Background to the study
Foreign labor refers to where the services of a foreigner are sought in a country other than his or her own country. Mostly, the services of foreigners are required in certain specialized or professional fields (www. dictionaryreference.com)
In the 21st century, like the 18th century the need for foreign labor has increased across the world. This is attributed to the fact that there has been a rapid rise of industries in Saudi Arabia.
According to Binzagr, 2007, in Saudi Arabia jobs are filled by non – Saudis, they have a wealth of expertise and are paid for the work they do.
Availability of foreign labor in Saudi Arabia has assisted the Saudi economy to grow in recent years. Most foreign workers are employed in oil, healthcare, finance, trading etc industries.
In October 2006, Saudi Arabia successfully joined the World Trade Organization (WTO) after 12 years of negotiation. This will have a dramatic impact as it opens the kingdom’s protected economy (Evans, 2005). Foreign investments will increase bringing in the necessary funds for giant projects and businesses as the country’s laws and regulations begin to conform to international standards. However, the impact will be felt on the economy as well as culture.
While the economy of the country is generally vibrant, the Gross Domestic Product (GDP) per capital is considered to be low in the region. Therefore one of the main concerns of the Kingdom is to create jobs to lessen dependence on foreign workers and reduce unemployment rate. The main focus of the developmental plans is to deal with the issues of foreign labor and unemployment. This can contradictory, but it reflects the strong dependence on foreign workers to support all technical and menial jobs. The kingdom is a net importer of technology and depends nearly on foreign labor to support technical needs. The dependence has hindered the country’s ability to develop the required skilled workforce and made it difficult for the private sector to offer attractive salaries to the national workforce (Al-Kibsi et al, 2007).
Businesses in Saudi Arabia face great challenges in their operations. This is mainly caused by work practices that limit performance levels as compared with those in Western International Companies. Keeping and raising a wide base of Saudi Arabia’s technical and skilled labor staff is a challenge because Saudis are more motivated by status and position. “Many young Saudi’s have grown up in luxury, seeing their parents getting well paid, high-status position” (Bell, 2005). A 1986 study of Third World Labor forces ranked Saudi labor the lowest in terms of productivity for reasons that included the abundance of job opportunities. Accordingly, the Saudi Worker was motivated to stay in lower rank jobs (Rowings et.al., 1986). A more recent report shows that one-fourth of Saudi employees in the private sector do not regularly show up, causing a high turnover rate (Al-Kibsi et.al 2007) on foreign labor and this has hindered the development of a skilled workforce to the degree that the private sector is not able to absorb the new Saudi entrants and cannot provide attractive salaries (Al-Kibsi, 2007). Foreign workers in the kingdom have gained admiration from employers because they are ready to take any job available as against the Saudis who prefer to work in technical and managed positions. Labor-type jobs are considered unattractive and dishonorable.
This is deeply rooted to the extent that families and government protect and support those who pass up the socially unacceptable jobs (Yadav, 2005). Technical Saudi professionals are compelled to seek managerial positions as most companies’ systems are not structured to support interesting and rewarding and labor career paths.
Problem statement
According to the study carried out in Saudi Arabia by British Broadcasting Corporation (BBC) 2003, it was found out that there are fewer US and European workers in Saudi Arabia in Saudi Arabia currently than 1970s and 1980s. However, the report shows that there are five million expatriate workers in Saudi Arabia.
The economy of the country is generally good. The gross domestic product (GDP) is considered to be low in the region. However, one of the main concerns of the Saudi authorities is to create jobs so as to reduce dependence on foreign workers and reduce the unemployment rate. Main focus of the developmental plans is to deal with the issues of foreign labor and unemployment. The kingdom’s dependence on foreign labor has hindered the country’s ability to develop the required skilled workforce and made it difficult for the private sector to offer attractive salaries to the national workforce (Al-kibsi et al, 2007)
Purpose of the study
The purpose of this study is to identify the exploitations of foreign workers in Saudi Arabia, nature of employment for foreign workers, why foreign labor is preferred in the Kingdom as against local labor, the impact of foreign labor on Saudi economy and working conditions of foreign workers. The study will address the way forward (Recommendations) for foreign labor problems in Saudi Arabia as well.
