Demands to liberate the Saudi labor market from “unskilled” foreign hands
Economists assure the “Middle East” the positive impact on the balance of payments and reduce trade cover-up
Tuesday – 14 Dhu al-Hijjah 1441 AH – 04 August 2020 AD number number [
Amidst the demands of boosting the economy with skilled foreign labor, precautionary measures continue after the return of business in Saudi offices and headquarters (Middle East)
Jeddah: Saeed Al-Abyad
Voices in Saudi Arabia are resonating with the return of the vitality of the normal life of economic activity and the recovery of the trade and business movement, by asking expert opinions and recent studies to liberate the Saudi labor market from unskilled foreign labor because of its positive consequences in improving the balance of payments and raising the level of quality, in addition to reducing cover-up in Local market.
Specialized experts told Al-Sharq Al-Awsat that achieving long-term economic growth comes through the accumulation of capital and population growth that produces armed hands armed with technological development, while increasing unskilled foreign workers will reduce the income of the Saudi worker and reduce the level of quality of production and services.
A report prepared by the Council of Saudi Chambers recently on the impact of the (Covid 19) pandemic on the Kingdom’s economy recommended an emphasis on the employment file, as it called for the necessity of introducing a new program to deport violators for residence. The report called «Saudi Chambers» to limit the dumping of markets with unskilled labor, at a time when he stressed the importance of relying on Saudi competencies in all areas, because it will have positive effects on the national economy. More details on the following report:
The new economy
For his part, Dr. Ayed bin Farea, a specialist in measuring economic impact, says that the new classical models of economic growth highlight four critical factors in studying economic growth: “employment, capital, technology, and population growth”, noting that the increase in population growth leads To reduce the level of per capita income if it is not accompanied by an increase in capital or technological development, as the increase in the number of foreign workers raises the population, and thus leads to a decrease in the average Saudi per capita share of GDP.
According to this, achieving economic growth in the long term, according to Farea, through the accumulation of capital and population growth with technological developments, and the continuous increase in the number of unskilled foreign workers and not accompanied by similar growth in economic variables will result in lower citizen income. Dr. Farea, the author of the study “The Economic Impact of Reducing Unskilled Manpower”, added that this does not apply in the case of relying on skilled labor, as it will bring technology and knowledge, as happened in the experience of the United States of America, whose economy witnessed tremendous growth during the twentieth century, and increased income The individual eight times.
The oil countries are among the most skilled and unskilled sides of employment, which is indicated by the study, which linked the relationship between oil production and migration and rates, indicating that understanding the relationship will enhance knowledge of economic development, while it remains to determine whether the large number of unskilled foreign labor promotes economic development Or discouraged by one of the continuing questions in the field of development economics.
Here, Dr. Farea says, there are 3 views related to the relationship between the increase of unskilled labor and development is that the growth of the increase of unskilled labor is an encouraging factor for economic development, and the other is the growth of the increase of unskilled labor is not a factor of importance for the process of economic development, while the last opinion confirmed However, the growth in the increase in unskilled labor is a limiting factor for economic development.
To measure the actual economic and social impact of unskilled labor on wages and prices, the study identified four important factors that focused, on the necessity of knowing what Saudi labor is affected by the increase in the supply of unskilled labor, as well as what is the size of the economic and social impact on affected Saudi workers, and what are The percentage of unskilled labor participation in economic growth and the gross domestic product of Saudi Arabia, with a determination of the rate of production cost reduction due to unskilled labor that is passed on to consumers.
According to the data of the General Authority for Statistics, on which the study relied, the percentage of foreign workers in the private sector represents 74 percent and the percentage of Saudis in the private sector does not exceed 26 percent, as the number of foreign workers reached about 13.1 million, which represents about 38.3 in The percentage of the total population in 2019. According to the data of the International Economic Forum, the rate of foreign employment in developed countries does not exceed 15 percent of the total population, while the rate of foreign employment in Saudi Arabia exceeds 34 percent, and this represents twice the proportion of developed countries in development Economic, which raises the question about the proportion of unskilled foreign workers out of the total proportion of foreign workers in the private sector in Saudi Arabia.
