Saudi protectionism rises

Indian workers in Saudi Arabia, the largest expatriate group in the kingdom, are under focus again following reports that the seven million foreigners in the country have drained the country of a staggering SR285.3 billion ($76 billion) during its last five-year development plan…Indians alone, who represent the largest foreign community in Saudi Arabia, have been remitting SR15 billion annually to India.
Total remittances from Indians from the six-nation Gulf Cooperation Council (GCC) exceeded SR37 billion annually giving a substantial boost to the Indian economy, he added. UNI report

The Saudi government is concerned about the high unemployment among local Saudis, of up to 10% of the population. While the government probably cites the higher wages as a primary cause for this, I think the problem lies deeper. The education system with its focus on religious studies does not create the right mix of graduates required for a modern economy. It is therefore likely that Saudis will not be able to replace the foreign professionals who form the backbone of the economy.

Construction and domestic workers could be affected, but its unlikely that the ‘entitlement economy’ of Saudi Arabia will produce workers who are willing to take on these ‘undesirable’ jobs.

Expelling expatriate workers is not a solution. Rather the Saudi government should explore how it can leverage on the strengths of the large expatriate talent pool to create wealth; possibly by encouraging entrepreneural growth. This means the government has to liberalise its entitlement economy and expose it to the vigours of a market economy. More importantly it should reform the education system and bring it in line with the modern world. These may not be politically palatable in a country where there is no representative government. Physician, heal thyself first.