King Abdullah’s Drive to Put Saudis to Work May Rebound on Egypt

Photographer: Reza/National Geographic/Getty Images

People stand in line at a national employment agency in Saudi Arabia. Close

People stand in line at a national employment agency in Saudi Arabia.

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Photographer: Reza/National Geographic/Getty Images

People stand in line at a national employment agency in Saudi Arabia.

Halah Alduhaylib strolls among the recruitment stands at a jobs fair in Riyadh where there are 10,000 positions available. Only Saudis need apply.

“This is my second fair this week, it’s a great chance for me,” said Alduhaylib, 28. With a masters in computing from the U.K.’s Manchester Metropolitan University, she’s well-placed to benefit from the kingdom’s drive to reduce unemployment, a cause of unrest in many Middle Eastern countries, by forcing companies to hire more Saudis. Nine out of ten non-government employees are foreigners.

After deploying troops, money and religion to stave off protests in the world’s top oil exporter, King Abdullah this month imposed quotas that may force employers to cut foreign staff. While that’s good news for Alduhaylib, it will raise costs for Saudi businesses and hurt poorer Arab countries which earn foreign currency from expatriate workers in the Gulf.

Saudi Arabia’s ability to absorb labor from the region will be reduced,” said Jarmo Kotilaine, chief economist at Jeddah-based National Commercial Bank. “Oil-importing nations of the region have struggled at a time of rapid population growth to absorb people into productive employment.”

Kotilaine cited Egypt as an example. Another is Tunisia: Mohamed Bouazizi, the 26-year-old whose self-immolation helped trigger the regional revolution, was unemployed.

Photographer: Roger L. Wollenberg/Pool via Bloomberg

Saudi Arabia's King Abdullah. Close

Saudi Arabia's King Abdullah.

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Photographer: Roger L. Wollenberg/Pool via Bloomberg

Saudi Arabia's King Abdullah.

Egypt received $8.9 billion of net private transfers, mostly from Egyptian workers abroad, in the nine months through March, according to the central bank. The Saudi contribution was $1 billion last year, John Sfakianakis, chief economist at Banque Saudi Fransi (BSFR), wrote in a June 14 report.

Egypt Finance Gap

That’s a problem for an Egyptian government seeking to repair finances after the revolt against Hosni Mubarak scared off tourists and shut down factories. One-year bond yields rose to 13 percent this month. Saudi stocks, by contrast, have recouped most of the 19 percent loss that the Tadawul All Share Index (SASEIDX) posted in the three weeks after Mubarak’s fall.

Egypt projects a budget gap of 11 percent of economic output, and is seeking international help. Saudi Arabia cushioned the potential blow from lost remittances with $900 million of grants and loans under an accord signed this week.

Saudi Arabia is the second-biggest global supplier of worker remittances after the U.S., sending $26 billion last year, Banque Saudi Fransi said. Neighboring Yemen, pushed close to civil war by five months of protests, is another recipient.

Foreign Workers ‘Worried’

“All foreign workers here in the showroom are worried about their jobs,” said Mohammed al-Rashidy, 23, a Yemeni administrator at Saks Fifth Avenue in Riyadh.

About one-third of Saudi adults have jobs, government figures show. Sfakianakis said the kingdom has the second- highest youth unemployment in the region, behind Iraq. Meanwhile, almost 1 million work visas were issued to companies in 2009, more than double the 2005 number.

“Saudi companies prefer the lower paid, better skilled foreign workers,” said Paul Gamble, head of research at Riyadh- based Jadwa Investment Co. Now, “they will probably pay more for less productivity.”

Quotas for Saudi nationals range from 65 percent at larger companies such as Saudi Investment Bank (SIBC) -- one of those hiring at the fair -- to 10 percent for small retailers. Companies falling short won’t get permits for foreign workers. It’s the first time the government has “explicitly linked visas to employing Saudis,” Gamble said.

‘Only Saudis’

At the Riyadh jobs fair, Ismail Abudawood Trading Co., the Saudi distributor for Procter & Gamble Co. and Quaker Oats Co., has openings for 35 women and 125 men. “We are only looking for Saudis,” said Mohammed al-Okaili, its human resources manager. “The king’s decree has really changed things.”

Gender, as well as nationality, is an issue. Saudi Arabia’s Wahhabi version of Islam requires segregation in many workplaces. One of the first questions asked by Shady Hanafy, who’s recruiting for New Jersey-based construction manager Hill International Inc. (HIL), is whether applicants would work with the opposite sex.

Responses varied. Saleh Alfreihi, seeking an interior design job for his daughter, said he wouldn’t mind a “mixed environment.” Abdullah al-Hussein, a 26-year-old Islamic law graduate, said he preferred separation though “would work with women in the right job.”

King Abdullah has vowed to get more Saudi women working, and his government is hiring too. He pledged 66,000 jobs in teaching and health care, mostly for women, as part of $130 billion of extra spending announced in February and March.

Show of Force

Religious institutions that denounced protest as un-Islamic got some of Abdullah’s cash. Accompanying the handouts was a show of force: police deployed throughout Riyadh on March 11 to deter a planned demonstration. The protests that did take place that month were mostly in the eastern region, including Alduhaylib’s home of al-Qatif, where most of the Shiite Muslim minority live.

Alduhaylib says she doesn’t mind working with men and is willing to travel if King Abdullah’s plan helps her land a position in information technology. “If I find the right job in Riyadh, I would move here,” she said.

To contact the reporter on this story: Glen Carey in Riyadh at gcarey8@bloomberg.net; Mourad Haroutunian in Riyadh at mharoutunian@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.

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