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Doing Business in the Middle East
Doing Business in the Middle East
|Posted on May 17, 2013 at 11:58 AM||comments (118)|
So tomorrow (Saturday, 18 May 2013) is the day that Saudi officials will start the expat exit process for those who want to leave the Kingdom. This entire process, from announcement to implementing has been worrisome for both the expats themselves and the employers they are working for. The end of the three-month grace period is 3 July, so there is still a bit of time for some to figure out what road they will take. Most of the affected expats come from high poverty countries like India, Pakistan, the Philippines, Ethiopia and Yemen.
If I understand this correctly, under Saudi law, iqama requires all foreign residents to sponsord by either a Saudi company or an individual. After the initial announcement, some workers have opt to not go to work to dodge spot inspections.
The Saudi government has decided to enforce stricter quotas as historically the rule about expats only working for their sponsor been predominately disregarded. One of the main reasons this is now being enforced is to close a loophole that permitted companies to get around sharing how many Saudi nationals they employ. (If I have this wrong, please feel free to comment below.)
The aim is to tackle the unemployment issue amongst Saudi nationals by getting more Saudis into private sector jobs and to help preserve Saudi workers However, what is not being addressed by the changes (and again, if I am wrong, please feel free to comment) is that Saudis demand higher wages than expats from developing nations and the local labor laws make it very difficult to fire the Saudi nationals. As I mentioned in yesterday’s post, many Saudi nationals are not qualified for the jobs and feel that the positions available are “below them”.
The Kingdom has a significant “black market” for cheap expat labor. What has happened to fuel this demand, many expats are registered with one company, as a “cover”, but then work for another. Many of these “black market” expats fear that by coming forward and requesting to change sponsors will not be granted. As a double whammy, the companies they work for do not want to officially hire more expat workers.
As of today, The Labor Ministry denies reports that it is enforcing immediate deportations, but people who lose their official residency status must leave the Kingdom. However, across Saudi Arabia, the affected workers have been telling stories of spot inspections and sudden deportations. The regulations were announced last year, the government announced in March that it would start enforcing the changes with spot inspections.
With the deadline of July 3 approaching, these Illegal workers here are trying to make as much money as possible before they either report and change their status or go home. They are dodging officials because they know if they get caught, they are sent home.
My concern, as someone investing in the success of non-Saudi companies coming into the Kingdom for these massive construction projects is that in order for them to be done on-time and on-budget, these workers are needed. Some believe this is a passing trend and that the situation will work itself out
It will be interesting to see how it plays-out and how much actually changes.
|Posted on May 16, 2013 at 11:51 AM||comments (81)|
A lot has been in the news lately about the changes happening in the Kingdom as it relates to expat and migrant workers. Some of it positive news, some of it not so positive. Please note that anything I write here is predominately a reflection of different ideas out there in the media. If I do add anything about my personal opinion, I will say so. I am not an expert on either topic, but just want to look at what is happening on both sides of the coin!
The Saudi Ministry of Labor has announced that it will achieve nationalization of 3 million jobs by 2025. One of the main reasons for them making this announcement and placing so much attention on this topic is that they are trying to make it easier for non-government companies to hire more Saudi nationals.
According to an article on 2 April 2013 in the Saudi Gazette, "Unemployment in Saudi Arabia, according to the latest official figures, was 5.5 percent of the total Saudi labor force (15 years and older) in 2012. This means there are at least 300,000 unemployed people in the Kingdom." This unemployment number is much higher amongst the younger citizens. I can tell you one thing that most countries realize is that a young population with unemployed young men often leads to serious problems for the society as a whole. (My opinion.)
One of the contributions to the unemployment issue is that a.) attitude of younger workers for their employers (this is not just a Saudi phenomena). b.) they have grown-up thinking that blue collar or manual labor jobs "belonged to someone else" (ie, migrant workers from predominantly developing nations) and c.) they lack sufficient education and technical skills to do the "more acceptable" white collar jobs.
A recent announcement about the goal of getting rid of unemployment through programs like Hafiz & Nitaqat. Nitaqat as I understand it is the Kingdom’s program for measuring nationalization. Hafiz intended to increase job opportunities for youths with intensive training programs in professions required in the job market. The program pays a monthly allowance of SR 2,000 to unemployed Saudi men and women. However, what I don't believe was foreseen is that many of the unemployed were still not taking new jobs. (This isn't uncommon, look at all the US citizens living off welfare even though they are fully capable of working!)
"Now the Saudi Ministry has added a monitoring program or both Saudi and expat workers. This is to make sure that employees are getting what they are supposed to and the employer is not meeting their employment obligations.
The ministry is also taking steps to evaluate the capabilities of graduates of educational institutions and the suitability of their specializations to cater to the needs of the job market. The ministry will benefit from the information provided by the Nitaqat program to prepare a sufficient number of graduates to replace expatriates in all areas of job specializations.
According to an earlier report, Nitaqat will be instrumental in increasing the percentage of Saudi workers in the private sector from 10 to 50 percent over the next three years." from same article on 2 April 2013 in the Saudi Gazette,
Unemployment is not unique to Saudi, nor are they they only country trying to find solutions to the problem. There is no one easy way to figure this out. We have an entire generation of young people entering into the job market with much different expectations of what work will mean to them. Saudi Arabia, as do all countries, need to figure out what it is that is important to this generation, what is it that makes them different then that of their parents or grandparents. Only then can solutions be evaluated and tailored for the new generation. (Again, just my own thoughts!)
More tomorrow on the controversial expat changes... Stay tuned!