While in Saudi Arabia and hearing about the global recession and particularly the fall of the American housing market and mortgage industry, one will feel empathy but by viewing and hearing from afar, it still remained more of a remote issue. However after being in the States and seeing firsthand the empty and boarded up houses which have been foreclosed upon, the rows and rows of people seeking work after having been laid off, knowing too many people who fear whether they will be included in the next round of cuts their company will be making…it hits home. Even the commercials while watching tv in America air more which are also focused on the global recession and how to help people in times of financial and medical crisis.
When we left Saudi back in March there were still many opportunities for both Saudi nationals and expat workers. Eventually though can’t one expect that the global recession if it continues as it does, will also be felt and impact Saudi Arabia? Fortunately on one hand, Saudi Arabia, unlike some countries does contend with the slowdown from a strong position given that it comes from a background of many years of high oil prices which in turn have left the Kingdom’s public finances in good shape after years of chronic deficit.
The impact of the recession in Saudi Arabia would likely be felt more by the private sector than the public/governmental sector which will feel the brunt of the conservative banking practices which have been put into place as well as shrinking credit markets.
But when we talk about individuals and their jobs, who would feel the greatest impact in Saudi Arabia? Would the Kingdom resort to releasing expats and hiring Saudis in their place? Would Saudis become more amenable to taking jobs which had been traditionally held by expats? Or would even more qualified and experienced expats wish to come and work in the Kingdom? Would Saudi Arabia entertain hiring more expats in a time of recession if their skills are far and above current applicants or incumbents?
Filed under: America, culture, Economy, Saudi Arabia, Saudi culture, Saudi customs Tagged: | America, culture, customs, Saudi, Saudi Arabia, Saudi customs
Carol, Interesting point. At the Brittish Wives breakfast, we spoke to quite a few that were packing up and leaving for good this summer, so I assume that it’s happening here as well as everywhere else in the world.
However, the population in KSA is booming, unlike in the west, so I think that will help to keep spending at an even keel. The latest craze in the Kingdom seems to be in malls and small food shops…all run by new graduates returning after their studies.
There is no denying the fact that KSA also has been impacted by the global recession albeit to a small extent. But at lot of banks and financial institutions have used this opportunity to trim the workforce targetting expatriates in high paying jobs or in middle and senior management roles. I personally know of so many friends who have been shown the door, not because of their performance levels, but purely because of the expected drop in business volumes during the year and thereby smaller profit margins. The way the pink slip business was handled in some banks was totally insensitive with scores of people left hanging in mid-air with no information, made to wait,hope and then let go with a thud to earth. What a crying shame!!
The real estate business isn’t doing so well either. Mega realty corp Emaar has recently done some major downsizing in Dubai, and the trend has caught on in their Saudi branch.
I would imagine that the impact of worldwide recession (which the officials still do not think it is), would hit with less severity in Middle East – UAE is the exception.
I think you are in Houston, and based on my knowledge the impact in Houston isn’t that severe compared to the other parts of the country. It really makes you think 5 times before making any decision.
I am particularly interested in the current situation in the MidEast since i am contemplating a move in that region.
Anyways, the problem with the Saudi (or gulf in general) economy is that the locals wont take the low paying job. The locals will either sit unemployed and work in a high paying job (Wasta?) for which they are unqualified. So when a situation like this arises, they are left unplanned.
I know that the companies have to pay expats additional benefits which increased their expenses, but if they hire locals, don’t they have to pay more salaries, which would mean that the expats don’t necessarily cost them much?
Amidst the current gloom and doom, its amazing how companies (such as MAF) still talk about building 5 star hotels and malls and what not.
(i have been all over, so i apologize)
The recession will be a painful but useful period of adjustment. The oil price bubble has burst and countries like Iran are no longer quite as powerful as they felt they were with $100 per barrel oil. If the government can act with care, this should be a needed period of adjustment. Given what Saudi Arabia exports, they will be far less hurt than countries like China.
