to the land of the Arabian
Peninsula and work in professions
and
trades that the island's people do
not accept to work in, or those who
come for pilgrimage and then prefer
to stay near the Two Holy Mosques
and become with the passage of time
as other citizens.
With the formation of the modern
Saudi State (third) and the
stability of
the political and social conditions,
the country is witnessing the advent
of
limited numbers of entrants who have
contributed to laying the
foundations of the governmental
bodies. The view of King Abdul-Aziz,
God's mercy be upon him, that the
country needed competencies and
expertise in management, education,
politics and engineering, medicine
and other areas whereas he attracted
some famous names that have
become significant in the
development of the first building
blocks in certain
areas of the nascent State.
After the discovery of oil in 1938
the country witnessed more foreign
manpower, but, nevertheless,
remained limited in a narrow range
of
activities associated with the
exploration of oil fields and
extraction of oil
and the services associated with it.
When oil production increased and
financial revenues have risen from
oil exportation, and the country had
a
budget with semi-stable financial
income and organized expenditure,
the
State sought to establish modern
economy side by side with provision
of
health, educational and social
services for its citizens. To
achieve this, the
State had to bring in foreign labor
to manage the governmental
facilities
and institutions to meet the gross
deficit of national cadres, which
were
still at the beginning of its
formation.
12
The state brought teachers,
doctors, engineers, administrators
and government
officials from Egypt, Syria and
other Arab and Muslim countries.
Thus foreign labor
began to record increasing presence
in both government and private
sectors. The
presence of foreign manpower was not
limited to cities only, but also
extended to the
vil ages, countryside and rural
areas which changed the features of
the economic,
cultural and social life in the
country generally after many
centuries of almost
complete isolation.
Nevertheless, the real increase of
foreign man force in the country has
started since
the 1970s of the last century, when
the State began the development
plans
and realized the need for foreign
manpower to fill incoming gap
between
supply and demand in the labor
market. In 1970 the non-Saudi labor
force
was representing 15.86% of the total
work force, while Saudis constitute
84.14%. But by 1975 with end of the
first five-year plan, the proportion
of
foreign labor has reached 28.28% of
the total labor force in the Saudi
economy. This percentage increased
to reach 50.65% by the end of the
second development plan in 1980
after then leapt to 59.83% in 1985.
By
1995 the proportion of foreign labor
has reached 66% of the total labor
force
in the Kingdom. At present (2005)
the number of foreign labor is
estimated
more than six million workers in
addition to about 2 million of their
families
members. Estimates by the General
Secretariat of the Manpower Council,
according to some scenarios, that
expatriate workers will reach 17
million
after 10 years from now, if the rate
continued to increase like the
previous
historic pace.
The country was bringing foreign
labor at the outset because of the
deficit in
the local employment. At present the
unemployment rate hit 9.66%,
according
to the estimates of the General
Statistics Department in 2002.
Therefore, the
situation seems strange. If things
continue in this way would lead the
country
to real disaster because
unemployment itself and in the
Normal
circumstances, is considered as one
of the most social ills that
threatens the
stability of societies. How would be
the situation when this unemployment
is
accompanied by millions of people of
foreign labor competing citizens for
job
opportunities?
13
The experience of some GCC
countries tell us that the expansion
in bringing
in foreign labor may lead to change
the population structure of the
country in
a way makes citizens are a minority
in their homeland. Reports indicate
that
foreign labor in the United Arab
Emirates, for example, amounted to
90% of
the total manpower in the country,
and 75% of the State's population
are
foreigners and were representing
only 38% of the labor force in the
United
Arab Emirates in 1968. Meanwhile,
Emirate citizens becoming only 7.5%,
according to Mr. Matar Jumaa,
Head of Statistics Unit of the
Department of
Planning in Dubai. Mohammed
Al-Mazrouee, Secretary General of
Federal
National Council believes that the
situation requires a solution to the
problem
before proportion of Emirate
citizens becomes 1% of the State's
population.
This picture is repeated in more
than one Gulf State, in Kuwait,
Qatar and
Bahrain there are enormous numbers
of foreign workers which affected
the
population structure of those
countries. It may not be the
situation in the
Kingdom as we see in some other GCC
countries with less population
density. However, the increasing of
foreign manpower, especially during
the
past three decades, has left its
effects on the population structure
in the
Kingdom. It is noted that some
quarters and some markets in our
Saudi cities
have become dominated by non-Saudi
because of the intensity of foreign
labor presence. For example, the
markets deployed in the "Batha'a" in
the
heart of Saudi capital are almost
exclusively limited to foreigners,
which was
once one of the most important
markets in Saudi Arabia. It is no
exaggeration
to describe Batha'a markets as
apiece of Bombay or Karachi or
Manila,
especially on the weekends where
labor accrue massively, and is very
rare to
find one Saudi among them.
The GCC countries realized the
disorder which struck the population
structure
in the region, and have initiated a
population strategy for the GCC
countries
to restore balance in population.
However, this strategy is still ink
on paper
and has not been implemented so far
in spite of the perception of the
officials
of the GCC that the situation
population has reached a critical
stage requiring
practical steps to reduce the rate
of deterioration of the local
population rate
to the number of foreigners.
14
It is difficult to accept that
turning the local population into a
minority in their
countries because that threatens to
change the identity of the country,
besides the economic and security
effects. The penetration of the
foreign
elements in regions societies is
evidenced by the emergence of
circulated
foreign dialects mixing the
vocabularies of Arabic, English,
Persian and Urdu
and other vocabularies used in the
languages spoken by the foreign
laborers.
Indeed, in some work environments in
the region you do not find any one
who
speaks Arabic. English language has
become a requirement that some
employers insist on that those who
want to work with them should know
and
speak such a language though the
nature of the job may not need to
know
English language, and the service is
provided to citizens who mostly do
not
speak English language. In some
cases English language has become
necessary, since most or all
employees are non-Arab, because, so
English is
the language in which to write the
transactions, accounts and the
language of
understanding by the staff who hold
various nationalities. Thus, the
employer
is keen that any Saudi applies for
work with his company should know
English in order to be able to
communicate with the rest of the
staff, rather
than the foreigner staffs learn the
Arabic language which is the
language of
the country and its people.
It is so interesting what one hears
for example of dialects and
vocabularies
spoken by taxi drivers that roamed
the streets of Saudi cities. Those
are
mostly of Indian, Pakistani or
Bangladesh nationality or other
Asian
nationalities. Saudi citizen is used
to talk with them with a blend tone
of
"broken" Arabic and foreign
vocabularies. As such, also
restaurants, hotels,
workshops, shopkeepers and various
shops workers.
This massive human creep may lead to
deflation of Saudis rate to
foreigners.
That is why Saudization has become
an urgent national need to spare
society
major disaster if the growth in
foreign labor ratios continued
according to the
previous historical ratios while
some Saudi citizens suffer form
unemployment.
15
4. Policies and Strategies
The increase of foreign labor, as we
have observed, as well as the
emergence of the phenomenon of
unemployment among Saudis does
not mean that the agencies concerned
have not realized the planning of
these aspects. It does not also mean
that the executive bodies had not
exercised an important role in the
implementation of these plans.
However, the painful truth is that
the efforts were not enough to cope
with the influx of foreign labor
suffered by the country, for
objective
reasons.
