Dubai: Jobs for citizens is a priority for all countries, and the GCC states are no exception. Over the years, Gulf states, especially those in which unemployment among nationals is a concern, have rolled out policies of nationalisation of jobs in various sectors. These policies have gathered steam over the years, especially in the course of the economic conditions brought about by the COVID-19 pandemic.
‘Saudisation’ presses ahead against the odds
Initiated in Saudi Arabia in mid-1970s, “Saudisation” or “localisation” is a term denoting a policy adopted by successive governments in the kingdom replacing migrant workers with Saudi citizens.
The policy has since sought to reduce the numbers of expatriates in the country, which is the world’s top oil exporter, with a view to curbing unemployment rates among the Saudis. The Saudisation drive has picked pace since King Salman Bin Abdulaziz ascended the throne in 2015 amid vigorous efforts to diversify the country’s oil-reliant economy.
Labour disequilibrium in private sector
Saudisation has already carved a niche in the public sector where Saudi employees make up around 96.3 per cent of the overall workforce, according to official figures.
The situation is lagging behind in the Saudi private sector, where foreigners still constitute the vast majority of labour despite the fast-paced Saudisation efforts made in recent years.
Foreigners account for about 80 per cent of the total employees in the kingdom’s private sector, according to official statistics.
Saudis employed by the private sector stood at 1.7 million out of a total of 9.5 million workers in this sector in the first quarter of last year, the Saudi National Labour Observatory said. Foreigners were estimated at 7.8 million employees in that period.
Work in domestic service and construction are still foreigners’ preserve in Saudi Arabia where many citizens see such jobs as menial. However, young Saudis have increasingly shown interest in commercial jobs and other professions.
Saudi Arabia’s Vision 2030, an ambitious development scheme championed by Crown Prince Mohammed Bin Salman, envisages reducing unemployment rates, now standing at 11 per cent, down to 7 per cent by 2030.
Foreigners make up about 10.5 million of Saudi Arabia’s total population of 34.8 million.
Plethora of Saudisation initiatives
In an attempt to increase the numbers of Saudis working in the private sector, authorities in the monarchy have introduced a raft of laws in recent years gradually limiting employment in certain jobs to citizens.
As part of these initiatives, the Ministry of Human Resources has signed an accord with the Saudi Authority of the Chartered accounts and the Saudi Human Resources development Fund, which is a governmental agency, to localise 20,000 accountancy jobs by 2022.
Over the past five years, the government has sought to create millions of jobs for citizens to cut unemployment rates. In July 2017, Saudi Arabia started levying fees on dependents of foreign workers, a step seen to have raised living costs for low-earning expatriates and forcing them to leave. In 2018, authorities ordered jobs be limited to Saudis in stores selling cars, ready-to-wear clothes, furniture, office equipment and other sale outlets.
The kingdom has, moreover, implemented Saudisation of several businesses in 2019 including those dealing in medical equipment, construction substances, auto spare parts, confectionaries and carpets.
In the same vein, Saudi Arabia seeks to employ 3,000 Saudi pharmacists by 2022 under a plan to replace expatriates in the sector.
The first phase of the plan went into effect last July aiming at Saudising 20 per cent of pharmacists in the profession. An extra 30 per cent is envisaged in the second phase of the plan due to start this year.
In February last year, Saudi Minister of Human Resources Ahmed Al Rajhi issued a decree for gradual replacement of foreign pharmacists in the country with Saudi counterparts.
The decree applies to institutions employing at least five expatriate pharmacists. An estimated 21,530 foreign pharmacists are registered in Saudi Arabia, according to 2018 figures. In June last year, the Saudi consultative Shura Council voted for a proposal to Saudise the pharmacy sector, one of the biggest commercial activities in the kingdom. The sector is dominated by Arab expatriates, according to Saudi media.
The proposal calls for limiting ownership of and works at pharmacies to Saudi nationals as part of the country’s drive to provide jobs for Saudi graduates of pharmacology schools. The author of the proposal argued that there are enough Saudi pharmacists to meet the local job market needs.
This month, Minister Al Rajhi decreed that only Saudis be employed in online customer service jobs.
Bearing fruit despite lingering obstacles
The Saudisation initiatives have borne fruit, according to some market observers.
“The localisation process has resulted in providing thousands of jobs in a large number of economic sectors for Saudis and reducing unemployment among them,” said Abdullah Al Maglouth, a member of the Saudi Economic Society.
