By The Wall Street Journal ‘Saudis Crack Down on Foreign Workers’

By Ellen Knickmeyer

1 april 2013

RIYADH—Foreign workers in Saudi Arabia stayed away en masse from their offices, schools, stores and other workplaces on Monday as the government mounted a crackdown on illegal residents.

Authorities in Saudi Arabia—the biggest labor market in the Persian Gulf, and home to an estimated two million to three million illegal foreign workers—have raided office buildings and set up document checkpoints on main roads recently for workers here illegally, according to workers, Saudis and media reports.

Reuters

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 Saudis soars.

The government didn’t respond to requests to comment on the efforts or describe their scope.

Saudi labor officials said on Friday that their targets included 250,000 small and medium businesses that failed to employ at least one Saudi. Over the weekend, foreign workers spread word over social media that a crackdown was under way, turning many workplaces into ghost operations Sunday and Monday. 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 criticisms that the government was moving abruptly at the peril of business stability.

“Everybody is staying at home,” said a Bangladeshi taxi driver in Riyadh who said he is in the country legally. He said he had been stopped at checkpoints several times in the past two days, where he said he saw dark-green immigration vehicles loaded with people he presumed had been detained. “Everybody is worried.”

Usually, the Riyadh office block where Irishman Paul Farrell works is bustling. South Asians are posted at the ground-floor security point. Non-Saudi Arabs—Palestinians, Syrians and Jordanians—sit at reception desks. Tea and coffee is brought around by South Asian men.

On Monday, Mr. Farrell 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 and 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. On top of 20 million Saudi citizens, the country hosts 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 didn’t want to do. Saudi Arabia is the world’s second-largest source of remittances abroad, after the U.S., according to the International Monetary Fund.

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 40% of Saudi government spending, said Steffen Hertog, a lecturer in comparative politics at the London School of Economics, citing government statistics. Fewer than one of 10 Saudi workers are in the private sector, he said.

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, Mr. Hertog says—of young Saudis coming onto the labor market each year. Past efforts to push nationals into the underdeveloped private sector have failed in part because Saudi schools haven’t produced enough skilled local workers, said Mishrif Ashraf, a lecturer in Middle East political economy at King’s College in London.

In recent years, the government has attempted structural reforms in the labor market—despite complaints from business people accustomed to hiring inexpensive foreign workers—putting in place a quota system for Saudi nationals and now assessing fines of $640 per foreign worker to companies whose employment of Saudis falls below sector targets.

Word of the recent crackdown spread before the workweek began Sunday, as foreign workers used Facebook and other social media to raise flags over unannounced workplace sweeps and checkpoints.

Over the past two days, Saudi newspapers have reported, employers have cited raids closing hundreds of schools, in particular, and claims 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 sending pupils home from his international school on Sunday and Monday 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 $640-per-worker fines imposed by the Saudi government are already expected to cost Saudi firms more than $4 billion this year.

The Ministry of Interior didn’t immediately respond to a request for the number of those detained in recent days and Ministry of Labor officials haven’t publicly quantified the scope of the crackdown.

In Riyadh, supporters of the labor-market overhaul urged patience, saying the campaign was crucial to 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.

“I know most of us businessmen will suffer for the next two, three months,” with the labor market overhaul, said Abdul Rahman al Zamil, chairman of the Riyadh Chamber of Commerce and Industry. But “what is going on now, even though it is tough, it is good for business,” he said.

Source: http://online.wsj.com/article/SB10001424127887324883604578396603434399588.html