Nature of employment for foreign workers in Saudi Arabia
The labor laws in Saudi, in effect since 1969, require every foreign worker to be under contract with and guaranteed by a sponsor (Article 49 (c)). While addressing Human Rights Interview in 2003 Saudi Arabia’s then minister of labor and Social Affairs, Dr. Ali-al-Namlah said that Saudi Arabia does not have immigrant workers, but workers by contract. The main problem with this system of employment is that legal sponsors are not necessarily the de facto employers of foreign workers, particularly those in the lowest-paying job categories. Another shortcoming is the apparent ease with which some Saudi citizens have managed to disassociate themselves legally from sponsorship responsibilities, with adverse consequences for workers under their guarantee. It is the responsibility of or sponsors to secure employment visas from the Saudi government for the foreign workers they wish to hire.
Workers contracts and wages
Foreign workers in Saudi Arabia are supposed to work on contracts. However, this has not been the case. It is a false promise. The contracts are mostly written in Arabic language which many foreigners do not know and are hence forced to sign those documents.
Foreign workers from the Philippines, India and Bangladesh have explained that their salaries are being deducted when they are working in Saudi. They also say that their salaries are lower than what they were promised before coming to Saudi Arabia. An employer of Raymond Beltran, a Philippine restaurant worker was presented with a contract written in Arabic when he arrived at Damman Airport and instructed to sign it. It was written in Arabic and could not read it. Later on he discovered that he was being paid $267 instead of $300 offered before coming to Saudi Arabia. (Human Rights Watch Interview, Philippines 2003).
Further other aspects of contract are also modified. Another worker from Philippines also complained that she had been offered to work for a 2-year contract, but when she reached in the kingdom she was told that her contract was not valid and she had to sign a new one written in Arabic. She came to realize that the contract she had signed was three years and not two years as promised. Sometimes foreign workers are in a dilemma once they land in Saudi. It is either the job description is totally different or no job at all. This forces them to settle on other less-paying jobs. However, Saudi law bans these practices unless the worker agrees in writing to perform other work. Article 79 of the law states that “except in cases of necessity and as dictated by the nature of the work, a workman may not be called upon to perform a work which is essentially different from the work agreed upon, unless he so agrees in writing and provided that this is done in a temporary basis”. This provision is not adhered to by the employers of lowly paid migrant workers.
Therefore, even though the Saudi government’s provision of employment terms of foreign workers should be on contract at times this law does not work at all subjecting the foreign workers to a long and suffering life at the hands of employers.
Preference of Foreign Labor
Most employers in Saudi Arabia prefer the services of foreign workers to the Saudis. This is so because most Saudis want technical and managerial jobs which are at times difficult to come by. They (Saudis) also want to be paid highly as compared to foreign workers. Saudi employers also fear that if they employ their fellow Saudis they cannot agree to work long hours as the foreigners do. To this end, they find foreign labor as being cheap.
However, the government of Saudi Arabia has started Saudiization. This concept encourages Saudi employers to consider employing their fellow Saudis. It also encourages Saudi employees to seek employment opportunities and be willing to work in their industries. However, some Saudis say that there are not enough employment opportunities for them. To this end, the government is making a tremendous effort headed by HRH Prince Abdullah, who is trying to move the country from a bureaucratic system to a more transparent, lenient one and encouraging all the foreign companies,” No one thought that foreign companies will come and carry out work needed in the country.”(Juffal i, 2008).
In the 1996 Saudi Manpower Council Study, the civilian labor Force for both men and women was 7 million. Only 2.5 million people were Saudis. The rest were foreign workers. Currently Saudi Labor participation is about 33 percent of the total due to young age of Saudis, high adult illiteracy; inappropriate skills and very low participation rate of women in the labor market, although it is changing.
The pervasive presence of foreign nationals from the lowest-paid manual labor through the middle management to top executive jobs is another cause of unemployment. In 1970s and 1980s the government cushioned Saudis assuring them jobs and giving them a sense of financial security without skills acquisition. The dilemma is that foreign labor or expertise is generally cheaper than for Saudis. “We are being paid for the work they do and it would be a pity for this body of human beings to be lost. Having said that, there are many Saudis coming from the schools and alleges ready to work but without skills”. (Binzagr, 2008).
