Saudi increase expat fee to force unneeded labour out
The ministry will hand unskilled jobs to locals eventually
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The robust Saudi economy is passing through a unique phase providing innumerable opportunities for the first time in history.
“So we need a number of qualified executives and skilled manpower to drive the economy and make the best of the current economic boom in the Kingdom,” says Nael Fayez, CEO of INJAZ-Saudi Arabia.
“The ongoing development projects need both skilled labor and efficient management talents,” Fayez told Diana Al-Jassem of Arab News in an exclusive interview.
He said the Labor Ministry’s decision to impose an additional payment of SR 2,400 per year on each expatriate employee would limit the access of the unskilled and unfit labor.
It will encourage business owners to invest in technology and automation in order to enhance their manual operation, which is mainly driven by cheap labor.
He emphasized that the Kingdom in its pursuit of sustainable development needs to continue to invest in education, manpower and technology.Success recipeFrom your point of view what are the qualities of a good businessman? A real good businessman should balance two main concepts at the same time. The first concept is to drive profits to the company, and second to be equipped with the right leadership to face future challenges. However, I think a real businessman should be segmented more by the type of business he does. If we talk about Saudi business environment, we have to admit that it is a very dynamic, changing environment. Business today is different from what we have seen in the past 20 years. We have to know and balance the future needs of the Kingdom, what segments to target, and what industries to develop. We have to tackle the challenges that did not exist in the past. There is a great need for skilled labor, which is a real challenge now, since we want to reduce the reliance on expatriates. I think we need businessmen who give more attention to the use of technology, whether in industry or service.Would the mentality of successful businessmen change over the years? Most frankly, the mentality of young leaders should be determined by three main components; first, they should be open to face challenges, second, they should use the obstacles as advantages and third, they should have a comprehensive overview of the various sectors of the economy. Diversity of human and business sector is needed for each leader to operate, function and drive a good environment. Building a very successful team who enjoy diversity in terms of nationality, religion, ethics, gender and fields is also needed for the new age businessmen to make new things work.What changes have you seen during your career, especially in the past twenty years? I have seen many changes related to both business and personal issues. I have to admit that the nature of experience has changed; the challenges on how to deal with failure are also changes. I have faced many challenges in business, but I learned how each difficulty can be turned into a success story.What words would you choose to describe your success story? One word that would describe my career is passion. Passion is needed for each businessman; passion has driven me to success, and successfully facing the challenges makes me do my best and enjoy working.Company agendaWhat are your plans that you wish to implement while managing INJAZ. And why those plans in particular? I was recruited in INJAZ in 2009, and it was one of the greatest moments in my career. I came from a profitable business background, but I also pay attention to any non-profit sector. I have to balance these two sectors. In most cases, non-government organizations are managed by leaders with great dreams and good intention, but they lack the businessman’s skills. I think this is a quality that I had and I try to implement them every day. My message to my staff is to run our non-profit organization as one of profit. Our aim is to have accountability and credibility.According to statistics, Saudi Arabia is the largest market in the Gulf and is poised to be one of the fastest growing markets in the region over the next 3 years. Tell us the efforts INJAZ is making to support the participation of Saudis in the job market? INJAZ-Saudi Arabia is a member nation of Junior Achievements Worldwide. INJAZ-Saudi Arabia is dedicated to inspire and prepare Saudi youth to success in a global knowledge-based economy with a vision for delivering hands-on programs to 250,000 Saudi male and female students by the year 2018. What we are presenting so far is cooperative work in partnership with the business community, ministries, educators and volunteers.Saudi business portfolioHow do you view the Saudi business map, especially when the Kingdom is moving toward involving more Saudis in the market? I am not satisfied with what we have done, whether in the government sector or the private sector. Much more can be done, and we need to make stronger efforts. If we would like to reach a lead position, we have to work hard. I think the Saudi economy map presents a very unique opportunity for the first time in history. Saudi Arabia is in the top twenty economies. We are the only Arab country in the G20. We have to benefit from the economic boom and massive external and internal opportunities. All these projects need very successful talented labor, management