The heavy price of reconstructing the demographics of Saudi Arabia's construction sector
575,000 corrections to visa statuses has not been enough to stall the labour market and the reverberating aftershocks have rocked the sector.
There is estimated to be 12 million expatriates to be working in Saudi Arabia, or at least there used to be. Official figures are currently vague as to how many people have been forced to leave the Kingdom since it introduced a crackdown on the black market for labour but current best guesses stand in the region of one million.
You don’t have to be a maths genius to realise that almost 10% of the expat workforce has flown the country before being forced to pay fines or, worse, find themselves in prison..
The construction industry has possibly been the hardest hit. Before the start of April’s grace period for illegal workers there were an estimated 250,000 construction contracts in motion. The 575,000 corrections to visa statuses has not been enough to stall the labour market and the reverberating aftershocks have rocked the sector.
Arab News published a report just as Construction Machinery Middle East went to press showing figures from the National Committee in Saudi Chambers (NCSC) that reveal that 90,000 of those 250,000 contracts had been cancelled. Presumably because they were unable to fulfill their contracted obligations.
Raed Aqeili, a member of the National Committee in Saudi Chambers, told the newspaper that the majority of the contracts belonged to small contractors. He suggested that the companies that can afford to, turn to rental companies to hire professionals that can carry out the contracting work.
The cost of this will surely be higher prices in terms of contracts and a subsequent shrinking in the number of contractors in the market.
The goal of this move has been to reduce wastage in the Saudi labour force as well as accelerating the Nitaqat programme. Only the very cynical could argue against both those aims. I worry that the extension of the grace period to November has come too late – and in hindsight may have been a more reasonable deadline to ensure the continuity of construction in the market.
However we also must look at how we conduct our own affairs, and as the construction industry bears the brunt of these changes, smaller contractors must once again realise that they will pay the price in the short term for long term neglect of their role as responsible employers.
- Egypt passed the economic conference with flying colours, but what's next?
- Why the GCC really needs a VAT tax
- Selfies, jokes, and billions: Sisi 'boisterous' after economic summit, but the hard part has just begun
- 'Open for business': what did the World Bank have to say about Egypt's economic conference?
- Egypt's Economic Conference: formidable expectations, formidable challenges