Strategies have been set forth for
the growth and development of the
national workforce and Saudization
of functions and activities either
through the Manpower Council or the
Ministry of Planning. The
executive agencies such as the
Ministry of Labor and Social Affairs
and
the Ministry of Civil Service and
relevant ministries and educational
and
training institutions have
significant efforts in this area,
but simply were
not enough. The real solution to the
dilemma we are suffering from is to
reduce effectively the introduction
of foreign labor, under firm and
unhesitant administration, and to
rehabilitate and train Saudi young
men. Anything but that is merely
enabling solutions might help for
some
time but did not reach the roots of
the problem.
At the level of policies and
strategies it is enough to review
some of
those included in the "strategy of
development of human manpower"
set out by the Secretariat of
Manpower Council and approved by the
Manpower Council, in order to
realize the interest of planning
institutions and policy-making
bodies in this problem. These
strategies
cover a period of twenty five years
(2000-2025) and included some of
the objectives such as:
�
Reducing foreign labor and
rationalize the same.
�
Achieve harmonization between the
outputs of educational and training
institutions and the needs of the
labor market.
�
Integration in the area of manpower
planning and development.
�
Creation of integrated rules for
labor market information
�
Improve the level of productivity of
the national workforce and configure
the
same to cope with technical changes.
�
To reach full use level of the
national workforce
�
Appropriate exploitation of national
human resources
�
Planting and devoting concepts of
affiliation and citizenship and work
values
in Saudi society
16
Mechanisms and mentors have been
developed for work such as:-
�
Directing admission policies in
universities and rationalize the
same in
conformity with the requirements of
development and labor market
variables, and development of
programs, curricula and university
educational systems accordingly.
Preparing programs for the training
and rehabilitation of graduates
whose qualifications do not
commensurate with the job
opportunities.
Establishment of unified network for
manpower information to cover all
regions of the Kingdom.
�
Review work organization laws and
those related to recruitment
regulations and procedures and other
relevant regulations.
�
Development of labor market
mechanisms, particularly employment
offices and employment civil offices
and reinforce the same to be more
effective in the process of
recruiting Saudis and replacing them
in
foreign labor positions.
�
Exert efforts to increase
contribution of women in the labor
market, in a
way fitting her nature and does not
contradict with the Islamic Sharia.
�
Exert efforts to increase training
opportunities for the disabled.
�
Deepening the religious, social and
psychological concept of work and
citizens' trends and their
expectations for the work.
�
Unification of bodies responsible
for issuing work visas.
�
Convergence between social insurance
system and civil retirement
system.
�
Feasibility study and consider way
to establish a fund for
rehabilitation
and training of national labor in
collaboration between the public and
civil sectors.
�
Compulsory of primary education for
boys and girls.
�
Encourage investments in the
productive sectors and to build
feasibility
of new projects based on the cost of
national labor recruitment and the
use of production methods leading to
increase their employment.
17
The five-year development plans set
by the Ministry of Planning included
many of
the policies on the development of
national workforce and Saudization
of posts,
especially since the fourth
Five-Year plan (1986-1990), which
highlighted the issue
of Saudization specifically, and set
out targets sought to achieve during
the plan
years.
As for the decisions related to
Saudization directly, the Cabinet
Council approved
the decision taken by the Manpower
Council to replace national labor in
foreign labor
positions in the private sector
enterprises, and cabinet passed
decision No. 50 dated
9/27/1994 , which states " each
organization using more than twenty
people is
required to increase employment of
Saudis of not less than 5% of the
total
employment annually". In to contrary
to the rumors that this resolution
lacks
flexibility, and that it has treated
all enterprises the same way
regardless of their size
or type of activity or location, the
resolution stipulates that "the
above referred to ratio
wil be amended according to the
availability of national manpower
and depending
on the nature and conditions of work
and ratio of Saudi labor for any
organization or
activity or region". The resolution
included also the formation of a
committee to
examine all aspects of
implementation of the resolution and
in particular "considering
amendment of the ratio of Saudi
labor which increases annually, and
to recommend
their proposed ratio; and such
amendment to be issued by the
Minister of Labor," as
well as "evaluate the results of the
implementation of this resolution
every two
years," and so on.
Several resolutions were issued to
Saudize some activities, professions
and
occupations and made them entirely
limited to Saudis or by gradual
replacement of Saudi labor instead
of foreign labor; those activities
include:
- Real-estate offices
- Cement companies
- Civil private security guards
- Gold and jewelry shops
- Shops selling vegetables and fruit
- Small groceries
- Transport of students and teachers
- Electricity companies
- Private Education
- Hotel activity
- Hospitals and private clinics
- Airlines and their agents and
tourism agencies, travel and
freight.
- Appliances and household utensils
- Public taxis (Limousine)
- Transport and distribution trucks
- Customs clearance offices
- Hajj and Umrah offices
Used furniture selling
18
And other activities in addition to
the many occupations.
The Minister of Labor and Social
Affairs issued on 07/02/2002 a
decision to Saudize
a number of functional categories,
which included 167 career
indefinitely. The
Minister of Labor and Social Affairs
then passed another resolution dated
09/24/2003 to Saudize Twenty-five
commercial activities including
clothes selling
shops, women's and men's cloth
selling shops, upholstery shops,
telephones and
mobile selling shops, car spare
parts shops, and others from January
2004. The
decision stipulated that one Saudi
seller should work in these
activities in the first
year if the business store has one
worker, or, if there is more than
one foreign
worker, one Saudi worker should be
among them. In the second year 50%
of the
total number of employees should be
Saudized in commercial shops which
employ
more than one seller; and to
implement Saudization by 75% in the
third year.
In addition to Saudization direct
resolutions, other decisions were
issued supporting
Saudization such as establishment of
Human Resources Development Fund and
the
National Organization for Joint
Training. The country also witnessed
establishment
of more schools, colleges,
universities and diverse training
centers graduating
hundreds of thousands of Saudis in
various disciplines.
What has been accomplished, whether
at the level of planning or
execution, have
contributed to the Saudization
process but this achievement is not
enough given the
growing number of foreign labor and
the emergence of the phenomenon of
unemployment among Saudis.
It can be argued that the main
reason is that there is a gap
between the "planning
and execution". Many of the
Saudization decisions have not been
implemented; not
because they were not realistic, but
owing to the insistence of some
people that
there is foreign labor with low
wages. The existence of such labor
aborts any efforts
towards Saudiization. We can not put
the blame on the private sector
alone. As long
as cheap labor is available it is
difficult for a businessman to
recruit costly national
labor, because private economic
activity based on the principle of
profitability. Even
if a businessman has the enthusiasm
and employed national labor, he will
lose the
competition with colleagues unless
everyone complies to hiring Saudis,
because
production costs would be higher for
that businessman and wil be obliged
to get out
from economic activity and leaves
his rivals.
Therefore, the real solution is to
reduce foreign recruitment
significantly, which is
stipulated in the manpower
development strategy in its first
short-term goals, which
provided for "reduction of foreign
labor, rationalize recruitment
process and limit
work in some sectors and occupations
to national labor only."
19
The Manpower Council passed its
decision at the end of 2002, to put
a ceiling
for bringing in foreign manpower and
their dependents, and not to exceed
20% of the Saudis population in a
maximum period 2011. It is hoped
that this
decision, which has some mechanisms,
will contribute to reducing the
growth
of foreign labor.
There are many people who attribute
the failure of Saudization efforts
to the
government decisions in this regard
which adopted a policy of "imposing
and
obligation" to the private sector
rather than "stimulation and
persuasion."
There are people who see that
imposing 5% annually on
organizations using
twenty workers or more, did not
succeed in achieving Saudization,
because it
ignored market mechanisms, and
adopted the mandatory instead of
providing
incentives.
