Divided We Beg
During the oil boom, the potential for wealth creation through the rapid industrialization and commercialization in the kingdom was apparent. The ruling elites consisting of wealthy royals and business beneficiaries who were closely in touch with said royals began the accelerated effort to turn Saudi from a vacant desert to an economic powerhouse. But to create anything worth a damn the country was in need of labor, lots of it. A system for immigration was written into law to bring as many expert and eager workers as humanly possible. More specifically, to bring massive flocks of low-wage workers from southeast and central Asia. Targeting debt-trapped workers in poor neighborhoods within developing countries with a promise of debt relief just to be saddled by a riyal-encoded debt. A codification of the most oppressive, inhuman, and tattering on what a lot of economists would categorize as modern slavery was set in motion. Decades later, Saudi Arabia is now holding the third largest immigrant population in the world with 13.5 million foreign residents making up roughly 42% of its total population.
Foreign workers rarely ever work a 45-hour week, according to a recent report by the Human Rights Watch; workers reported working for 12 or 13 hours a day, six days a week with no overtime pay. Professional white-collar workers with years of experience were paid less than the mandated minimum wage for locals in what economists call a two-tier wage system or social dumping. Others who worked as domestic maids reported physical and sexual abuse with no form of legal recourse offered to them. The Kafala System (sponsorships) ties the legal residency of the foreign worker to the employer and gives him/her the right to dictate working hours and freedom of travel bypassing all labor laws instated by the government. Workers described their situation as akin to incarceration since many workers have their passports confiscated, and their families denied residence in the country. Yes, one way to ensure that feeling of destitution is by taking away their passports, ensuring that workers can't quit, sue, report, or even complain without risking their freedom. Numerous incidents have been documented where the employer takes full advantage of the rules that are tilted on his/her side to turn the worker's life into a living nightmare. When I worked in a local Café Shop, I heard countless stories from my expat colleagues about their busted-up accommodations and late salaries the employer justified by insisting that they were going through "difficult times" and that the salaries would be transferred next month with no avail. When I suggested filing a complaint to the Ministry of Human Resources against the café, they laughed and joked about being deported immediately. Mind you, these "difficult times" never seemed to impact the Saudi workers' salaries as I received my own with no issue. This constant back and forth of pleading between the expat workers and their employer for their pitiful wages and better working conditions is the norm for most who work here with a foreign passport. The worst cases of untethered abuse and exploitation recorded, tend to happen to housemaids. Being a female worker in an extremely patriarchal society, in conjunction with being a foreigner, puts housemaids at the top echelon of marginalization and oppression in Saudi. In an interview with the HRW Ms. Siti Mujiati, an Indonesian domestic worker reported working for 6 years without any pay nor any holidays to travel back to Indonesia. Or the story reported by The Guardian that highlights the immense suffering of one Kenyan woman named Jon Simiyu. She was malnourished and overworked, and her pay was withheld from her for an extended period. Thankfully she managed to go back to her home in Kenya, telling her loved ones of the infamous GCC stories commonly shared in Africa.
The inhumane treatment of foreign workers in Saudi is well documented, the Kaffala system coupled with the discriminatory labor protection laws impacts immigrants in a most awful way, both economically and psychologically. People come to the kingdom from all around the world seeking a modicum of upward social mobility that can lead to some level of economic freedom, but they quickly come to realize they signed their freedoms away. The two-tier system of employment, however, has a much broader impact on the country's labor market. And the consequences of such market shock can be felt by Saudis to a devastating length. Harming even the ones it is supposed to protect.
Saudi workers were indeed hurt by the unjust wage discriminatory laws. It made foreign workers cheaper to hire, and consequently, foreign labor filled up private factories, offices, schools, and hospitals, constituting 77% of the labor force as of 2021. While unemployment was and still surging for nationals. Even throughout the oil boom, a significant number of Saudis were hard-pressed to find an adequately paying job, some economists estimated a staggering 40% unemployment rate among Saudi-born individuals in urban and rural areas. The struggle developed into resentment, and business elites were well aware of that. A narrative started to develop, the reason for Saudi unemployment as it were, a moral failure says the employer. A result of an indolent, entitled, and lazy Saudi workforce that was unwilling and unprepared to match industry standards in productivity and work ethic. The bogus narrative was even echoed by Western so-called liberal journalists. One example that comes to mind is Karen Elliot House and what she espouses in her sorry excuse for an anthropological book "On Saudi Arabia: Its People, Past, Religion, Fault Lines—and Future". Where she champions privatization and blames Saudis' tendency to be dependent and idle for the failure of such a robust private market. While in the same book quoting business elites and capital owners' malevolent comments about reducing labor costs in whatever way possible. Her inaptitude to connect the dots is too apparent it comes across as intentional.
