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Jobs for the Locals But Who Will Take Them?

Far-reaching changes are sweeping across the labor markets in the Gulf region. With the price of oil frequently passing $70 a barrel and profits soaring for the national oil companies around the Persian Gulf, it’s hard to imagine that unemployment would be a problem in the region. However, when looking at the measures being taken by several regional governments the picture suggests something very different.
 
Recently, the government of Saudi Arabia proposed a rise in the number of Saudis working for private companies. The initiative was met with enthusiasm by the public, but some company executives fear that the new law will compel them to employ untrained Saudis, which would harm their businesses.
 
In the United Arab Emirates (UAE), citizens account for only about 9 percent of the total workforce and most of these are employed in government offices and not in the burgeoning private sector. Even in countries such as Jordan, the government put forward a proposal to raise the cost of work permits in order to encourage local employers to hire Jordanians instead of foreign workers.
 
When the Saudi Labor Ministry was separated from the Social Affairs Ministry, one of its first tasks was to initiate a Saudization process in the country’s workforce. The process has two main features: the requirement that local employers hire Saudi nationals instead of foreign workers, and a stricter reviewing of visas and salary increases for foreign employees to be undertaken, as well as studying the usefulness of each foreign worker and determining whether a Saudi citizen would be capable of doing the job instead.
 
Saudization was met with skepticism by the Saudi business community. Voices were raised about the fact that the private companies now have to pay for the costs of training the new jobseekers, many of whom are young, untrained and generally unwilling to start working in the private sector.
 
Much of the reluctance against working in the private sector comes from the differences in work conditions. A government employee works fewer hours and is better paid than someone who works in a private company. A government job also comes with a lifetime employment guarantee. Statistics show that the pay differential varied from one sector to another. The newspaper reported that 97% fewer permits were issued for office jobs, 73% in sales, 54% in services, 17% in agriculture and 1% in executive and management positions.
 
In Bahrain, the Ministry of Interior announced steps towards nationalizing its employees, not only in the office itself but also at the security posts of embassies, banks and ministries, because, according to Bahraini officials, “this field does not require a lot of training and they can be civil servants from Bahrain instead of foreigners.”
 
Nevertheless Bahrain still faces the same predicament as Saudi Arabia that most of the new jobs created are in the private sector where most locals are reluctant to work, so instead, most of these jobs go to foreign workers. New laws also made it possible for foreign workers to switch employers without having to apply for a new work permit. The anticipated effect is that a more open labor market will increase both labor rights and wages.
 
The United Arab Emirates faces similar problems as many of its neighbors: a divided labor market where nationals work in governmental jobs and foreigners work in the private sector. The changes initiated by Bahrain were met with skepticism by local officials, who pointed to the differing structures of the country’s labor markets. However, the government recognizes that changes have to be made to encourage more nationals to work in the private sector.
 
The different rules and regulations are the main obstacles that divide the labor market; the idea is that a healthier system that looks out for everyone’s interests can be established and that this would lead to a more balanced labor market. Employers usually prefer foreign labor since they cannot switch jobs without their consent, and therefore employers can dictate their conditions, work environment, and contract terms without fear that those workers might leave at any time.
 
The situation in Jordan differs from that around the Gulf. Most foreign laborers in Jordan are Egyptian, Syrian or Iraqi, working in sectors such as agriculture or textiles, whereas in the Gulf, foreign workers also include Asians, many of whom are employed in white-collar jobs.
 
In order to replace these expatriates with nationals, the Jordanian government decided to raise the cost of work permits. The reactions were similar to those in Saudi Arabia. Mohammad Oran, president of Jordan Farmers said: “It is not the foreign workers who will bear the brunt of the extra fees; it is the small farmers who can barely make ends meet as it is.”
 
He also complained that Jordanians shun jobs in the farming sector because of a prevalent “culture of shame” towards menial work. Government officials on the other hand argued that with an unemployment rate of 15 percent, the new fees acted as a means of discouraging employers from hiring foreigners, and would replace them with Jordanians. However, previous plans to replace foreign workers with Jordanians have failed.
 
The shame of working in certain areas is also a common problem in Kuwait, where families don’t encourage students to take part-time jobs during their studies, something that is common both in America and Europe.
 
Mohammed Adnan Dashti, a student at the School of Theatre Arts, told the Kuwaiti newspaper A-Siyasah: “We must change our attitude concerning people who work in cafes and restaurants, as they are currently the subject of mockery. [But] taking someone else’s money when you, yourself, could work [should be the subject of mockery].”
 
The young Kuwaiti’s attitude toward work does not only apply to work during studies, but to work in general. Acording to Sadek Jafar, general manager of the Kuwait Branch of the Human Resource company, Tawteen. “The younger generation here do need career counselling…They need to be aware of their responsibilities, the behavior expected of them, and how they should deal with their managers and colleagues at work. Many still have a problem with their work values; i.e., they are not used to doing a lot,” says Jafar.
 
Just as in the other Gulf states, in Kuwait the majority of citizens are employed in the government sector (98%), so in order to boost the numbers of locals working in the private sector, the Kuwaiti goverment created a special social allowance of 200 Kuwaiti dinnars ($961) to compensate for the wage differences between the private and government sectors. The effect of the allowance is that someone who previously could earn 250 KD ($864) in a government job and 150 KD ($518) in a private job would now make 350 KD ($1,210) in the private sector.
 
The results show that from 2000 to 2005 the number of nationals working in the private sector doubled from 7,000 to 14,000.
 
Another problem is that many of the features that are vital in the private buisness, such as “the need for productivity, achievement and passion for their jobs, is in many ways something new for Kuwaitis,” according to Sadek Jafar.