Authorities impose a fine of SR20,000 on violators of Saudisation decrees. Nonetheless, there are still professions into which Saudisation has yet to make inroads. They include those of dental surgery, nursing, sales agents and purchases agents.
Obstacles, according to Al Maglouth, are related to the profitability factor that makes private enterprises favour foreigners over Saudis.
“A large portion of job-seekers among [Saudi] lack in experience and hold secondary school degrees, a matter that makes it hard to employ this category in top jobs,” Al Maglouth told Okaz newspaper.
Still, Al Maglouth cites the retail sector as a promising field that provides a lot of work opportunities for job hunters without need for much experience. He said that the Saudi Shura Council appears close to approving an amendment to the labour system to specify rates for Saudi employees in the private sector including setting the leading jobs for Saudis at 75 per cent. Foreigners are seen as still dominating the top echelons in private enterprises.
Shura member Mohammed Al Jarba has tabled a proposal limiting the expatriate’s residency in the kingdom to six years, renewable for six more years. Author of the proposal argues that the expatriates’ unlimited stay in the country have allowed them to hold leading jobs at the expense of Saudis.
“Localising leading jobs has becomes imperative, given that there is a large number of Saudis who hold top degrees in different specialties, particularly those who have returned from scholarships abroad,” Al Maglouth commented.
The Saudisation process may have got an impetus from the economic repercussions of COVID-19 amid low oil prices. Like other Gulf countries, the kingdom has sought to cushion the economic fallout from the pandemic on its citizens.
‘A state project’
And as Minister of Human Resources Al Rajhi put it, “Saudisation” is a “ state project” rather than a scheme undertaken by his ministry only.
“The localisation project is personally overseen by the crown prince, who seeks to bring down the unemployment rates to 7 per cent by the year 2030,” Al Rajhi said.
Kuwaitisation is a national priority
Like most of the Gulf countries, Kuwait is highly dependent on foreign labour. Although the majority of expats work in the private sector, the Kuwaiti government has been trying to revise employment in the public sector so that 100 per cent of the workforce is made up of Kuwaitis. This governmental policy, which was established in 2017, is known as Kuwaitisation and has been viewed as a key policy to reform the Kuwaiti labour market.
Reasons for Kuwaitisation
Although Kuwait began laying off non-Kuwaiti employees and consultants since the policy was introduced three years ago, there has been an increase since the start of the COVID-19 crisis as the pandemic shed light on several issues from the demographic imbalance to the rise in unemployment.
As expats make up 70 per cent of Kuwait’s population, several calls have been made to address the demographic imbalance. While the 3.3 million expats in Kuwait mainly work in the private sector or in marginal day to day jobs that are unaccounted for, many still view Kuwaitisation as a way to solve the issue and reduce the number of non-Kuwaitis working in the governmental sector.
Several politicians and governmental officials have adopted the Kuwaitisation policy as a way to also address the growing unemployment problem. In 2019, Kuwait saw a 0.11 per cent increase in unemployment compared to the previous year, where it was at around 2.08 per cent.
Over-dependence on public sector
While the demographic imbalance and unemployment have been seen as driving forces for the Kuwaitisation policy, the over-dependence on public sector jobs by Kuwaitis are also a reason why the government has pushed for reducing the number of non-Kuwaiti employees in order to increase jobs for Kuwaitis. Around 80 per cent of Kuwaitis stated that they prefer working in the public sector, according to a 2019 governmental report.
Compared to the rest of the Gulf countries, Kuwait has the highest ratio of nationals working in the public sector, one out of three Kuwaitis work in the public sector, compared to Saudi Arabia where one out of five nationals are public sector employees and Oman where out of every 11 Omanis one works in the public sector. The high demand for governmental jobs is due to the short working hours and the high pay, as Kuwaitis that work in the public sector receive on average 1,510 Kuwaiti dinars a month, compared to their counterparts in the private sector who receive an average of 1,191 Kuwaiti dinars a month.
Kuwaitisation and National Assembly
Several politicians and government officials have adopted the Kuwaitisation policy as a way to also address growing unemployment, fix the demographic imbalance and appeal to their constituents.
On February 1, 2021 the prime minister, Sabah Al Khaled Al Sabah, met with 16 MPs to outline legislative priorities, one of which was the Kuwaitisation law. MPs in the previous legislative term have also put forth several laws calling for urgent implementation of Kuwaitisation with some stating that, “pubic employment is a right for citizens guaranteed by the constitution.”
