Riyadh takes on unemployment

26 September 2013

Getting more Saudi nationals employed could reap huge benefits, but will present short-term challenges

Over the past few decades, Saudi Arabia’s increasing reliance on expatriate workers to perform work that nationals were either unqualified for or did not want to do had become a problem with widespread political and economic implications for the government.

With political unrest across the region serving as a catalyst, Riyadh is finally making good on years of promises to strictly enforce a Saudisation scheme that rewards companies that meet localisation targets and penalises those that do not.

While the country is to be commended for the bold moves it has taken to end its reliance on cheap foreign labour and create more jobs for its citizens, the government faces huge challenges in its effort to overhaul the labour market. The implications for the construction industry are immense.

In the wake of an exodus of tens of thousands of foreign workers, many analysts say there is not enough skilled labour to complete the billions of dollars-worth of projects in the pipeline in the kingdom.

Companies are also having difficulty finding qualified Saudi nationals to meet quotas and complain of low productivity and high turnover rates among the locals that are hired.

To meet the challenge, the government will need to invest heavily in education to improve the skills of its citizens, 48 per cent of whom are under the age of 25. Its biggest hurdle will be to convince Saudis to take up roles in the private sector previously deemed to be beneath them.

If it is able to achieve these aims, it could lead to a big payoff in the long-term for the kingdom. In the short-term, however, it will be painful for construction firms.

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