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Foreigners head home as Saudi jobs go to locals

RIYADH: In the Battah district in the heart of Riyadh, immigrants have recreated a slice of home, buying and selling clothes, food and movies from a dozen mostly Asian countries. It’s a way of life that may be under threat.

King Abdullah’s drive to replace foreign workers with Saudis has begun to transform the Arab world’s biggest economy. Since its oil industry took off in the 1970s, Saudi Arabia has relied on migrants for tasks from building pipelines to fixing cars and packing grocery bags. They make up more than half the 11.3 million workforce, and now many are being urged to leave.

“I can’t give you a percentage but I can tell you that business is down,” said Mohammed Fahem, manager of the New Sri Lankan Restaurant in Battah, as he stood behind the cashbox watching a depleted clientele enjoy chili crab and dhal. “Many people have left the country.”

The king made reducing unemployment in the world’s top oil exporter a priority after the popular unrest that began in 2011 toppled or threatened leaders across the Middle East. He unveiled a US$130 billion social-spending plan, and this year the government is taking steps to ensure the jobs it creates go to Saudis. It has tightened labour regulations on expatriates while offering an amnesty that allows the millions working here illegally to formalise their status or go home.

On July 2, King Abdullah extended the three-month grace period, announced in April, for foreign workers to rectify their residency status, the official Saudi Press Agency said. They have until the end of the Islamic year, at the beginning of November, it said. The previous deadline was July 3.


“The government is serious about getting Saudis into the workplace,” said John Sfakianakis, chief investment strategist at MASIC, a Riyadh-based investment company. “There are real structural changes happening in the labour market.”

Foreigners often entered the kingdom under the sponsorship of one person or company then changed jobs without official approval. Many were stranded in the country, unable to leave without the consent of their original employer, who often retained their passports. Foreign workers without legal visas may represent 30 per cent of the total, Cairo-based investment bank EFG Hermes Holding said in May.

The jobless rate for Saudi workers is about 12 per cent, according to official figures.

The government said in March it would penalise Saudis who allowed employees to work for someone else. Weeks later, Abdullah ordered a three-month grace period so migrants could correct their status or leave the country without any restrictions. About 1.6 million people applied under the plan as the July 3 deadline approached, according to the Saudi Press Agency.


The clampdown could hurt countries from Egypt to the Philippines that rely on Saudi Arabia’s economy to prop up their own with money sent from abroad. Neighbouring Yemen, whose economy is significantly bolstered by remittances, has already warned the measures could destabilise its fragile government.

Saudi Arabia is the third-biggest global provider of worker remittances after the US and Switzerland, sending US$28.5 billion in 2011, according to World Bank data.

Egypt, the Arab world’s most populous country, received US$14.3 billion in remittances in 2011, representing 6 per cent of its gross domestic product, according to the World Bank. For the Philippines, it’s 10 per cent. In Yemen, pushed to the brink of a civil war in 2011, remittances account for 4 per cent.


In Battah, Filipinos sell fish in narrow back-streets next to Yemeni-run fruit stalls, while Indians and Bangladeshis sell garments and buy the latest sub-continental movies.

On Olaya Street, in another part of the capital, many of the Asian men who once hawked pirated computer software are gone. Jashim Uddin, a 31 year-old Bangladeshi, is still there, working in a shop selling computer parts. He says he still hasn’t resolved his working status

“Twenty or 30 guys have already left,” he said. “They didn’t have their work permits. I expect more will go.”

Meanwhile, young Saudis – women as well as men – are increasingly visible in jobs that used to be the preserve of migrants. At the Lulu supermarket chain in Riyadh, Saudi men bag groceries and scan items. Women work at checkout counters in family-only sections at branches of Carrefour, the French retail chain.

With the cost of living rising, many families need to have more than one person earning a salary, Sfakianakis said. Women “need to contribute to a family’s income far more today than a decade ago,” he said.

Also, under the government’s jobs-for-locals drive, “retail chains are being compelled to hire more Saudis with higher salaries than before.”


The kingdom’s US$657 billion economy grew 6.8 per cent in 2012 and will expand 4.4 per cent this year, according to the International Monetary Fund. Inflation is forecast to average 4.2 per cent this year in a Bloomberg survey.

It’s important for Saudi Arabia’s public finances that, as the local workforce expands, private companies take a growing share of it, said Fahad al-Turki, head of research at Jadwa Investment. This year’s budget provides for a record US$219 billion in spending, including on new state jobs.

“The government can afford the wage bill in the short- to medium-term,” al-Turki said. “But in the long term, it will be difficult.”

Preparing Saudis for private-sector jobs is one of the tasks of the Technical and Vocational Training Corporation, which teaches 110,000 Saudis a year. It has “gotten a lot of requests from different companies,” spokesman Fahad Alotaibi said. “There is a need in the market for our graduates.”


This month, Al-Hidada, a construction company, hired 500 graduates from the programme, and the local BMW distributor, Mohammed Yousuf Naghi Motors, took 200 for its car workshops, Alotaibi said.

As such jobs go to Saudis, crowds are gathering outside embassies and consulates as foreign nationals line up for the paperwork required to leave the country.

The wait erupted into a riot at the Indonesian consulate in Jeddah on June 9, leaving one woman dead. The Indian Embassy in Riyadh has “urged our community to avail the concessions announced by the Saudi authorities” and is working on a “24/7 basis” to process them, said spokesman Surinder Bhagat.

There are still jobs for foreigners, and not all the Indians will have to leave. For Mohammed al-Dowsari, a Saudi camel farmer, it’s a good time to hire cheap labour and the embassy is a good place to find it.

“I need two or three workers,” he called out to the hundreds of Indians waiting outside. “I can provide them with their work permits.”

Others have already made the decision not to stay, including Saleem Amid, 38. Waiting in the sun for hours, he’s trying to get a one-way ticket to New Delhi from the embassy, after working illegally in Saudi Arabia for years.

“I’m going home and will start over,” he said.