Recent studies have shown that the liberation of the Saudi labor market from unskilled foreign workforce would improve the balance of payments, raise quality levels, and reduce the cover-up in the local market.
Experts told Asharq Al-Awsat that achieving long-term economic progress depended on the accumulation of capital and a steady population growth that produces a labor force armed with technological development. They noted however that unskilled foreign labor would reduce the income of the Saudi workers and undermine the quality of production and services.
A recent report prepared by the Council of Saudi Chambers 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 residency violators.
The report called for freeing the Saudi market from unskilled labor, while underlining the importance of relying on Saudi competencies in all fields, which would yield positively on the national economy.
Dr. Ayed bin Faraa, expert in economic impact analysis, said that the new classical models of economic growth highlighted four critical factors, namely, “employment, capital, technology, and population growth.”
The increase in population growth would lead to a decrease in the level of per capita income if it was not accompanied by a rise in capital or technological development, he said, adding that a growing number of foreign workers would lower the average Saudi per capita share of GDP.
Oil-producing countries are one of the most popular destinations for skilled and unskilled employment, the study revealed, highlighting the relationship between oil production and migration rates.
The study relied on the data of the General Authority for Statistics, which showed that the percentage of foreign workers in the private sector represented 74 percent compared to 26 percent for the Saudi labor. The number of foreign workers reached about 13.1 million, which constituted about 38.3% 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.
The study called for reducing unskilled labor in each sector independently, beginning with the food retail sector, which is the largest sector with an estimated consumption of about 221 billion riyals (USD 59 billion) and an annual growth rate of 6 percent.
It also emphasized the importance of some necessary measures that should be taken, including preventing the transfer of sponsorship, with the aim of limiting the trading and exchange of labor visas.
Dr. Faraa underlined a number of positive results if all measures were applied, including improvement in the balance of payments, reduced competition for the Saudi merchant and less pressure on the infrastructure.
Meanwhile, Chairman of the Shura Council’s Economy and Energy Committee, Dr. Faisal Al-Fadil, said that the Council assumed a pivotal role in the process of localizing private sector jobs through its legislative and supervisory role.
The private sector must move in this context and work to open the way for trained Saudi workforce that have succeeded in many areas and have proven its ability to compete at home and abroad, he remarked.
