More than a decade of job nationalization
Nationalization policies have been in more for more than a decade in some Middle East countries and for more than four decades in others. In a statement to Saudi Business magazine on the 10th of August 1979, Shaykh Hisham Nâzer, Saudi Minister of Planning, said that "Every Saudi should set himself the goal of replacing one foreign worker." This is how the term "Saudization" was born. This process was followed by "Kuwaitization" (in Kuweit), "Qatarization" (in Qatar) and "Omanization" (in Oman). So immigration and the nationalization of jobs are far from being new issues, and they resurface with each economic crisis.
1979 was the year of the second oil crisis, although oil-producing countries had already stocked a lot of wealth during the first oil crisis. Only then did the world really become aware of Gulf countries located in desert regions, with abundant petrol. Gulf countries refer to Saudi Arabia, Bahrain, the United Arab Emirates, Kuwait, Oman and Qatar. The Middle East includes the Gulf countries plus Syria, Iraq, Iran, Cyprus, Lebanon, Israel, Jordan and Yemen.
While Gulf countries got wealthier from oil production, they have been facing labor shortage. This was the beginning of massive and continuous immigration to support local production. Before the Covid pandemic, 40% of Saudi Arabia's population were immigrants. They were 64% in Kuwait, 90% in the United Arab Emirates, 49.5% in Oman, 49.9% in Bahrain and nearly 79.6% in Qatar (according to 2019 figures). While immigration seems to have become a burden for Saudi Arabia and Kuwait, others, such as the United Arab Emirates, are definitely more open, as evidenced by their immigration policies.
The reasons behind job nationalization in Gulf countries
Gulf countries are aware of their needs for foreign labor, especially in the vital oil sector and all its ancillary activities (technical, manufacturing, logistics, IT, marketing, research, quality control, etc.). However, all this was expected to be a "win/win" situation. Indeed, Gulf countries consider foreign labor a cheap adjustment variable to fill shortages but expendable as soon as locals are available to fill the vacancies.
Oil crises, as in 2017, were catastrophic for thousands of immigrants who had to abide by restructuring strategies. In the energy sector, foreigners bore the brunt of petrol price rises and drops. The economic repercussions spread to other sectors and affected even more foreigners. Governments then decided that the presence of foreigners could be responsible for the rise in unemployment.
In Saudi Arabia, although the government claims to be fighting against illegal immigration, its intentions to exclude all foreigners are getting clearer. The so-called "national preference" during the oil crises has spread to all the Gulf countries. Kuwait had even aimed for a “total Kuwaitiization” of the civil service by 2028 by excluding all foreigners. However, it is never easy to replace performing assets. The Saudi Ministry of Labour conceded that Saudization was progressing slowly. In the 2000s, informal surveys revealed that nearly a quarter of young Saudis were "reluctant" to work, especially in jobs considered to be “inferior”. They prefer managerial or team-leading positions, although they do not always have the required skills. Hence the government's decision to focus on the education system, another major challenge.
Which sectors are affected by job nationalization?
Most sectors in Gulf countries are concerned. In the 2000s, Qatar launched its "Qatar national vision 2030" (Qatarization) program. Energy was the first sector affected. But Qatar is also targeting other associated jobs such as administration, human resources, management, engineering, etc. The Qatarization process affected both the private and public sectors. In February 2022, the government announced that the number of Qataris working in the public sector had jumped by 135% in 4 years. It is 163% for the engineering sector. Qatar launched its program with 16 partner companies. They were 14 in 2014 and 35 in 2019. These partners operate in the very strategic oil sector: oil and gas industry, petrochemicals, electricity, shipping, insurance, steel and aluminum production, catering, and education. The state is also investing heavily in education to train the Qatari elite of tomorrow.
In 2018, Saudi Arabia embarked on a new "Saudiization" program. Again, the energy sector was primarily targeted, along with wholesale and retail. The government is mandating a 70% Saudi employees' quota, under the threat of fines. A year earlier, it introduced a surtax for foreign workers. However, many foreign workers ended up leaving due to intimidation, threats, racism,etc. More than 277,000 departures were recorded in 2017, and at the same time, 100,000 Saudis joined the workforce. Oman adopted similar measures. In 2017, it stopped issuing residence cards for foreigners in ten sectors, including insurance, accounting, finance, media, sales, marketing, and information technology. Oman also created some 25,000 jobs exclusively for Omanis. The country denies "stealing" jobs from immigrants and prefers to speak of new jobs created for Omanis.
Which sectors are still open to foreigners in Gulf countries?
Meanwhile, international talents are very much in demand by large groups, even in Middle East countries. This great paradox shows the limits of job nationalization policies. According to the Corporate Recruiters Survey 2022, 52% of companies in the Middle East are looking to recruit international graduates. In fact, recruiters in the Middle East seek professionals with international degrees.
The most attractive sectors to foreign talents are products and services, technology, and consulting. Companies are indeed looking for foreign expertise to better adjust their strategy to the challenges of a globalized economy. This is a boon for international graduates who are already many in the health and education sectors. Dubai, for instance, is the most open and international region in the Middle East, and it intends to attract even more qualified foreigners with its Dubai 2030 strategy.
Nevertheless, job nationalization is still on. In the first quarter of 2021, Saudization rose from 20.37% the previous year to 22.75%. Administration was the most affected sector with 71.9% local employees, followed by education with 52.9% of locals, and Information and Communications with 50.7%. This peak was welcomed by the National Labor Observatory in Saudi Arabia. Last June, the country launched a new policy to replace foreign workers with local ones. The state believes that its "Vision 2030" policy is essential to sustain economic growth. And nothing seems to be able to slow down this process.
