Saudi Minister explains expat time-bar plan

DAMMAM/RIYADH/JEDDAH, May 31,2011: The Ministry of Labor on Monday clarified press reports that quoted Labor Minister Adel Fakieh as saying that the government would not renew iqamas of expatriates who have completed six years in the Kingdom.

"What Labor Minister Mr. Adel Fakieh meant by his statement was that the measure would be applied on those foreigners who work for companies in the yellow category," said Hattab Al-Anazi, official spokesman of the ministry.

He said that companies in the yellow category that did not fulfill Saudization conditions, should correct their status in order to get the iqamas of their workers renewed.

However, the spokesman emphasized that iqamas of those foreign workers in red category companies would not be renewed at all, irrespective of the years they have spent in the Kingdom.

"The new Nitaqat system allows renewal of iqamas without any condition for expatriates who work in companies in the green and excellent category," Al-Anazi told the Saudi Press Agency.

He said the new measure would not apply on house servants as their iqamas would be renewed without considering how many years they stayed in the country. "They are not at all linked with the Nitaqat system," he explained.

Speaking to Jeddah businessmen earlier Sunday, Fakieh said companies not employing enough Saudis may find themselves without foreign workers and expatriate employees may be limited to six years of employment in the Kingdom.

Reports in two Arabic newspapers said Fakieh did not say when the decision would be implemented.

Businessmen across the Kingdom differed on their views on the minister's statement. While many businessmen found the plan unfeasible, others refused to comment on the issue.

A credible business journalist who works for a sister publication of Arab News and who attended the minister's meeting with the group of businessmen and women said the minister was not very clear about the six-year work visa limitation.

According to the journalist, all that the minister focused on was his ministry's "Nitaqat" program, which is expected to be applied in two weeks. Under this program, private companies and establishments will be classified across three colors - green, yellow and red - according to the number of Saudis they employ.

The green companies will be given a number of advantages, including recruitment of manpower from foreign countries and the transfer of employees in the yellow and red categories without their companies' consent.

"The current situation calls for strong cooperation between the government and private sector in solving the problem of unemployment with hundreds of thousands looking for work," reports in the local newspapers quoted the minister as saying.

The minister expected Nitaqat to end 99 percent of black-market work visas and said that with a little help from the private sector, this market would be totally dissolved. "The program will also put an end to the commercial concealment where foreigners run businesses under Saudi cover," he said.

Quoting latest statistical figures, Fakieh said there were about 500,000 unemployed Saudi men and women against the presence of eight million foreigners, of whom about six million are employed by the private sector. "The foreigners transfer about SR100 billion every year to their countries," he said.

Unemployment among nationals in the Kingdom is running at 10.5 percent, he said, adding that 28 percent of the unemployed were women and 40 percent high school graduates.

None of those who worked informally with the minister on a number of proposals to end unemployment was willing to comment on his remarks.

"This is his prerogative," said one planner, but he added that there are many issues that need the consent from the top to go ahead. "Some of the proposals can be implemented by the minister by using a ministerial decree; some others require the consent of the Ministry of the Interior, and yet others will have to go to Custodian of the Holy Mosques King Abdullah for approval," he noted.

That was perhaps an oblique reference to the six-year work visa limitation issue. Such a decision would have to come from the very top.

"This is a sensitive topic," said one Dammam-based businessman. "I don't want to get into any controversy," he said. "I have seen the reports in local newspapers just as you have, and they did say that the minister wants to bar foreigners from working more than six years in the Kingdom."

Another businessman said: "We have had such proposals in the past. Now the question is: Are they feasible? I don't think so. For example, let us take the case of accountants. Almost all the accountants working in Saudi Arabia have been here for more than six years. If we send them back home tomorrow, do we have enough accountants to replace them? These questions need to be asked," he said.

He said he would wait for the minister's presentation at the Eastern Province chamber on Tuesday. "I would like to hear from him directly. He is certainly well-intentioned, and we would like to hear what he has to say," he said.

Economist Ehsan Buhaliga, a former Shoura member, too concurred that the minister's statement on the limits on expatriates was not clear, but added that every Saudi is hoping to see more such initiatives to control the job market.

"I do not want to make any comment on the minister's decision as it comes as a part of a package program to create more jobs for Saudis. It would be difficult to make a statement on the iqama renewal issue as things are not yet clear and I would like to have a clearer picture of the whole program," he said.

Buhaliga said strict control of the job market was necessary to solve the unemployment problem among the Saudis. He said the huge influx of foreign labor posed a big challenge for Saudi job-seekers "who had to face not only the foreigners already occupying jobs but also those going around looking for jobs."

Another economist who requested anonymity described the minister's statement like a Ramadan riddle. "Everybody wants the job market to be controlled but what we hear about new programs every day reminds us about the Ramadan Fazzoura (riddle). We should have a clear picture in order to find an excellent solution for this problem," he added.

John Sfakianakis, chief economist at Banque Saudi Fransi, said the total number of foreign workers in Saudi Arabia as of 2011 exceeds 8.5 million. According to 2009 official figures, the total private labor force was 6.895 million of which Saudis comprised 681,000 - slightly less than 10 percent.

On the minister's reported statement, Sfakianakis said there is a need for more details and granularity at this point.

"The proposal does not limit the inflow of expatriates. Once the six years are over fresh expatriates will be able to work in Saudi Arabia; hence the problem is not solved as the inflow of expatriates is not limited, and dependence on foreign labor will continue. The economy also could benefit by having highly trained and experienced expatriates stay in Saudi Arabia as they contribute to the economy given that it is already challenging to attract good expatriates into the Kingdom."

He, however, felt that it was more of a knee-jerk reaction as the measure does not limit the total inflow of foreigners but only limits the tenure of existing foreigners.

As to whether such an idea is feasible, Sfakianakis said: "If there is commitment it could be realized, but differentiation will be needed. Not all expatriates contribute the same way, and if all exit the implications for the economy could be negative."

Jeddah-based businessman Yasin Alireza said that only growth and development and not bureaucratic decisions would help provide a solution to unemployment. "It is the overall economic develop ment and growth that plays a major role in decreasing and perhaps solving unemployment, not more bureaucratic decisions that hinders the private sector. The ministry could harm local business here instead of benefiting it with this decision. I do not see the logic or benefit from it when companies spend time and the effort in recruiting and training their workers with expertise to work in the country, and have to replace them in six years," Alireza said.

Another Jeddah-based businessman Ahmad Al Faroqi too expressed fears that such a decision would impact negatively on the Saudi business sector. "This decision will create many obstacles as many businessmen depend on qualified expatriate workers to run their businesses. Many jobs here require qualified expatriates, and at the same time, there are no Saudis ready to do these jobs," he said.

But young Saudis welcomed the minister's reported statement with unconcealed glee. "This is the best decision, and we want it to be implemented fully," said Ahmed A., a university graduate who is planning to launch his own business this year. "This is the only way to solve the issue of joblessness. We have no jobs, and as long as foreigners are well-entrenched in the market we will never get a fair chance," he added.