Saudization

Saudization or Saudisation of the workforce—the replacement of foreign workers with Saudi nationals in the private sector—is the official national policy of the Kingdom of Saudi Arabia. While many Saudis are employed by the government, there are not enough jobs for the growing number of youth. As of 2006 the private sector was largely dominated by expatriate workers from Southeast Asia and the Arab world.

The Saudi Government took the decision to reduce unemployment among native Saudis, under the slogan 'Let's Put the Saudi in Saudization'. Companies which "fail to comply" with Saudization regulations have been warned that they "will not be awarded government contracts". While the "Saudi political elite" is agreed on the importance of Saudization, Saudi businesses have complained of its implementation and sought ways to avoid it.

Since 2005, the target Saudization rate has been set at 75% for the private sector, however in most sectors the actual rates are still much lower, because most Saudis are not interested in working jobs requiring manual labor.

In 2014 the Saudi Gazette reported that one of the targets of the kingdom's Ninth Development Plan (2010-2015) -- to "bring down the unemployment rate to 5.5 percent and revive the Saudization strategy"—had not been realized.

While many Saudi native men found employment with the government, there were not enough government jobs to employ all unemployed. "Saudization" the workforce has been a goal of the kingdom since at least the Fourth Development Plan (1985-1989) which called for replacing foreign workers with Saudi natives as one of its objectives. Immigration was tightened and many undocumented foreign workers were deported, but the program was only a marginal success.

A Saudization goal for 2003 was that at least 30% of employees of companies with 20 or more workers should be Saudi natives, (although only 300,000 people were employed by companies of this size).

In June 2006, negotiations between business executives and senior government leaders, including King Abdullah, led to reductions of Saudization targets in some work sectors from 30 percent to 10 percent, and full waivers from Saudization in the case of two Chinese companies, according to discussions between US ambassador James C. Oberwetter and Saudi executives.

Currently the plan targets Saudi youths as well as the women workers for the growth of the kingdom's economy. The Shura council (a consultative body) dictated that as of 2007, 70 percent of the work force were Saudi. Between 2011 and 2013, the transportation and communication sectors recorded the highest improvement in Saudization rates from 9 percent to 20 percent. Manufacturing also underwent a notable improvement in Saudization rates (from 13 percent to 19.3 percent). Saudization rates in the retail and construction sectors also improved from 12.9 percent and 7.2 percent to 18.4 percent and 10.3 percent respectively, said the report. Taking average growth for the period between 2011 and 2013, improved Saudization rates in the transportation sector came mainly as a result of a significant 59 percent growth in employment of Saudis. Average Saudi employment growth in the manufacturing and wholesale and retail sectors was also high, at 25 percent each. Meanwhile, employment growth for non-Saudis averaged just 4 percent and 7 percent respectively. The construction sector — the most labor-intensive part of the private sector — recorded an impressive 34 percent average growth in employment of Saudis, while employment of non-Saudis in the sector grew by 14 percent. The higher growth in Saudi employment in the construction sector is impressive given the particularly high wage differential from non-Saudis. Saudis in the construction sector earned a monthly average of SR3,330 in 2013, while non-Saudis earned only SR1,029.

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Wikipedia