20
5. Economic growth is part of the
solution, not all the solution
Some people believe that employment
of Saudi nationals must be done
through economic growth as the
growth is leading to the creation of
more jobs,
which Saudis will work in. They
believe that the replacement policy,
i.e.
replacement of Saudi in the
non-Saudi's Place, is not feasible
because we
need non-Saudis expertise, and
therefore replacement policy will
hamper
economic activities and create a lot
of problems and difficulties to the
civil
sector.
In principle, a person can observe
the relationship between economic
growth
and employment increase. Economic
growth, which reflects the increase
in
GDP, is linked to production
increasing elements or increasing
the productivity
of such elements in the context of
artistic composition which
economists call
"production function". Among the
production elements which achieve
growth in
the economy is the work element side
by side with equipment, machinery
and
capital various replies, as well as
technology and natural resources of
land,
forests, and others. All these
elements combine to produce goods
and services
and thus it is subject to certain
laws known by economists, engineers
and
professionals from different
disciplines associated with the
production process.
On the other hand, economic growth
often leaves a positive impact in
the
increasing demand for goods and
services within the national
economy, and
economic growth leads to increased
purchasing power of many of the
categories whom their income
increase, and thus paid to buy more
goods and
services, which in turn leads
economic installations to expansion
its work and
activities in order to meet the
growing demand for the production of
goods and
services. In order for the
installations to expand, it may mean
the need to
recruit more manpower to produce
these goods and services. Thus a
series of
action and reaction continue between
economic growth and increasing
employment of labor.
21
This perception, as I indicated
earlier, is the initial perception,
as the
increase in production of goods and
services can be achieved through
increasing the manpower equipment,
machinery and technology with
retention of the manpower or a mix
of labor and capital elements. And
often
happens to increase production and
growth achieved without an increase
in
employment, but increasing capital
and technical, which is, as called
by the
economists, the increase of
productivity of work element,
because the same
previous number of manpower will
have a larger number of machines,
machines and modern technology at
its disposal, and thus the worker
can
produce a greater amount than was
previously. The economists call this
situation "the economic growth
unaccompanied by creating new jobs"
or
(Jobless Growth). We shall give some
realistic examples of the
experiences
of the countries faced this kind of
growth. Before all of this, we must
point
out a fundamental issue concerning
the reality of the Saudi economy. In
the
Saudi economy there is a remarkable
phenomenon to the attention of the
economic and non-economic observer,
is the massive presence of foreign
labor numbering up to millions of
people at a time when growing
segments
of the Saudi people are complaining
of unemployment.
Therefore, one can not but asks: How
can we talk about the need for
economic growth to create new jobs
for Saudis, while the jobs are
available
but filled by foreign workers? In
other words, the question that
arises is:
what ensures that the new posts that
the economic growth would open will
not go to additional foreign labor?
ALSO, What ensures that the new
posts
would not lead to bringing more
foreign labor? Our economic history
shows
that, as I indicated in earlier
sections of this book, that economic
growth has
contributed to an increase in labor
instead of increasing the
participation of
the Saudis.
Some people see that some Saudi
organizations are not enthusiastic
to
recruit Saudis because of the low
productivity of individual Saudi,
and the
way to increase recruitment and
training of Saudis is to teach them
new
skills and encourage them to and
learn familiarized to positive and
productive work values. By
imposition of acceptance of this
generality; the
problem may exist either economic
growth or not, because what is
required
is raising the level of Saudis in
the two cases even if economic
growth has
been achieved or if new jobs were
created Saudis will not be able to
benefit
from the available career
opportunities because their
productivity is low
according to the previous
generalized outlook.
22
In many cases judgments are hasty;
when decision of Saudization of gold
and jewelry shops was implemented in
the beginning of 2004, the number of
these stores decreased, for example,
in Medina from 311 shops to 127
shops
because of their inability to
implement the decisions of
Saudization, and some
considered that Saudization hampers
growth of the private sector thus
depriving the Saudis of career
opportunities. This is not the
truth, as we will
see in the next chapter that the
number of Saudis working in gold and
jewelry
shops at Madinah increased from 17
to 804 workers. The reason, of
course,
is that the gold and jewelry sector,
which was growing rapidly, did not
focus,
in the past on employing Saudis, and
the sectors' growth translated into
bringing more foreign labor. After
Saudization, the number of foreign
workers
has dropped from 2005 factor (from
21 nations) to zero.
As to the economic growth
accompanied by presence of new jobs,
this has
been proved by the experiences of
those countries recruiting foreign
labor' as
well as the countries importing of
such labor, for example, what has
happened in Australia, India,
Malaysia and the United States, the
Philippines
and some other countries.
In Australia significant economic
growth happened during the 1990s of
the
last century, but the rate of
unemployment remained high.
Australia has been
among the countries that have
achieved above average rates of
economic
growth, among the Group of the OECD
during that decade, but it was lower
than average
in creating new jobs. According to
economists, the growth in Australia
was in
productivity area and in jobs.
India also has achieved significant
economic growth during the 1990s,
however, the unemployment rate was
high. The Indian economy grew by
6.7% during the period from 1993 to
2000 compared with 5.2% in the last
ten
years preceding that period, while
the employment rate fell from 2.7%
to 1.7%
between the two periods. According
to economists, the reason behind
that is
the focus of the Indian development
strategies to achieve a high rate of
economic growth through the
intensification of the use of
technology and
capital at the expense of labor
recruitment, which led to the
recovery of
modern sectors of the economy
despite their failure to provide
great career
opportunities for staff. In the view
of some economists that the
deregulation of
Indian economy and its openness to
the world economy has made the
essential obsession is to improve
competitiveness and increase
productivity
of the Indian labor more than
creating jobs for the unemployed.
23
In Malaysia, the focus during the
1990s of last century, was primarily
on
economic development, resulting in a
higher rate of economic growth, but
did
not give enough attention to
creating job opportunities.
Unemployment rate
rose from 6% in 1962 to 6.8% in
1968, and reached 7.3% in 1970.
Malaysia
has recognized the need to review
the development strategy and focused
during the second development plan
period between 1971 to 1975 on
creating job opportunities for its
citizens and achieving fairness in
the
distribution of posts.
In the United States, the American
economy has been in recession for
2001,
and then recovered after that.
However, the recovery did not yield
the
creation of more jobs for the
American people. Until August 2003
the
American economy has lost 2.7
million jobs compared to the economy
in
February 2001. In August alone,
American economy lost 93000 jobs
after
more than twenty months of the end
of deflation. Although the United
States
has exceeded the problem of
deflation in the American economy
and
achieved a growth rate of 8.2%
during the third quarter of 2003,
the
unemployment rate in December 2003
was 5.7% and the economy did not
provide during that month only
thousand jobs, while the number of
unemployed in the United States in
December 2004 was 8.4 million
people.
These figures show that growth in
the United States has note been
translated
in the form of new jobs for the
millions of unemployed. The reason
is that the
American economy has been adopted to
intensify technology and capital
raising productivity and offset the
need for more workers. The American
companies often favored expand
across branches abroad in search of
cheap
labor instead of hiring Americans
with high wages compared with those
prevailing in many developing
countries, China, India and
countries of
Eastern Europe.
In the Philippines, Dr. Leonardo
Lanzuna, professor of economics at
the
University de Manila, Philippines,
noted that the annual rate of GDP
growth of
the Philippine economy has increased
from 3.3% in 1999 to 3.9% in 2000
while the unemployment rate during
the same period increased from 9% to
9.5% and then to 11.5% in 2001.