Retail sector model
The study called for the importance of reducing unskilled labor independently from each sector, provided that the start is in the food retail sector being the largest sector with an estimated consumption of about 221 billion riyals ($ 59 billion) and a growth rate of 6 percent annually, as it facilitates the process of commercial coverage .
In order to measure the economic impact of reducing unskilled labor in the food retail sector, according to Dr. Farea, there must be a decision from the Ministry of Human Resources and Social Development to compel companies and institutions operating in the food retail sector to appoint a sales representative and a Saudi national purchasing representative, and not to work Any foreign worker in these two professions in the food retail sector, whoever violates it is deported, and the corporation and the company are punished with financial penalties, at least.
A special platform must be built to facilitate the communication of the Saudis working in the professions of a purchasing representative and a sales representative, with the competent authority in the ministry in the event of a complaint, as the step will stop the monopoly of unskilled foreign workers on the food retail sector and will reduce commercial cover-up and washing Money, passage of counterfeit goods to the consumer, and unprofessional practices from unskilled labor in harassing the Saudi employee and harming the competing small trader.
Dr. Farea confirmed that this would increase the employment rate in the food retail sector in a way that leads to the entry of Saudi investors to this sector, and thus leads to a significant reduction in the unemployment rate, in addition to many direct positive effects that can be observed on the sector or indirect effects that can be observed. On other sectors, it will also limit the spread of counterfeit goods that are harmful to the health and economy of the country.
In general, for all economic sectors in the country, the study called for the necessity of taking some necessary measures before starting a study measuring the economic effects of reducing unskilled labor on the Saudi economy, including preventing the transfer of sponsorship, with the aim of limiting the sale of labor visas and trading in them, with an emphasis on obligating The private sector to pay the monthly salary through the bank in order to reduce cover-up operations, as well as increasing the rate of participation of professional risks in social insurance for foreign workers from 2 per cent of the wage to 5 per cent to help the General Organization for Social Insurance in facing a potential deficit due to the lack of Saudi subscribers as a result of crowding out Employment on job opportunities, and non-renewal of residence for those over 55 years of unskilled labor, in order to reduce commercial cover-up.
Dr. Farea stressed, at the conclusion of the study, that there are a number of positive results on the Saudi economy if all measures are applied, including an improvement in the balance of payments, as a result of reducing labor remittances, reduced competition for the Saudi merchant, as well as reducing pressure on infrastructure, reducing commercial coverage and the percentage Crime and drugs and increasing job localization.
According to the National Observatory of Labor of the Human Resources Development Fund (Hadaf), the latest figures indicate a slight increase in the rate of settlement in private sector establishments during the first quarter of this year to 20.3 per cent of the total workers in the private sector, bringing the number of subscribers The Saudis in social insurance have 1.7 million subscribers, of whom 66.7 percent are males and 33.2 percent are females.
On the other hand, the Chairman of the Shura Council’s Economy and Energy Committee, Dr. Faisal Al-Fadil said that the Council plays a pivotal role in the process of resettling private sector jobs, especially for youth in all economic sectors, through its legislative and supervisory role, where he discussed many important issues that he relied on Correcting the path of employment in the Saudi labor market, the latest of which is the demand to disclose the reasons for the continued foreign employment in some businesses and commercial stores, while the presence of the foreign supervisor continues in some simple businesses.
Al-Fadil added that the private sector must move in this context and work to open the way for trained Saudi hands that have succeeded in many areas and have proven their ability to compete at home and abroad, and to accelerate the treatment of Emiratisation cases in line with the «Kingdom Vision 2030» and bridge the gap in High number of manpower in the local market.
The Chairman of the Shura Council’s Economy and Energy Committee called for intensified efforts between the relevant authorities and those related to youth employment, to reach a unified and comprehensive mechanism that integrates efforts and accelerates recruitment processes in many sectors, particularly sectors that are experiencing growth in the influx of labor, taking into account that jobs are covered Administration and supervision with Saudi hands, through binding legislation and effective governance.