Saudization and poor economic growth spells disaster for Western expats

Published:  24 Feb at 6 PM
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Tagged: Australia, Canada, Jobs
Slowing economic growth and increasing Saudization are hitting hard on expats in the Kingdom.

For several decades, a white-collar expatriate job in Saudi Arabia has been seen as a path to wealth and a luxurious lifestyle as well as a sure way for career advancement. Since the dramatic fall in oil prices and the upswing in Saudization, it’s becoming clear the Kingdom’s golden days as an expat haven will soon be long gone.

The present day noticeable diminution of expatriate employees began as crude prices continued to fall, and has been intensified since the kingdom brought in its Vision 2030 plan. The scheme is based on economic diversity and includes employing more Saudi nationals in the private sector as well as broadening its business and investment base.

Since 2014, the kingdom’s budget deficit has spiralled, as has its debt to private companies, most of which are in the construction sector. One such firm has laid off some 70,000 expat workers, mostly from poorer countries, but nowadays westerners are the main victims of stalling economic growth across the board. Previously, around nine million expats were employed, but continuing economic pain has decreased the totals.

Speaking to the Business Times, one expat manager working in the consumer electronics sector explained there’s simply not enough business to justify renewing expat contracts. The manager, who preferred to remain anonymous, said margins across the board are under pressure, adding not a single Saudi business is doing well at the present time.

Pressures on expats are likely to increase next July when a levy is introduced for expat workers with dependents. The fee will at first by US$27 per month, but will increase by the year 2020 to around $100 per month, with the manager confirming the company will expect its expat workers to pay the fee out of their salaries.

According to the chairman of Saudi Arabia’s Zamil Group, the government is determined to keep increasing fees levied on expats in order to create jobs for locals as well as ensuring expats are ‘fair to the country’. Highly-paid Western expats believe their lucrative packages and luxurious lifestyles may well become things of the past.
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