24
Dr. Lanzuna wondered how the
economic growth resulting in the
high
unemployment rate? Found that the
reason for this growth was the
accompanying increase in employment
is the opening of the Philippine
economy to foreign capital by
globalization which led to the use
of machinery
and equipment and modern techniques
instead of hiring workers, and
considered that evidence that the
growth in GDP does not necessarily
mean
that recruit more hands workforce.
Even when we look at the picture of
inclusiveness global perspective, we
find
that the reports of the
International Labor Organization had
proved the
phenomenon of economic
growth-associated increase in jobs.
The ILO
issued at the end of 2003 report on
trends in labor and employment
expected
in the world during the year 2004,
the organization has noted that the
Middle
East and North Africa has been the
worst records in the world in the
area of
unemployment in 2003, where the
unemployment rate was 12.2% This is
the
highest in the world .. It also
noted that this has not been
accompanied by
growth in employment. For this
organization urged decision makers
in the
world to face a number of challenges
including addressing the problem of
economic growth - the accompanying
job growth Jobless Growth and
stressed that any country can not
bear the increasing rate of
unemployment
in the long run because it will lead
to lower demand for goods and
services
and therefore limiting the prospects
for economic growth.
Some may believe that this
phenomenon is linked to the extent
short time.
But books and literature economic
development replete with examples of
the
extent to which short, but outpaced
the longer term. As we observe the
evolution of the annual rates of
change in real GDP in some major
industrial
countries for the period 1978-1997
as well as the evolution of the
growth
rates of employment, economic growth
did not result in any event to
further
recruitment. The economy grew
industrialized countries during the
period at
an average rate of 2.7%, while
employment grew in those countries
at an
average rate of 1.1%. The United
States economic growth rate of 2.7%
compared with 2% for recruitment.
Japan's economy grew at a 3.7% rate
compared to the employment capacity
of 1%, and Germany's economy grew
by 1.8%, while employment has grown
by only 0.4%. While the French
economy grew during the period by
2.1%, the employment growth rate was
negative -0.1% capacity, either
Italy, where the economy grew at an
average
rate of 2.7% growth, the employment
rate was 0.4%, the economy grew
Britain at 2.3% while the growth
rate did not exceed 0.1% of
employment and
the Canadian economy grew at a rate
of 3.2% compared with 2.2% of those
employed during the period from 1978
until 1997.
25
He notes that many countries of the
world during the era tended 1960s to
pursue a policy of development based
on manufacturing, which led to the
growth of industrial production
rates impressive. However, the
growth rate of
employment in the industrial sectors
in these countries was low as
evidenced
by the statistics Between 193-1969.
In Ethiopia, the growth rate of
production
of the industrial sector 12.8%
compared with a growth rate of 6.4%
employment, and in Nigeria compared
to a rate of 14.1% 5.3%, 11.2% and
in
Egypt compared to a 0.7% in Kenya
6.4% compared to a rate of 4.3%. In
Asia, we find that the growth rate
of production of the industrial
sector in
Pakistan during that period was
12.3% while the rate of growth of
employment in the industrial sector
2.6%, and Thailand 10.7% compared to
a
negative rate of -12%. In the Latin
American continent production grew
by
6.5% while employment 1.1%, and in
Colombia by 5.9% compared with 2.8%
in Costa Rica at 8.9% compared to
2.8%. The other rates that show the
difference between the rate of
growth of production and the growth
rate of
employment in the industrial sector,
which was suspended by the
developing
countries during the period of high
hopes 1960s of the last century.
In earlier times was the services
sector is the sector which reliable
to absorb
surplus manpower which washed
industry and the growing proportion
of the
contribution remain the services
sector in world economies over the
past
inaction. This belief was based on
the premise that the services sector
is one
of the activities that used
techniques productive labor
intensive element
unlike industry using production
techniques of intensive capital and
machines.
However, signs industrial
transformation predicts the
contrary. Says
researcher Jeremy Rivkin author of
the book "end of the reign of
function"
(The decline of the global labor
force and the emergence of the
post-slavery
"for the time being which exclude
workers in the industrial sector of
the
economic process, is still among
many economists and selected
officials
hope to be able the services sector
and the administrative sector jobs
to
absorb the millions of unemployed
persons who are seeking career
opportunity, but more likely to
shatter their hopes. Valaatmmeh
(intensify the
use of machinery) and the
restructuring already SOLVE replace
human labor
force. That aide machines able to
perform many tasks mental handled by
humans now, but at a faster rate is
Andersen Consulting, one of the
great
institutions of corporate
restructuring, believes that the
restructuring in the
industry and one of the industries
of the service sector (banks) means
the
loss of 30% to 40% of jobs over the
past the next seven, and this
translates
to 700 thousand numbers and function
are irreplaceable. these radical
transformations that prompted the
French Socialist minister Jacques
Attali
said, "The machinery is working
class-proletariat-new.
26
These examples show that economic
growth may not lead to increased
recruitment of manpower, because
production can be achieved through a
work, but also through other
productive elements such as
machinery and
technical and others. Hence, the bet
that economic growth alone was able
to
recruit Saudis and stop the policy
of bringing Saudis replace arrivals
may not
achieve the desired result. This
does not mean to minimize the
importance of
economic growth, to create more
employment opportunities for the
increasing
numbers of Saudi job seekers. It
means that we have to take advantage
of
the career opportunities available
at the present time, and filled by
imported
labor rather than waiting for job
opportunities, has achieved has not
achieved
economic growth, or it may already
be gone but, as usual, to non-Saudis
arguing that the low productivity of
the Saudis and they non-qualified to
fill
these posts.
Of course, that does not contradict
with each work consistently and
diligently
to push forward the development
process forward, and take all
actions that
create an environment suitable for
local action to encourage domestic
investment and attract foreign
capital. Saudi Arabia, as well as
funds held
abroad to invest in the Kingdom
according to the comparative
advantages of
the country and which opens wide to
recruit Saudis. Because economic
activity will then be based on
logical grounds as economic concept
right.
27
6. Between the necessary conditions
and sufficient conditions
The recurring idea in this book is
that excessive recruitment of
foreign
labor has contributed substantially
to a significant imbalance in the
labor Saudi market. We have many
reasons to some very logical, which
made this recruitment absolute
necessity, especially in the early
times
of the experience of foreign
recruitment in spite of all the
negatives that
accompanied the experiment. We also
mentioned that the reform of
this deep imbalance in the Saudi
labor market will not be achieved
without diving into the roots of the
problem: Foreign Recruitment.
This does not mean in any way that
rationalization of recruitment only
will end the imbalance in the labor
market. What we are saying here, is
like what mathematics people are
saying when differentiating between
"sufficient condition" and the
"necessary but not sufficient
condition" to
reach mathematical result. The
necessary condition can not be
reached
without any result achieved.
However, if such a condition has
been
achieved this does not mean that we
get to the desired result because
other governing conditions may be
absent, but the existence of the
sufficient condition is enough to
reach a result.
�
Recruitment rationalization is then
necessary but not sufficient to
eliminate
the imbalance in the Saudi labor
market. Al other solutions proposed
in
symposia, conferences, meetings and
studies to overcome the problems of
the labor market will not be
sufficient in the absence of the
necessary
condition which is recruitment
rationalization.
Some of the proposed solutions in
most occasions
�
Discussing unemployment,
Saudization, and labor market
concerns, are as
follows:
- Matching the outputs of
educational and training
institutions and the needs of
the labor market, including reform
of the educational and training
system.
- Reform of work regulation,
especially as regards the capability
of employers
to terminate employee who the
employer finds as not competent.