In May of last year, four MPs submitted a bill that aimed at nationalising jobs in the Kuwait Petroleum Corporation (KPC). A month later, the Minister of Oil, Dr. Khaled Al Fadil, announced that KPC and its six subsidiaries will no longer hire expats for the year 2020-2021.
In June, a Kuwaiti lawmaker proposed replacing expats working in the National Assembly with Kuwaitis.
Reduction of expats in public sector
According to a report resealed by the Civil Service Commission in September of 2019, around 79 per cent of all employees working in the public sector are Kuwaitis, bringing them to a total of 297,335. As for expats, they make up 21 per cent of the workforce with 34,347 expats working in the public sector.
In November of 2019, various government agencies began laying off expats, especially those that are working in non-technical fields. Then a few weeks later, around 1,183 job contacts for expats working across 48 governmental agencies were cancelled.
Back in 2018, around 50,000 expats working in governmental agencies were laid off.
Omanisation: Employment for Omanis is prime focus
The recent press conference by Oman’s Ministry of Labour is regarded as path breaking as it addressed the growing concern of provisioning jobs for Omani youth. Omanisation, which started as early as 1998, has long been a key focal point of the Omani government over the years.
What is Omanisation?
Omanisation as a policy was introduced in 1998 by the Omani government to help Omanis get jobs in private and public sectors. The objective of this policy was to replace the growing number of expatriate workers with trained Omani nationals. Omanisation quotas or targets were put in place and were mandated for several industries and companies. Failure to attain the target meant hassles in various ministry related approvals and those companies that reached the mandated goals were provided with a ‘green card’ which gave them special opportunities in any government related project.
Omanisation quotas fixed were different for different industries with banks and telecom, among others given high Omanisation targets.
Furthermore, visa ban on specific job roles for expatriate workers in private sectors were also introduced to strengthen the Omanisation process. In-depth training programmes were introduced my major companies in energy and telecom sectors, among others, to sharpen the skill-sets of Omanis and build a strong and experienced national workforce.
2020 saw Oman’s Ministry of Labour reinforcing further moves to procure more jobs for Omanis in private as well as government sector. The move to discontinue sub-contracting of expatriate employees in the banking and insurance is notable in this regard, which is expected to open up more job avenues for Omani candidates. Other salient decisions were also announced in the recent press conference by Labour Ministry that were cheered and welcomed by Omanis.
Recent data, efforts and measures
As per the recent statistical data released by Oman’s National Centre for Statistics and Information (NCSI), the number of expatriate workers in the Sultanate have fallen by 15.7 per cent between 2020 and 2019. The data shows that there has been an almost 23 per cent decline in the expatriate workforce in government sector and 16 per cent in the private sector for the above mentioned period.
Maximum fall of expatriate workers were seen in the clerical categories that broadly include ones engaged in secretarial positions that fell to 28. 6 percent. Most of these positions have been filled with suitable Omani candidates with very few if none, employing expatriates for this post.
The efforts of Omani government’s measures in this regard have borne fruits in many fields with positive figures in the field of Information and Communication that shows an increase of Omani employees by 8.3 per cent. Another notable uptick is in the real Estate industry that shows an increase of 6.5 per cent Omani staff. The figures also indicate a reduction of 3 per cent in the number of Omanis working in private sector.
Unemployment figures in Oman as indicated by NCSI data show the rate at 2.5 per cent at the end of 2020, with the unemployment rate among women at 9.1 per cent and among men, 1.0 per cent. The data also reveals that this rate is maximum among the university diploma and degree holders at 9.4 per cent.
Shaddad Al Musalmy, noted English-language journalist in Oman, says the measures announced by the ministry of Labour will definitely benefit the country and its future generations. “There are many qualified Omanis who have graduated from the universities, in Oman and abroad, and are ready for the job market; but they do need the training and experience.
“The process of implementation of Omanisation in my opinion must be a well-calculated measure. Oman still needs a mixture of labour force not only for its current development but also for future. Looking ahead, I hope the fee hikes to bring in expatriate workforce doesn’t discourage investments among foreigners. I appreciate the attempt to generate more jobs for the graduates in a short span of time; however if Oman needs long term benefits, the seeds must be sowed with patience. Slow and steady is always a winning formula and especially in the long run.”