skills and leaders who will be able to drive this new economy. We need them all, but we don’t work through the years in order to achieve our needs. It’s better to be late than never. We have to define exactly the components of economic sustainability that will not be measured by dollars or riyals but by manpower, infrastructure, and legislation.Saudi Arabia is marching toward achieving sustainable development. What are the sectors that need stronger efforts? I think we really need to sit down and evaluate where we want to be. I don’t think that any mature leader would argue that all Saudi economic sectors should be at the same level. I think we have to focus on our exact needs. We need sectors that employ people, move the engine of the economy, and help us achieve sustainable industries that drive the local economy. Importantly, we need to streamline our education and service sectors that are vital for every family and generate new employment opportunities. We also have to diversify the national revenue, but the only way to tap additional source of income is empowerment through education and the use of technology. If we look at Singapore, Korea and Ireland, we will discover that they do better than us although they don’t have natural resources. They have heavily invested in education and technology. There was an awkward moment in 2011 when we exceeded our oil generated and telecommunication revenues. It gives me a great sense of displeasure, as most of our telecommunication doesn’t benefit the GDP. It also gives social indicators that most of our spending is on texting, and voting for talent programs, which is good but not sustainable.What are the reasons that contribute to speed up the Saudi Arabia’s need for small business jobs. Is it only growing population or other reasons like globalization and inflation? If I discuss this major issue, I would attribute it to the lack of education. We think that we don’t need to work hard to buy a car; we think that we don’t need to save money to buy a house. The change in the social means and economic cycles today is that we have larger families, lesser income and limited resources. I think lesser number of Saudi nationals contribute to the job market, because smaller numbers of citizens are qualified for the job market. Saudi nationals in general have great interest in the job market, but they lack education and so in skills. However, I recently saw great Saudi examples around, but we still need to see major forces: Saudi nationals studying abroad, and Saudi nationals in the Kingdom. They have to select their careers wisely, choose the fields that benefit the economy, and equip themselves with higher studies and value-added skills.Competition among companies that support SMEs is getting tougher especially when foreign investors are allowed to join the Saudi market and work with flexibility. Tell us about the competition among these companies? In my opinion, our economy will mature and reach a level where companies are evaluated based on the products that they offer, the services that they extend and the quality measures that will offer better value for the money to the end customer. Despite the nationality and origin of that specific company, the challenge lies in Saudi SMEs to understand that nationality is neither a point of advantage nor a competitive disadvantage. By competitive disadvantage I mean being labeled as a Saudi SME, which would necessarily be associated with a lesser quality or a higher price.What are your expectations of the Kingdom’s SMEs sector within the coming ten years, especially when the Kingdom has become a main attraction for foreign investors? The Saudi economy is not different from the other economies around the globe. Statistically speaking, all mature economies are based on a large number of SMEs that in most cases significantly contribute to the economy and are number one employers. My anticipation of the Saudi SME sector is no different; I think it will mature over time to become a key player in contributing to the GDP of the Kingdom and will eventually be a good alternative to oil, which is labeled as the main source of revenue for the Saudi economy.The Labor Ministry’s decision to impose an additional payment of SR 2,400 per year on each expatriate employee has raised the anger of real estate development companies. What is your view about such huge taxes and how will it affect the Saudi market? First, I would not label it as a tax rather I would consider it a means of regulating the market. In effect, it costs less than a handful of riyals a day but let us really consider what we are aiming to get in return: More regulated market; a slightly higher cost for skilled labor that would limit the access of the unskilled and unfit labor; a greater drive for business owners to invest in technology and automation in order to enhance their manual operation, which is mainly driven by cheap labor; hopefully the end user (the consumer) will receive better service with higher quality of labor; it goes without saying that this will further contribute toward creating more opportunities for Saudi nationals.
Fayez’s ID:Name: Nael Fayez Position: CEO of INJAZ Age: 38 years old Qualifications: • Master of Business Administration, Aspen University • Bachelor of Science-economics, Lamar University, Texas Experience: • Financial Analyst at Saudi Aramco • COO, Seyada
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