Expat exodus could keep lid on Saudi unemployment rates

Joblessness among Saudi nationals is expected to remain at about 12 percent this year, despite sharp economic downturn.

After the last oil market crisis, even as hundreds of thousands of foreigners left Saudi Arabia, only some of their jobs were saved and filled by Saudis [File: Tasneem Alsultan/Bloomberg]
After the last oil market crisis, even as hundreds of thousands of foreigners left Saudi Arabia, only some of their jobs were saved and filled by Saudis [File: Tasneem Alsultan/Bloomberg]

The expected departure of more than a million overseas workers from Saudi Arabia could help keep a lid on unemployment among the kingdom’s citizens even as the economy contracts the most in two decades.

Riyadh-based Jadwa Investment sees 1.2 million foreigners leaving the labor market in 2020, roughly 9% of total employees. Joblessness among nationals is expected to remain at around 12%, Jadwa economists said in a report.

A foreign exodus of that magnitude as the world’s largest oil exporter confronts the double crisis of the coronavirus pandemic and turmoil in energy markets will likely produce a ripple of negative economic consequences. But the departures, along with state support for businesses, might offer new opportunities for Saudi workers at the moment mostly employed by the government.

“As the economy begins to recover towards the end of the year, there is likely to be a surge in demand in certain goods and services,” according to Jadwa. “Such a surge coupled with continued precautions related to the pandemic, which potentially limit the supply of new expat visas, is likely to offer more opportunities for citizens.”

Replacing foreign workers with Saudis has been an official goal for decades with limited success. Over the past few years, stricter “Saudization” regulations – along with economic necessity and shifting attitudes – have pushed more Saudis into jobs once dominated by foreigners; citizens are increasingly visible as baristas, deliverymen and hotel receptionists. Still, after the last oil market crisis, even as hundreds of thousands of foreigners left Saudi Arabia, only some of their jobs were saved and filled by Saudis.

So far, government stimulus measures, including a pledge to cover 60% of salaries for some Saudis in the private sector, have helped to minimize Saudi job losses. However Jadwa’s economists estimated that 323,000 foreign workers have already left the kingdom since the start of the year, with travel, hotel and restaurant sectors particularly susceptible.

Source : Bloomberg

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