28
- Devote ethics of productive work
in the part of producer Saudi
employee, most
importantly the ethics of discipline
and respect for time.
- Create a minimum wage scale.
- Determine working hours for
private enterprises.
- Stimulate private enterprises to
recruit Saudis through financial
support and
granting of preferences to the
organizations that achieve high
proportions of
Saudization.
- Creating new opportunities for
employment of women.
Any of these solutions can be
detailed to endless partial
solutions. If we
take for example the solution
considered under the title of
"matching
between the output of educational
and training institutions and the
needs of the labor market", we will
find that there are hundreds of
detailed solutions, but all of these
detailed solutions will be
unbeneficial
in the absence of a policy
rationalizing foreign recruitment.
Then, what
is the feasibility of the training
and education of a Saudi citizen who
finds a lookout foreign competitor,
where the citizen could not accept
the second in the low pay that does
not meet his living needs in a
community that differs radically
from the society which the foreign
worker came from? The foreign worker
who comes from a State of the
Third World countries to work as a
driver in a public transport
institution
"limousine", is often not suited to
lead some types of existing modern
cars and does not know neither the
geography of the town, streets,
roads nor the language of the
country folks. I.e. he lacks any
kind of
experience or training, while the
Saudi citizen knows all these things
and does not need to be trained.
Moreover, if the citizen needs
something from this training it
would be much less than that needed
by
the foreign worker. However, most of
these institutions prefer to employ
foreign worker for reasons unrelated
to training and experience. When
we turn to the other professional
levels, we find that this is
repeated
with the holders of bachelors and
diplomas in application scientific
areas such as engineering, computer
and others.
29
In any event, some of the same
previous solutions are the subject
of vast
controversy between those who see
such solutions correct and the
opposites.
For example, there is also
controversy about the importance of
establishment
of minimum wage scale, which is
received by the Saudi national. In
the
moment such a wage is imposed, the
Saudi citizen will be less
attractive than
foreign worker, in the case of
equality between the Saudi and the
foreign
worker to obtain this benefit, when
we know that the foreign worker
drops
many things that the Saudi would not
accept to drop as explained
previously.
Further, we could imagine, in that
case, the volume of remittances by
foreign
workers because of their inflated
wages after granting them the
minimum
wage advantage. If minimum wage had
been decided in favor of the Saudi
citizen only, and not the foreign
worker, this decision would put us
in a
quagmire with international
organizations because in this case
we will be
accused of discrimination between
people according to their
nationalities.
This is the last thing we need.
Therefore, we may be obliged to
decide the
sectors, activities and professions
limited for the Saudis as the only
sectors to
grant its workers the minimum wage
advantage. Here we place ourselves
in
long mazes with the institutions
which will be more exposed to such
limitation;
and thus to the high wage bill
comparable with other institutions,
which will
benefit from two advantages of not
limiting work to the Saudis and not
to
impose a minimum wage for workers.
In Conclusion, all of these
solutions, although some
controversial, will not
help much away from "the necessary
solution," which is rationalization
of
foreign recruitment. However,
rationalization of foreign
recruitment may not
need us to take some of the previous
resolutions because market
mechanisms would create logical
solutions to us through the
interaction of
supply and demand and the resulting
individual initiatives on the supply
side
and demand side. The role of
government is to regulate the labor
market as
prohibiting practices that reduce
the transparency of the economic
process or
the practices that impede
competitiveness amongst different
economic units
on the sides of the supply curve and
demand curve in the labor market
map;
as well as training of Saudis in
various ways, whether through
training
institutions or governmental
training institutions in the private
sector.
30
7. The effect of not applying the
Nationalization (Saudization)
Unemployment rate rose in the
Kingdom during recent years from
8.1% in
1999 to 8.14% in 2000, then to 8.34%
in 2001, up to 9.66% in 2002,
according to official estimates of
General Statistics Department, the
latest
statistics is 15% as of 2007. There
is no doubt that the presence of
low-cost
foreign labor has heightened
unemployment rate meanwhile
population
growth rates are increasing in the
Kingdom, where growth in Saudis
population who are able to work is
estimated of 4.69% per annum during
the
period of the seventh development
plan from 1999 to 2004.
Unemployment is one of the worst
social ills that faces any society.
Unemployment does not mean only that
the unemployed does not have a
source of income to feed himself and
his family, but also a feeling that
the
unemployed person is marginal and
has no value in his society.
Unemployment inherits a deep sense
of non-feasibility, insult and lack
of
dignity. When an unemployed
individual finds that those who are
around him
are working and adding value to
their community while he hangs about
at
home or wandering in the streets and
cafes, he will feel of spiritual and
moral
vacuum and his confidence in himself
and his society would shaken.
At the beginning the unemployed
person will feel angry, and then
this anger
turns, by the passage of time, into
such a negative attitude mixed with
frustration and aggressiveness
towards others. Thus, the problems
of the
unemployed person would increase
with his family members, the near
surroundings, and then with his
community in general. The unemployed
person would then deviate into
destructive behaviors.
Many studies have shown correlation
between unemployment and
psychological diseases. social
scientist Dr. William Avison Says
that the loss
of a job leads to a sense of moral
decline by the unemployed person and
the
inability to control his feelings,
which casts him in the midst of
psychological
diseases. To be sure, some
psychiatric disorders destroy the
patient if
causes have not been cured. In the
case of long unemployment, the
destruction sometimes may be
constant and so would be difficult
for a person
to restore his vitality. Hence,
offering a job to this person
becomes almost
impossible because his ability to
cope with the work requirements
diminishes
with the passage of time.
31
The interruption source of income
for the unemployed person, and the
psychological his suffering because
of the social pressures and personal
embarrassment he faces continuously,
may push some people to fall deeper
in crime. In the study conducted by
the Manpower Council in conjunction
with
the Interior Ministry, it has been
shown that 83.92% of crime
committers are
unemployed persons in the study
sample; given that unemployment is
the
main reason for their commission of
the crime. The study attributed this
result
to the negative effects of the
phenomenon of unemployment on the
individuals economically, socially
which increases their frustration
and in the
accumulation of dislike and hatred
feelings in themselves, which may
push
them to the delinquency towards
crime.
The study found that the previous
crimes committed by the unemployed
persons had increased during the
previous period covered by the study
(1989-1995) by 319.53% at an annual
average rate of 15.42%. The study
showed that the majority of the
unemployed persons who committed
crimes
have made efforts to get to work but
were unable to do so.
Also, the study had found that the
age of the perpetrators of
unemployed are
concentrated in the slot, ranging
from 20-30 years old. The study
indicated
that in this phase of age the person
is often bear the stamp of bullish
and
physical strength, away from wisdom
and deliberation, eager to achieve
ambitions in the shortest and
easiest ways, and eager for
appropriate work
opportunity that achieves his
aspirations and secures him stable
life.
Unemployment estimates issued by the
General Statistics Department in
2001, showed that unemployment rates
are concentrated in different age
groups as follows:
15 to less than 20 years, equal to
48.51%
20 to less than 25 years equal to
29.07%
25 to less than 30 years, equal to
10.77%
Unemployment rate in the rest ages
is equivalent to 11.02%.
32
Another study conducted in 2002H on
the social characteristics of
unemployed persons of the crime
committers, showed that those under
the
age of 30 of the study sample
constitute 64.07% of the volume of
that
category. The study found also that
46.08% of the surveyed unemployed
persons, had committed crimes
because of the need of money, 21.5%
had
committed crime because of vacuum.
