Saudi government to limit work permits for foreigners

Saudis account for only 10 per cent of employees in private sector
||Last Updated: 05/31/2011

RIYADH (Reuters) Saudi Arabia plans to limit the number of work permits given to foreigners to try to increase employment among Saudis, and larger firms will need to meet higher quotas, the country's labour minister said on Tuesday.

Companies in the world's leading oil exporter will have a three-month period to Sept. 7 to achieve a prescribed quota of Saudi employees, Labour Minister Adel Fakieh told Al Arabiya TV.

"The larger the company is, the higher rate of Saudisation is required from it ... If companies exerted even the smallest of efforts the unemployment rate would fall significantly," he said.

Businesses will be deprived of their privileges if they do not comply, Fakieh said without giving details.

In 1994, the government began a "Saudisation" plan, setting quotas for the number of nationals private firms must hire.

The programme failed to achieve a significant increase in the participation of nationals in the private sector, where Saudis still account for only 10 per cent of employees. Companies found a number of ways to circumvent the rules.

Unemployment among nationals in the kingdom, which sits on more than a fifth of global oil reserves, is running at 10.5 per cent, according to the figures this week. Some 28 per cent are women and 40 per cent are high school graduates.

Despite its wealth, unemployment in the Gulf Arab state has risen largely because an outdated school system concentrates on religion and the Arabic language rather than the skills demanded by private firms.

Companies favour workers from Asia, who, they say, are prepared to work for long hours on low salaries, or well-paid foreign experts.

Fakieh said on Monday the government would not renew work permits for foreign workers who have spent six years in the country, but did not give details.

"Plans not to renew work permits for foreign workers, who have spent six years in the kingdom, applies to the companies that fall under the yellow category in the Netaqat programme," ministry spokesman Hattab al-Anzy was quoted as saying by state news agency SPA earlier on Tuesday.

Netaqat, meaning categories in Arabic, was launched earlier in May and classifies firms by green, yellow and red colours according to how they fulfil "Saudisation" rules. It also sets penalties for non compliance.

"Companies that fall under the red category will not have work permits renewed for its foreign workers regardless of the time the workers have spent in the country," Anzy said.

Some eight million foreign workers, who remit US$27 billion per year, live in the kingdom with the majority working in the private sector of the biggest Arab economy.

King Abdullah offered US$93 billion in handouts in March to stave off unrest rocking the Arab world, including neighbouring Bahrain, Oman and Yemen. This followed a US$37 billion package announced in February, an initial move to ease social tensions.

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