In era of cheap oil, Saudi loses shine for foreign workers
Mobarak Musa, a mobile telephone salesman from Syria, has spent 10 years working in Saudi Arabia, sending part of his wages back home to support his parents and three brothers. A shift in Saudi labor policy means he won't be able to do so for much longer. In early March, the Ministry of Labour announced that within six months foreigners would be banned from selling and maintaining mobile phones and accessories for them, in an effort to keep open more jobs for Saudi citizens.
So Musa became one of hundreds of thousands of foreign workers in Saudi Arabia who may lose their jobs and be sent back to their home countries this year, as low oil prices slow the kingdom's economy and prompt the government to restrict employment opportunities for expatriates.
"I don't know where else can I go - I don't know any other job to do," Musa, in his 30s, said in his small shop at a mobile phone market in downtown Riyadh. Millions of foreigners from south Asia, southeast Asia and elsewhere flocked to work in Saudi Arabia during the economic boom of the past decade, filling relatively low-paid posts in the oil industry, construction and services as well as many middle-management and professional positions.
Foreigners accounted for 10.1 million of the total population of 30.8 million in 2014, according to the latest official data. The money they sent home was important for their home countries; they remitted $9.1 billion out of Saudi Arabia in the third quarter of 2015, central bank data shows.
The inflow of people may now go into reverse. Saudi economic growth is slowing as low oil prices produce a state budget deficit that totaled nearly $100 billion last year, forcing the government into spending cuts.
Many analysts expect gross domestic product growth, which averaged over 5 percent annually between 2006 and 2015, to fall well below 2 percent this year. Partly because labor rules make it hard and costly to fire Saudi citizens, layoffs in the early stages of a downturn tend to hit foreigners almost exclusively.
Meanwhile the government, lacking the cash to create public sector jobs for Saudis as freely as before, and worried that the official unemployment rate of 11.5 percent among them could rise, is intervening more heavily in the labor market to push Saudis into jobs previously held by foreigners.
A top executive at a major Saudi company told Reuters in January that he wouldn't be surprised if one million foreigners had to leave the kingdom by the end of this year. "The economic changes have started to pressure the labor market, and this has triggered the start of the migration of a large segment of foreign workers," said prominent Saudi economist Fadl al-Boainain. "Declining corporate profitability has made the foreign workforce a target for managements seeking to cut fixed financial obligations." So far, layoffs have been concentrated in the construction sector, which analysts estimate employs around 45 percent of foreigners. Hit by shrinking state contracts and delays in payments owed to them by the government, construction firms have been laying off tens of thousands of people since last year.