It is clear form the foregoing that
the small age groups or lesser ages
are
critical categories that could be
spoiled significantly of
unemployment and
threaten the society. Jeremy Rivkin,
author of the book "end of the reign
of
the career" observed horrible images
of violence of unemployed youth and
adolescents in the European and
American cities. In New York City,
Washington and Los Angeles and some
European cities there are gangs of
unemployed adolescents sowing terror
in residential areas that were safe
in
the past. Incidents like robberies,
break into houses, shooting from
moving
vehicles, drug trafficking and riots
increased as a result of
unemployment.
However, the other age groups are
also threatened by unemployment and
loss of jobs they used to handle.
Mr. Jeremy conveys of Dr. Thomas
Cottle,
researcher specialized in psychology
and clinical sociology, that some of
those who lose their jobs are
exposed to sick symptoms similar to
symptoms
that appear on people who are dying
because work has been linked in
their
minds over life. The researcher
gives an example for the purposes of
his
research, where he conducted
interview with 47 years old man
named
George Wilkinson who lost his job as
a manager of small company.
Wilkinson
says, "there are only two worlds,
either to work every day in normal
working
conditions and obtain vacation, or
die, and that there is no compromise
solution". Working is just like
breathing, a thing you don't think
of but you
practice it only to keep you alive,
and when you quit it you die. After
a year of
this interview George Wilkinson
committed suicide by shooting
himself.
33
Available literatures on the social
and economic impacts of unemployment
indicate that, unemployment leads to
many devastating effects including:
Waste of deactivated human
resources.
Feelings of alienation and weak
sense of belonging and loyalty to
the
community.
Psychiatric disorders
Suicide
Abuse of alcohol and drugs
Prevalence extremist ideas.
Divorce and family disintegration
Theft and assault on others
properties.
Killing and Sexual assaulting
Insecurity
Unemployment among Saudis is only a
part of the many negatives of the
consequences of the presence of
foreign labor overly exceeds the
needs of
the economy and society in Saudi
Arabia. Unemployment despite its
gravity
as an economic and stressing social
problem comes in the context of
larger
number of negatives and numerous
problems created by the phenomenon
of
the surplus foreign labor.
The negative effects of the foreign
labor on Saudi individual begin
since his
birth and childhood. He arises under
the confines of foreign maid who
often
becomes nurturer and not just
working at home for cooking and
washing
service. The Saudi child spends long
hours with the foreign maid far from
his
mother who works outside the home or
devoted to her own affairs even if
she
were not working. Saudi houses are
full of large numbers of workers
beyond
the family's needs in some cases,
because some consider the existence
of
more than one maid from the
perspective of social relevance.
Saudi families
have become dependent almost
entirely on the maid servants where
a
reprehensible type of severe
dependency has resulted to the
extent that the
Saudi child is not doing any role in
serving himself even in the simplest
things. Even if he needs a cup of
water he asks the maid to bring it
for him.
Because of this a feeling of relying
"unconsciously" on others has been
created with Saudi citizen as to
performance of any act, and this
partly
explains the reluctance of some
young Saudis to do many works and
their
inability cope with the work
requirements in the private
34
sector because he used to see
another person doing the work on his
behalf
since he was a young child.
Some people are surprised by the
behavior of some Saudi young people
and
teenagers at the present time and
that many of them lack the minimum
of
seriousness and weak dependence on
them for the performance of any act,
and tyranny of selfish.
But what can we expect from a person
who has emerged since was a small
child seeing that there is someone
who performs on his behalf all his
personal
affairs, and not having any role in
the home and is dependent on the
maid
and driver, and that no one asks him
to perform any useful action even
for
training and familiarity.
Some of the negative impacts that
face Saudi individual since
childhood, are
the cultural influences where he
picks up the daily speech
vocabularies from
the foreign maid perhaps before he
picks it up from his father and
mother. He
also picks up from the maid a lot
values that form his psychological
personality and leave their marks on
his behaviors over life. In many
cases
the child is affected by the maid to
the extent that when she travels to
her
country after completing her work,
leaves deep psychological crisis in
the part
of the child.
Indeed, the cultural influences of
foreign labor are not caused by the
foreign
house workers only, but by most
categories of foreign labor of all
kinds,
especially by those coming from the
Arab countries. When one goes to buy
supplies from the market, obtain
service from a trade business, rents
a car,
go to the hospital or anywhere he
hears a lot of languages and
dialects..
There is no doubt that this leaves
negative impact on the Arabic
language,
especially given that some work
environments are becoming
exclusively
foreign and their work language is
foreign and not Arabic. It is
noticeable that
some hybrid vocabularies marched to
the Arabic and Saudi citizen have
used
such vocabularies even when talking
with another Saudi citizen.
35
If the language is a key element in
the equation of culture, culture is
broadly
defined to include many social and
ethical elements. These cultural
values
certainly been significantly
influenced by the excessive presence
of the
foreign labor. We do not say that
all the components of our local
culture are
positive values but the sweeping of
foreign values to our culture due to
the
imbalance of population which made
the foreign labor rate up to a third
of the
population structure, poses a real
threat to the cultural fabric of the
Saudi
society, especially that the
majority of foreign labor is simple
and illiteracy
labor came from small rural
villages.
The imbalance in the Kingdom's
population structure by the presence
of
excessive foreign labor has left
negative impact on the community
through
the proportion of crimes committed
by the foreigners. The ratio of
expatriates
to the total population is 32%,
while the proportion of crimes
committed by the
expatriates of 75.59% of the crimes
of bribery, 75.05% of forgery crimes
and
67.54% of swindling and fraud
offenses, 48.28% of the thefts and
47.49% of
ethical crimes, 43.6% of composed
crimes and 40.72% of identity theft
crimes
and 31.66% of criminal offenses for
cars, and 28.39% of the crimes of
assault
and beat, and 27.77% of intentional
murder, and 26.55% of the alcohol
crimes, and 26.29% of drug offenses.
Dr. Abdullah Bin Hussein Al Khalifa,
found in a field study, that
"foreigners
commit crime, in pattern and size,
to the extent and pattern of crime
occurring
in the communities they have come
from, this means that the foreigners
coming to Saudi society from
communities infested of criminal
behaviors are
more inclined than others to be
involved in the same behaviors, and
vice
versa. In his review of the
literature on this subject in the
Arab Gulf states,
says Dr. Khalifa: "a number of
studies discuss the impact of
foreign labor in
the volume of crime, and a number of
these studies pointed out that
foreign
labor commit crimes in ratios
greater than such lobar actual size
in the
society, some of those studies also
revealed the emergence of new
patterns
of criminal behavior were not known
locally before the advent of foreign
labor.
36
It is known that communities
generally subject to constant
change, as social
change is the basic recipe in any
society as it may seem stagnant at
first
glance. We could imagine the impact
of foreign labor in identifying the
change
aspects that will occur on our
society and contribute to its
strucrure over the
upcoming stage. Back to the many
literatures available on "social
change",
we could say that any immigration or
foreign presence must leave their
deep
impacts on the community. Such
effects may be negative or positive.
Some
of the positive effects left by the
early foreign presence in the
eastern region
of Saudi Arabia in the early entry
of oil companies are the behavior of
discipline and respect for work
values. But we note how different
the impacts
of foreign labor which came later to
the region during the era of
so-called
"boom" and thereafter.