This two-tier system of employment developed further divisions among workers, and talks of "us" vs "them" started to crop up more frequently in Saudi gatherings and households. The feckless independent media portraying racist and cartoonish depictions of different foreign nationalities on online platforms as a way of social commentary on the issue of unemployment inflamed those antagonistic fervors even further. Harnessing the just anger average citizens held and shifting their focus towards unjust targets was an additional perk for the ruling elites. Capitalizing on the xenophobia that came to plague locals was an effective implementation of the good old divide-and-conquer strategy. Because ultimately Saudis and non-Saudis have so much in common and their interests in virtue of being workers were aligned. But the ignorance of that fact by nationals was crucial for the two-tier system to function.
The narrative later on developed to the point where some Saudis started believing it themselves. Truth is, it never was about the occupation or the job description. The ruling class is simply changing the rules in traditional labor economics and reveling in the results. The average Saudi is not lazy, insolent, or incompetent, no, Saudis just came to develop better labor protection laws as a result of the social contract they have with the ruling family that promised some level of amenities for nationals. Those run-of-the-mill labor laws are still seen as costly by employers and therefore, nationals are not worth hiring, and they much rather hire cheap foreign labor that also acts as a benchmark that depresses wages across all industries. The fact is Saudis or anyone for that matter, would jump for the opportunity to work in construction, watering, sanitation, or any other essential job if it meant it would be able to provide adequately for their families. But the average salary in these jobs is pitiful, to say the least, and no wonder they're mostly employed by workers from countries where it's just marginally better to come and work in these fields instead of staying home. The average employer is simply not accustomed to treating his/her workers fairly. Abdulrahman Al-Zamil, the previous chairman of the Zamil Group, a well-off businessman and above all a recipient of his father's generational wealth continuing the "entrepreneurial" tradition. said it blatantly in a conversation regarding Saudization. "Saudization is insurance for us. But businessmen are selfish and want to look for low-cost foreign workers. Without jobs, Saudis will wreck our nation." The irony in the self-professed indirect wrecking of his nation through his and his siblings and contemporaries' greed is comical yet not surprising in the least. Before his death Abdulrahman held positions of power in public institutions like the Ministry of Industry and Electricity, demonstrating how much power rich private families hold in the kingdom.
As the labor market developed throughout the years anger among young Saudis intensified to the point where the ruling family could not ignore it any further. Saudization became the fix the state offered. The state attempted to curb the Saudi unemployment rate, by injecting quotas of Saudi hires to be strictly followed by private enterprise. It's a band-aid solution and an ineffective one at that. Unsurprisingly, private companies found another way to continue hiring foreigners and benefit from exploitative labor laws. Human resources contractors proved a profitable venture after Saudization became the law of the land. These HR contractors promised to deliver cheap labor that wasn't protected by those pesky labor law protections to whoever demanded them. The hired contractors did not impact the quotas for corporations and were still cheaper than Saudi workers. ESAD services group is one of those major expat staffing companies and if it's known for one thing it's how awful they treat their workers. ESAD's workers will often be stuck between the HR department of their place of work and the HR department of ESAD itself. Chasing their wages is as if it's part of their job. I talked to about a dozen of ESAD workers and one thing kept coming up, late and short wages.
Of course, I'm not proposing to stop immigration or slow the influx of people coming into the kingdom. Immigration is great, it brings culture and enriches it, and for our economic problems, it brings much-needed technical and academic know-how. The job market does not consist of a fixed number of jobs, on the contrary occupancies scale up with population. As more people come in more construction is needed to house them, more teachers to teach their children, more doctors for their health problems, and the pie of economic growth expands overall. Instead of limiting immigration, it should be encouraged through citizenship programs and not an underclass of indentured servants. It is not uncommon to see immigrants work in this country for 10 to 15 years and still hold on to their expat status and still be under a sponsor. It's proven time and time again that the best way to handle immigration is through assimilation, and that starts with an easier grant of citizenship and the complete abolishment of the Kafala sponsorship system by erasing any restriction of ownership and investment for an immigrant. This will raise the depressed benchmark of wages as immigrants will enjoy the same labor protections as born nationals. Furthermore, in a World Bank statistic, remittances flying out of Saudi increased drastically from $14,8 billion in 1990 to $40.7 billion in 2020 that's a whole 4.9% of our total GDP gone. Instead of sending remittances to their families back in their home countries, money can stay if their whole family can live and prosper in Saudi. In an article by the economist Kathryn H. Anderson, she documents the overall societal benefits gained from offering low-cost paths to citizenship for migrants. One crucial benefit is having employers offer wages based on output and not a passport, which will tend to increase positive competition around a wage much closer to the equilibrium or true value of labor, thus removing any barriers to employment created by the two-tier system. Equally important, venues of collective bargaining can be much easier to access when the labor market is less segmented and more aligned into a cohesive labor pool that can see solidarity as an advantage and not a hindrance.