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Foreign workers in Saudi Arabia stayed away en masse from their offices, schools, stores and other workplaces as the government mounted a crackdown on illegal residents. According to workers,
Saudis and media reports, authorities in Saudi Arabia, the biggest labor market in the Persian Gulf, and home to an estimated two to three million illegal foreign workers, have raided office buildings and set up document checkpoints on main roads recently for workers here illegally.
The sweeps make good on years of government promises to reduce the ranks of foreign workers who have kept much of the country’s private sector afloat even as the number of jobless young Saudi Arabians continues to soar. The government didn’t respond to requests to comment on the efforts or describe their scope.
Saudi labor officials stated that their targets included 250,000 small and medium businesses that failed to employ at least one local resident. Hours before the crackdown, foreign workers spread word over social media that a crackdown was under way, turning many workplaces into ghost operations the following days. According to repatriated Ethiopians, workers who knew or feared their papers weren’t in order worked in offices with the lights off or stayed away.
Operations at the Red Sea port of Jeddah, where more than half of Saudi Arabia’s imports arrive, slowed because foreign freight workers feared document checks, according to business leaders and news media reports. Around the capital, Riyadh, many retailers and coffee shops made do with one counter worker. Hotel guests could be seen carrying their own bags. Phones went unanswered. Many computer shops on Riyadh’s Devil Street, so-called for the videos sold there by South Asian workers, were shut.
That spurred criticism that the government was moving abruptly at the peril of business stability. The crackdown even forced migrant workers who have legal work permits to stay at home. Many of them had been stopped at checkpoints several times in a day and saw dark-green immigration vehicles loaded with people they presumed had been detained.
Mr. Farrell, who is an Irish man, stated to the Financial Times that he arrived at his design-consulting firm there to find the lights off and the halls silent. “The door was locked – no security on board downstairs,” he said. He said he understood what was happening when he looked at the English-language paper in his hand, whose cover story described raids on shops, schools, and foreign workers in hiding. “They’re clamping down!”
The world’s top oil exporter, Saudi Arabia has for decades been a haven for foreign workers. In addition to 20 million of its own citizens, Saudi Arabia has eight million legal workers and, according to some estimates, two million to three million illegal ones. These workers often provide skilled labor that not enough Saudis are qualified to do, and cheap unskilled labor that Saudis do not want to do. According to the International Monetary Fund, Saudi Arabia is the world’s second-largest source of remittances abroad, after the US.
But Saudi Arabia’s reliance on cheap foreign labor has crippled the kingdom’s private sector, economists say. With a booming population, more than two-thirds of Saudi citizens are under 30; the region already has the world’s second-highest level of youth unemployment, after sub-Saharan Africa.
Generations of Saudis grew up to expect government jobs, but those opportunities are dwindling and rely on continued income from oil sales. Public-sector wages and benefits account for 40pct of Saudi government spending, said Steffen Hertog, a lecturer in comparative politics at the London School of Economics, citing government statistics. Fewer than one in10 Saudi workers are in the private sector, he said.
According to the Saudi Ministry of Labor, without structural change in the economy, neither the private nor the public sector will be able to keep accommodating the growing number, currently 400,000 annually, of young Saudis coming onto the labor market each year. Mishrif Ashraf, a lecturer in Middle East political economy at King’s College in London stated that past efforts to push nationals into the underdeveloped private sector have failed in part because Saudi schools haven’t produced enough skilled local workers.
Despite complaints from business people accustomed to hiring inexpensive foreign workers, in recent years the government has attempted structural reforms in the labor market putting in place a quota system for Saudi nationals and now assessing fines of USD 640 per foreign worker for companies whose employment of Saudis falls below sector targets.
Word of the recent crackdown spread before the work week which began on Sunday, as foreign workers used Facebook and other social media to raise flags over unannounced workplace sweeps and checkpoints. At the start of the crackdown Saudi newspapers reported that employers have cited raids closing hundreds of schools, in particular, and claim that officials are destroying the documents of some workers they stop. Some businesses have posted watches outside to look out for labor inspectors, according to the media accounts.
In the Red Sea city of Jeddah, Abdullah Dahlan described to the Financial Times that at the beginning of the crackdown pupils were sent home from his international school because 100 of 150 foreign teachers failed to show. “What is happening in Jeddah is unbelievable. No workers are in the street or in the market,” he said. “Really, the government has the right to do it, but they should not do it suddenly,” he added.
Such a labor crackdown threatens to stoke inflation, particularly in construction, transport and other firms that use large numbers of foreign workers, financial analyst Iyad Khalid Ghulam of Saudi-based NCB Capital said. Mr. Ghulam said that the USD 640-per-worker fines imposed by the Saudi government are already expected to cost Saudi firms more than USD four billion this year.
In Riyadh, supporters of the labor-market overhaul urged patience, saying the campaign was crucial for making conditions better for foreign workers, reducing the kingdom’s reliance on oil revenues and restructuring the labor market to ensure jobs for young Saudis.
Abdul Rahman al Zamil, chairman of the Riyadh Chamber of Commerce and Industry said “I know most of us businessmen will suffer for the next two, three months,” with the labor market overhaul. But what is going on now, even though it is tough, it is good for business”. Some of the Ministry of Interior and the Ministry of Labor officials also share Abdul Rahman’s statement. The crucial question, however, is that “Is the Saudi government really serious and committed this time?” Well, time will tell.