These negative effects have been
exacerbated by the presence of
surplus
large numbers of foreign labor which
often created a kind of friction
between
the citizen and foreign worker. The
nature of the existing circumstances
has
isolated foreign labor community
from the periphery of society in
which they
live, is the Saudi society. Hence,
there is "another community" within
Saudi
society and only small numbers of
Saudis know such society. Therefore,
the
daily deal between the Saud citizen
and foreign labor carries some
pictures of
friction because of the social and
cultural gap that separates the two
sides.
The reasons for this friction is
that the foreign worker believes
sometimes that
the relationship with the Saudi is
unequal authoritarian relationship
in favor of
Saudi, which may create some
feelings of hatred and perhaps
revenge in any
form. The Saudi sometimes looks at
the foreign worker suspiciously
because
of the differences in customs and
traditions and may misunderstand the
foreign worker and imagines that he
wants to use or even stolen him.
Given
that the majority of foreign labor
with which Saudi citizens directly
deal is
simple labor, some Saudis look at
such labor generally in a
superstructure
way wounding the feelings of the
foreign labor in general. If we add
to this the
conflicts that occur on the
financial benefits of foreign
workers and quality of
service provided to them, we
understand the bitterness resulted
from such
bitterness, which may be translated
into bad practices. Because of this,
the
Kingdom sometimes faces criticisms
from foreign governments and global
labor organizations and human rights
associations. There is no doubt that
such criticisms damage the country's
reputation and the reputation of the
Saudi citizen.
37
From an economic perspective we
could see the positive contributions
of the
foreign labor. However, these
positive effects must be compared to
the
negative effects of surplus foreign
labor. Perhaps the most obvious
negative
effects are the creation of economic
structure lacks in its ingredients
the
essential elements which ensure
continuity of some businesses and
economic organizations which had no
real economic justification for its
creation but cheaper foreign labor.
This has led to distortion of market
forces
and mechanisms, where organizations
of no real relative advantage have
been created in the area of its
work. Those institutions have
devoted quick
profit concept, and also became
stumbling block in the saudization
road
because they cant saudize their
posts then they will lose the most
important
element in equalized profitability
which is the existence of cheaper
foreign
labor. Some existing institutions,
which appear at first glance as they
belong
to Saudi individuals, are in fact,
exclusively owned by foreign labor
covered
by Saudi persons who receive
commission or lump sum for
sponsoring such
foreign labor and give them legal
coverage. Of course, this cover has
led to
competing Saudis who have
installations in the market, or who
want to enter
the market, especially in the area
of small enterprises that could
attract large
numbers of small investors.
Due to the presence of such huge
numbers of surplus foreign labor
that
exceed the real need, the abroad
financial remittances by those
workers have
become constant drain on the Saudi
payments balance. The total
remittances
were about sixty billion Riyals in
2002. A study, issued by the General
Secretariat of GCC countries,
estimates the volume of remittances
of foreign
labor from the Kingdom during the
period from 1975 to 2002 of 260
billion
dollars, i.e. about 975 billion
Riyals. It is certain that these
enormous funds
would have revived the Saudi economy
if stayed at home and invested to
establish economic projects to
provide income and employment for
Saudi
citizen.
38
As regards Saudi human resources,
we can say that the presence of
surplus
foreign labor, but not the essential
labor, had contributed to the
reduction of
Saudi human resources growth. As the
presence of surplus foreign labor of
specialties needed by the country in
the field of medicine, nursing and
university education and the like
have contributed to the development
of
Saudi manpower; the surplus labor
has created a cheaper ready
alternative.
Thus, some employers did not find
motivation to train the Saudi and
grant him
the opportunity to learn and master
the profession, but the employer
always
compares the Saudi worker with the
foreigner although is not objective
comparison.
From the foregoing it can be said
that the intense of foreign labor
surplus to
requirements will be devastating if
continues at its previous historic
velocity.
The issue is not a question of
specific number of foreign labor
working in the
key areas that are difficult to
provide national manpower to run,
but beyond
that to turn this foreign labor into
in addiction, to the degree to which
unemployment started to appear among
foreign labor itself in addition to
unemployment among Saudis.
Many countries have encouraged
attracting foreign labor to meet
their
existing needs in certain historical
and economic conditions. But the
matter
did not reach the degree to
imbalance the local population
structure, as is the
case in the Kingdom and the rest of
the GCC countries. The GCC Council
General Secretariat estimated the
expected number of foreign manpower
of
17 million foreign worker by 2012 if
recruitment continues in the same
previous historical pace according
to some scenarios.
For these reasons we say that our
country, Saudi Arabia, is facing two
options: either Saudization or
Deluge. It is certainly true that
the real option is
the first option which maintains a
productive community that keeps on
with
the rest communities in terms of
export and import and benefit from
others'
technology and resources and
meanwhile make others benefit from
our
products and munificence, and
doesn't isolate itself from the
exchange of
globalization movement but also
don't build upon fragile structure
fully
dependent on others, but on the sons
of the homeland bearing in mind that
should not prevent us benefit from
the foreign experiences according to
the
real need of the country.
39
General Analysis
In the part of this essay I will
cover the relation between the
Economics and
the Gender.
why Women make less then Men?
�
Pregnancy
�
Loss of time in the field and
intermittent absence can put women
at a
economic disadvantage. (Many times
this difference in treatment is
against the law.)
�
Stay-at-home Moms
�
98% of stay-at-home parents are
women leaving them out of the job
market for extended periods of time.
Time out of the labor market causes
women to lose the period of rapid
economic advancement.
�
Different Professions
�
Teachers (83%) Nurses (93%) Social
Workers (69%) Day Care workers
(97%) Secretaries (99%) Vs
Mechanics(4%), Construction Workers
(2%),
Truck Drivers(5%)
�
Flexible Employment
�
Women, more than men, tend to choose
jobs that allow them to deal with
her
children's activities and il nesses.
Why Competition would Eliminate
Discriminatory pay
�
Businesses that hired only men at
the higher wage would have higher
costs
than businesses that did not
discriminate.
�
Businesses that did not discriminate
could lower their prices and take
the
market share of those firms that did
discriminate.
�
As this happened firms would see
that discrimination was not
consistent with
maximizing profits and would stop
discriminating.
40
Why Competition Would Not
Necessarily Eliminate Discrimination
�
In industries where there is
economic profit, firm owners may
continue to
discriminate and consider it a price
they are willing to pay so as to not
employ
women.
�
In industries in which the customer
chooses which business to patronize
based on gender, firms may be
willing to discriminate because
their profit
maximizing interest and
discrimination are consistent.
41
Actualization
Case Study: Implementing the
Saudization
in the Gold and Jewelry sector
As a matter of principle; no one is
against Saudization, as I mentioned
in the
previous chapter, but the problem is
always in the details. When going
into
details enthusiasm will fade out and
another theoretical point of view
appears
filled with caution and hesitation.
Not because of bad faith, but
because
businessmen of every economic
activity believe that their activity
represents
"special case" and is
non-Saudizable.
As an example, when the government
wanted to Saudize gold and jewelry
shops, the shop owners expressed
fear of lack of preparedness of the
sector
for Saudization, and asked concerned
bodies repeatedly, to postpone
implementation of Saudization.
Although the concerned departments
have
positively responded more than once
to their requests for postponement,
but
the owners of gold and jewelry shops
have returned again to ask for
postponement whenever earlier
postponement has expired.
Despite that, Saudization of gold
and jewelry shops has succeeded at
the first
serious attempt.
The story of saudizing gold and
jewelry shops begins with the
decision of the
Manpower Council in 1421, to limit
seller posts in gold and jewelry
exhibitions
and shops to Saudis only and not
allowing foreign labor to work in
such posts.