Binzagr (2008) in his acknowledgment of foreign workers, says they should be paid for their productivity. He further says that they should not lose their opportunities because of Saudis. He says in order for them not to lose their opportunities business has to grow and for this to happen the economy needs to grow.
Working conditions of foreign workers
Foreign workers who are covered under labor law; it guarantees them minimum standards with respect to daily house, overtime wages, days off and vacation pay. The law specifies a six-day work week, with a minimum of eight working hours daily. Employees who work in excess of forty-eight hours a week must be compensated at the overtime rate of regular wages and an additional fifty percent (Article 151). There should be an entitlement of fifteen days which begins after one year of employment and is raised to twenty-one days after ten years of uninterrupted service (Article 153).
Passports are not acceptable forms of identification in Saudi Arabia for citizens or foreign residents. The government issues residency permit (iqama) which is the identification document that all foreign workers in the kingdom are required to use instead of a passport and it must be carried at all times. The importance of the iqama cannot be underestimated. Without the document, foreign workers have no freedom of movement, are subject to arrest at any time, and cannot be admitted to hospitals for medical treatment.
Even though the council of ministers ruled that government fees for residency permits should be borne by employers, Human Rights Watch research confirms that enforcement of this regulation remains a major problem. Saudi sponsors and employers continue to illegally charge workers for the cost of residency and work permits.
No Access to Medical Care
Foreign workers in need of medical treatment have been shut out of Saudi Arabia’s health system because employers did not provide them with residency permits. Most of the employees become too ill without their employers offering them medical care. They end up being provided with a one-way ticket to their country while they are sick. Some end up being not paid for the services offered to the employers.
Long Working Hours without Overtime Pay
Saudi Arabia’s labor includes specific standards for daily work and rest (article 48, Labor Law), and has clear provisions for overtime pay. In violation of the law, employers have forced migrant men and women to work well in excess of eight hours a day and forty-eight hours a week, without payment of overtime wages, unpaid salaries.
Some employers without salaries and force workers to leave the kingdom without reimbursement of their earned wages. The conditions of departure for some migrant workers including official deportation offered them no opportunity to lodge complaints against their employers and seek remedy in Saudi Arabia for unpaid salaries and other benefits that they are owed. Even in cases where government labor office adjudication have ruled in favor of migrant worker’s unpaid claim, some employers use deception and threats at the airport to force workers to leave the kingdom without their earned wages. Some workers who are owed months of unpaid salaries are faced with the difficult decision of remaining in the kingdom and continuing to work without pay, or cutting their losses and leaving. Employers influence these decisions with the lure of a final exit visa and paid transportation to the workers’ home countries.
Denial of paid vacation allowance
Denial of paid vacation leave is another employer abuse that affects workers in large companies and small businesses in the kingdom. As earlier on pointed, workers covered under labor law are entitled to fifteen days of paid vacation per year beginning with their second year of employment.
Summary Dismissals
Some employers have engaged the services of migrant workers for short periods of time and then dismissed them summarily when they are no longer needed, breaching contractual obligations. Workers covered by the labor law are theoretically protected from such a practice although in the absence of de facto protection. Some workers respond by searching for jobs in the underground economy, while in most cases leads to their arrest and deportation without legal status in the kingdom. Agricultural and domestic workers in Saudi Arabia, who have no legal protections under labor law, are particularly vulnerable to summary dismissals.
Impact Of Foreign Labor On Saudi Economy
Saudi Arabia’s economy is fueled almost entirely by the production and distribution of petroleum and its derivative products. Foreign workers have played an important role in the development of Saudi economy. Most of these foreign workers are employed in production and distribution of oil industries in the kingdom. The oil industry is the major industry in the kingdom, it earns Saudi Arabia huge income. Over the past decade oil has generated an average of 90 percent of the country’s yearly export earnings, 35 percent of annual gross domestic product (GDP) and 75 percent of all budget revenues.
Saudi Arabia’s government has allowed foreign or international companies to start business in the kingdom’s economy. Foreign companies as well as foreign workers will play a key role
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