Saudization
Saudi Economy Term Paper: Saudization Done By: Mais Atiyeh & Noura Nadir Saturday, January 6, 2011
Introduction Saudi Arabia is a wealthy country with a young population structure and a high population growth rate. People under the age of 40 make up 78% of the population of which 32% is under 15 years. This means that the dependency ratio in Saudi Arabia is very high compared to other countries (2.4 times the world average). This also means that there will be a continuous increase in the number of new labor market entrants in the coming years. With high costs of living and a high dependency ratio, there is great pressure on the Saudi individual to find a job and greater pressure on the Saudi government to create more jobs. Over-saturation of the public sector has created a need for young nationals to look for work inside the expatriate dominated private sector. However with so many expatriates working in the country it is harder for the Saudi national to find a job in the private sector, and thus unemployment has been a serious issue in Saudi Arabia. In an effort to facilitate the employment of nationals, the Saudi government has instituted a number of policies favoring the Saudi worker in an effort known as Saudization Saudization is a tool used to combat unemployment and involves replacing foreign workers with Saudi workers. The Saudization plan was imposed by King Fahd bin Abdul Aziz to in order to significantly decrease dependence on cheap foreign labor. Under the plan, 75 percent of the workers should be Saudi, and should receive at least 51 percent of the company’s total salary payment.
Goals of Saudization The three main goals of this policy are: * Increase employment opportunities for Saudi nationals in the country especially in the private sector: the main aim of Saudization is to reduce unemployment levels and increase the availability of jobs for the nationals across the economy. By replacing
Introduction Saudi Arabia is a wealthy country with a young population structure and a high population growth rate. People under the age of 40 make up 78% of the population of which 32% is under 15 years. This means that the dependency ratio in Saudi Arabia is very high compared to other countries (2.4 times the world average). This also means that there will be a continuous increase in the number of new labor market entrants in the coming years. With high costs of living and a high dependency ratio, there is great pressure on the Saudi individual to find a job and greater pressure on the Saudi government to create more jobs. Over-saturation of the public sector has created a need for young nationals to look for work inside the expatriate dominated private sector. However with so many expatriates working in the country it is harder for the Saudi national to find a job in the private sector, and thus unemployment has been a serious issue in Saudi Arabia. In an effort to facilitate the employment of nationals, the Saudi government has instituted a number of policies favoring the Saudi worker in an effort known as Saudization Saudization is a tool used to combat unemployment and involves replacing foreign workers with Saudi workers. The Saudization plan was imposed by King Fahd bin Abdul Aziz to in order to significantly decrease dependence on cheap foreign labor. Under the plan, 75 percent of the workers should be Saudi, and should receive at least 51 percent of the company’s total salary payment.
Goals of Saudization The three main goals of this policy are: * Increase employment opportunities for Saudi nationals in the country especially in the private sector: the main aim of Saudization is to reduce unemployment levels and increase the availability of jobs for the nationals across the economy. By replacing