The owners of these shops were given
a full year notice before the
deadline
for implementing Saudization in
order to arrange their own affairs
before the
start of implementing the
resolution. Coordination was also
made with other
training institutions in the public
and civil sectors to provide
training courses
on the profession of selling gold
and jewelry.
By the time of implementation in
1422, shop owners expressed their
inability
to Saudize the shops, and asked to
postpone implementation of the
resolution. HRH Prince Nayef bin
Abdulaziz, Chairman of the Board of
Manpower responded to their request
and issued his decision in 1422 to
gradually implement the resolution
accounting for the circumstances of
the
owners of gold and jewelry shops,
according to specific ratios,
starting with
30% of the total employees, and
would rise to 50% at the beginning
of next
year, and complete and reach 100% at
the beginning of next year i.e. by
01-
01-1424 date.
42
That was accompanied by
coordination between the Secretariat
General of
Manpower Council and the civil and
governmental training bodies.
However,
once again, by the specified time
the shop owners requested anther
postponement of implementation.
In spite of everything, postponement
was approved till the start of next
year,
i.e. to 01/01/1425, but _ believe it
or not- voices have risen again
asking for
further postponement when
implementation of resolution fell
due.
The argument has always been given
is that the gold and jewelry selling
profession needs special skills and
personal qualities that are
available only
in a few people, therefore, it is
difficult to bring Saudi citizen to
replace the
foreigner in the short term. But the
short term remains to passing
endlessly
as whenever a deadline expires and
implementation date falls due,
owners of
gold and jewelry shops again called
for postponement; although training
courses held to train Saudis on such
unexceptional profession with the
support of the Human Resources
Development Fund and the National
Organization for joint training of
the institution of technical
education and
vocational training and some other
private institutions did not receive
the
popularity of the owners of gold and
jewelry shops. The shop owners were
expected to send to such training
courses the people they want to
attract to
their shops through programs
supported by the aforesaid Fund
during the
training and recruitment beginnings.
The experience of Saudizing gold and
jewelry shops in Medina, shows us
how the possibility of implementing
Saudization despite fears expressed
by
the owners of such shops. This
experiment shows also the great
benefits that
can be achieved by the process of
Saudization despite the presence of
the
many obstacles and challenges in the
face of Saudi citizens, such as long
working hours and lack of
incentives, and so on.
When the Sauization resolution was
introduced the number of gold and
jewelry shops in Medina was 331
shops and the number of sellers was
1426
persons belonging to 21 nationals,
and there were 17 Saudi only among
them; i.e. Saudization rate was only
1.19%.
After a year of implementation of
the resolution, the number of the
rehabilitated persons for the
profession of selling gold and
jewelry had
reached more than 800 Saudi sellers.
In the first month of 1424
Saudization
rate accounted to 100%. As a result
of the efforts of Saudization, the
shops
that practiced concealment have
disappeared and thus decreased the
total
number of shops from 311 to 127
shops by the end of 1424, and the
number
of Saudis sellers settled at 625
person.
43
Discussions
The Saudization Executive Committee
in the Principality of the Medina,
conducted a field study in the
eleventh month of 1424, before the
introduction
of comprehensive Saudization, and
came with following results:
Most of the sellers came from
outside Medina, this means that the
Saudi
citizen has the desire to move where
his job exists.
Most sellers are between the ages of
twenty and thirty, and then sellers
of
less than twenty years, then between
forty and fifty years, which means
that
this work attracts all groups of
age.
Most of the sellers have
Intermediate Efficiency
Qualification, then primary
and secondary school certificates.
This means that such a job does not
require high qualifications and did
not affect the ability of the
individual to
handle the profession.
95% of the sellers never had access
to training courses in sale of gold
and
jewelry career and were trained in
on the job. This indicates that
despite the
importance of training courses
generally, training on work can be
appropriate
method.
62% of the sellers did not have
previous experience in selling gold
and
jewelry. As for the 38% who had
experience has gained it during the
previous
two years of the implementation
during the gradual Saudization. This
indicates that the tightening by
some of the shop owners about
experience
requirement may be excessive in some
cases.
44
There is high demand from Saudis to
work in this profession, despite the
obstacles. The study found that
there are a number of constraints in
this
context such as:
Long working hours and lack of
weekly rest, 534 sellers serving
morning and
evening periods, the number of hours
for some sellers reaches 16 hours a
day. Also, some of them do not
obtain leave weekly. There are 32
sellers
serving one period only, but they
are students who work in relatives'
shops
and some sellers with meager wages
who wish to improve their
conditions.
Non-subscription in social
insurance: all sellers, except for
six of them, are
not subscribers in the social
insurance system although some
expressed his
desire to subscribe.
Work without contracts: 74% of the
Saudi sellers work without
employment
contracts, despite the fact that
Article 83 of the labor law dictates
for written
employment contract.
Despite all these constraints, the
demand for enrollment in the "gold
and
jewelry seller" profession was
significant. It is noted that
limiting this
profession to the Saudis had
launched market mechanisms to
fine-tune the
labor market with the new reality as
is the nature of markets to adjust
to
changes according to supply and
demand. For example, figures show
that
24% of Saudi sellers in gold and
jewelry shops in Medina, paid
between 3000
to 5000 riyals, and there are higher
wages than that despite the absence
of
minimum wage. This indicates, on the
other hand, that the imbalance in
the
pay structure is due to the
intensive presence of foreign labor
that exceeds
the local economy requirements.
The study of Medina ironically
revealed, that the declining number
of gold and
jewelry shops from 311 to 127 shops
was accompanied by a rise in the
number of Saudi sellers from 17 to
804 persons. This confirms that many
of
the shops had practiced concealment,
and that economy did not lose any
thing with such shops disappearance,
all the issue is that the share of
these
shops in the total volume of sales
has turned into shops that employ
Saudis,
which shops have continued in the
market.
45
The experience of Medina has been
repeated in more than one region in
the
kingdom, and has succeeded
dramatically both in terms of
attracting Saudi
citizens to work in gold and jewelry
shops, or in terms of elimination of
concealment, or modification of the
structure of wages according to
market
mechanism, without interference from
the government for the purpose of
minimum wage. These steps were
accompanied by an increase in the
sales
of the shops which have initiated
Saudization functions, as buyers
have
turned to these shops from those
shops which have had to close down
because of their failure to achieve
Saudization.
Experiences in various regions of
the Kingdom have proved the
possibility of
the success of Saudization whatever
seemed at first glance as not
promising
process from the point of view of
some people, especially the owners
of the
unsaudized activities; as market
mechanisms and forces begin work and
complete the adjustment process in
order to achieve balance in the
market.
46
General Recommendations
�
With all had been mentioned above
I'm suggesting the following:
1.
The Saudization became a most to
avoid the negative impact on the
society, family
and the individual .
2.
The leaders and mangers become role
models of passing knowledge to the
young
Saudi employees to make them better
employees.
3.
HR Dept. should ensure the
implementation of the Saudization .
47
Conclusion: A New Perspective
�
As I am the Human Resources of my
Company, I will
establish a system that will focus
on implementing the
Saudization without impact the
business.
�
Moreover, the HR Dept. encourage the
organization to
invest in the young Saudi employees
by developing
strong training programs.
�
HR Dept. should balance between
implementing the
Saudization and ethical issues.
48
References:
Principles of Economics Mark
Vandenplas, Dominick Salvatore,
Eugene A.
Diulio,.
Saudization or Flood Dr.
Abdelwahed ALHOMAID, Ph. DFirst
Edition, (Arabic
Version) .
More references had mentioned within
this essay.
49
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