RIYADH: Yazid Al Shammari has ambitions to land a job at Saudi Basic Industries Corp when he finishes a two-year vocational training course. Asked what he expects as a starting salary, he names a figure that’s many times what foreign workers doing similar jobs earn now.
“I want to earn 10,000 riyals ($2,700) a month with my diploma,” the 21-year-old said, as he attended lessons with a crowd of fellow students at the Higher Institute for Plastics Fabrications in Riyadh. “The training will help me get a job where I want.”
Al Shammari and his friends represent a challenge for the kingdom. The king unveiled a $130bn stimulus plan last year to create jobs for Saudis, and tightened rules on the expatriate workers most businesses depend on. The aim is to ensure that the world’s biggest oil exporter, where about a quarter of citizens aged between 20 and 30 don’t have jobs, remains unscathed by the political unrest that has swept other Arab countries with high youth unemployment.
Boeing and General Motors are joining a government plan to train young Saudis. The biggest obstacle is that foreign workers are cheaper and in abundant supply: there are more than eight million in the kingdom. The share of Saudi citizens in the private workforce ranges between 2 and 10 percent, according to government figures.
To shift the balance, the government has imposed an annual fee of 2,400 riyals per expat employee on companies whose workforce is more than half foreign. That should encourage Saudi companies to end the “culture of importing cheap labor,” Deputy Labor Minister Moufarrej al-Haqbani said last month.
Still, the gap between Saudi pay expectations and market wages for foreigners is so large that many employers may prefer to pay the fee rather than hire locally.
“Most big companies will treat it like a tax,” said James Reeve, an economist at Riyadh-based Samba Financial Group. “They would just say, this is the price you pay for working in Saudi Arabia. In that sense it isn’t really an incentive to hire.”
Higher salaries available for government work and unemployment benefits of SR2,000 a month are also disincentives for Saudis to “switch to private sector employment,” he said.
Local businessmen have challenged the fees for foreign employees, saying it will drive up costs. After its introduction, the Saudi stock benchmark dropped to a 10-month low. It’s up about 7 percent this year, less than half the gain on the main Dubai index.
Khaled Al Ghefaili, executive director of the institute where Al Shammari is studying, says the government expects salaries for his graduates to be at least SR4,000, sometimes rising to SR6,000. That’s a problem in an industry which “unfortunately is based on expatriates,” he said, citing a typical worker with 15 years of experience earning SR800 a month.
The institute offers English and engineering classes and a course on work ethics. It counters non-attenders by making them pay for make-up classes, and monitors the performance of graduates by visiting their employers after six months. The drop-out rate “is maybe 45 percent,” falling to 25 percent among those who complete the first semester, Al Ghefaili said.
Ali Al Ghafis, head of the Technical and Vocational Training Corporation, says his program includes special colleges for women, with 19 already open and a target of 40 in the next three years. He says popular programs at the women’s institutes include beauty, fashion design, computer skills and accounting.
“We will reduce the number of expat workers and substitute them with Saudis,” he said. “The response from the industrial field is very high.”
Boeing plans to build a 1,000-person aviation training facility., “We project exponential growth in demand for airline pilots and maintenance technicians,” Ahmed Jazzar, president of Boeing Saudi Arabia, said in response to e-mailed questions. GM is participating in a similar program with a capacity of 200.
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