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Can Saudi Arabia manage without its expat workers?

By granting citizenship or permanent residency to worthy foreign employees, the country can offset the dangers of a likely slump in the economy

Gulf News

What will the Saudis do without the expat workforce? What will happen when all the expats leave? Will Saudi Arabia lose all its lively diversities? Are Saudis up to the task? Are they disciplined enough to take up the challenge to do what others have been doing for them for so long? Very demanding questions for an untried society that has long been accustomed to let the foreigners do most of the work for it.

While Saudi Arabia does not have a dominant expatriate workforce, unlike some other Gulf countries, the numbers are nonetheless significant to have influenced the government to implement a series of measures to free up employment opportunities to more Saudi nationals.

With the expatriate dependent tax increasing annually, it is sure to challenge the most arduous of foreign workers who want to stay in Saudi Arabia and keep their families and loved ones close to them. Most of these foreign workers had brought their families when their children were very young and for many of these children, Saudi Arabia was the only country they had known and come to call “home”.

I had a chance to study the likely scenario in a work titled ‘Post 2017 readings’. It delves into what could be the situation in the months and years ahead. Experts predict that the economic crisis experienced by Saudi Arabia due to the decline in international oil prices and the war in Yemen will cause huge changes in the population structure in the Kingdom. The most important of these is the departure of a sizeable number of foreigners by the first quarter of 2018, who cannot cope with the large fees imposed by the Kingdom on dependents and escorts [of foreigners].

Outbound migration

Some 165,000 foreigners are expected to leave the country by the end of this year — most of them single earners, who will find it difficult to cope with the cost of living. Other fees and taxes that the state may seek to impose on them will be raised simultaneously with subsidies lifted on fuel, electricity, cooking gas, bread, baby milk and medicines. By July 2019, foreigners with high salaries and families of not more than four members are the ones who will remain in the country.

Of course, this outbound migration is expected to affect several commercial sectors in the country, the first of which are the companies of nutrition, catering and pledges, some of which may collapse completely if they cannot withstand the economic shock in the first two years.

The impact from the first half of this year will take its toll on the real estate market as rents are expected to fall to 50 per cent or even lower from their current levels, followed by decline in revenues generated by transport and relocation companies, airlines, construction companies and car dealerships.

The economic forecast is gloomy not only for expatriates but is likely to affect even some Saudi families, who may opt to remove their children from private schools and admit them into public schools to cut costs, look for cheaper housing with limited advantages, or move from villas to apartments. There will also be a pile of new vehicles at the dealerships; the used-car market will rebound and prices will fall too much.

“With the expatriate dependent tax increasing annually, it is sure to challenge the most arduous of foreign workers who want to stay in Saudi Arabia.””
-Tariq A. Al Maeena
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The impact of the crisis at the end of this year will extend to almost all businesses. Hundreds of companies and institutions with sizeable expatriate employees will be forced to close down.

Partial adjustment

At the beginning of next year, it is predicted that many of the foreigners will not be able to afford high electricity, water and gasoline bills. These will be subsidised for Saudi citizens only. Foreigners will therefore be forced to look for solutions such as renting homes with Saudis or transferring ownership of their cars to citizens. Dozens and perhaps hundreds of branches of foreign private restaurants and fast food outlets manned by lower-paid expatriate workers may be closed down due to lack of customers.

By the end of next year, one upside of such a tectonic shift in employment patterns and a deflationary trend in the economy will be the rise in the number of Saudi women employees. The nationals will begin to partially adjust to the situation by the beginning of 2020 and Saudis will be seen working a lot more in areas and activities that they have hitherto not been involved in.

This is just one perspective based on current projections.

As a Saudi, I have often been asked what would I do different. My answer? Allow long-term and worthy expatriates to apply for citizenship or grant them permanent residency. The country has been built on this formula, so why mess with it now?

Tariq A. Al Maeena is a Saudi socio-political commentator. He lives in Jeddah, Saudi Arabia. You can follow him on Twitter: @talmaeena.

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