Nobody believes that the price of oil will get any lower (and it seems to be rising again).
If only someone could convince Saudis that any job that needs doing is an honorable one, the problem of foreign labor might solve itself. But pride is a powerful motivator.
I am all for saudisation. It’s sort of an arab thing – most arabs don’t want to work for another person. Did you ever notice even in the USA they are proprietors of stores, gas stations, etc.??
Hopefully with better education all this will change.
@mariam
saudisation / emiratization / omanazation etc is good. but do they let go hard labor to hire locals? No. Those jobs are still done by people from the subcontinent.
@Miriam – I’m really happy to hear about new grads who are working and
opening up enterprises. But on the other hand, it is sad to hear
about others who are leaving and not coming back which I am assuming
is due to cut backs?
Rasputin – Thanks for sharing. What sectors and what part of the
Kingdom are you in?
@saudi Jawa – while I do not want to hijack the thread, there is a
very interesting report circulating on the “Downfall of Dubai” which
is a disconcerting read. I guess it is not surprising to hear that
the real estate sector in Saudi is impacted. But I’m sure the other
mega-projects the King has initiated are still going on.
@Aamer – I enjoyed your comment and all the areas which you covered! (smile)
I am still in Houston and while perhaps not as evident as parts of
Florida or Nevada, it is indeed evident. Houston is not only having
to contend with unemployment and foreclosures but still has a high
number of Hurricane Ike and Catrina refugees here too. As a result,
the crime rate is pretty high here. In fact, since I am assisting in
the care of a family member at one of the medical institutions, I
usually leave the hospital at late odd hours. If I drive, it is
policy that a member of the security escort me to my car. If I do not
drive, then the security actually takes me back to our place rather
than using a taxi. Again, this is due to the security (crime) in
Houston.
Now back to Saudi….it is a conundrum between what constitutes an
attractive package for an expat and what is a fair and equitable
package for a Saudi. I know that Nzingha has commented in detail on
this very subject and hope she will join in on your comment.
Bear in mind though that a typical (basic) expat package includes air
tickets, housing, transport, health insurance, vacation pay, salary
(some packages will include other perks depending on position). A
typical Saudi package will include housing or housing allowance,
transport or transport allowance, vacation pay, salary. But bear in
mind that most Saudis may live in a family home; already have a car
and …. in a lot of cases, the Saudi salary may be lower than that of
an expat – it depends on the position.
@mariam – I so agree that education or lack thereof has been the root
of too many problems in KSA.
While I do concede on several weaknesses of the Saudi workforce (poor education, not willing to do manual labor..ect.) there has to be something said of the cheapness of imported labor.
The US is having a problem with outsourcing recently due to lower costs abroad. This is somewhat offset by transportation fees.
However, in Saudi Arabia instead of outsourcing, they bring the foreign worker here who works for next to zero pay and costs them nothing in transportation! Unless a Saudi is willing to live in squalor he has no way to compete with this.
And I find Saudis not from the big city to be more willing to do menial work, like all those flatbed tow trucks on the highways and “Baqala” owners.
A critical question to consider, I believe, is what the effect of the economy will be on youth.
Our young people do appear to be increasingly frustrated and alienated, due to the irreconciliation between their aspirations and the existing social mores.
I would welcome opinions on this topic.
Hi Carol,
I’m in the financial services sector and I’m based at Riyadh
@Rasputin – thanks. I appreciate your response and input.
But Mohammed, I guess driving towing trucks and running Baqalas cannot be considered as menial in comparison to the jobs that involve keeping the roads clean in the most oppressive heat, construction work etc.
Also dignity of labour is virtually non-existent with the so called ‘menial jobs’ being called so.
@Carol
I was in Dubai last week (might blog about it soon!), and the vibe on the street is pretty grim.
KAEC (King Abdullah Economic City), which is owned by Emaar, is already feeling the brunt of the crisis, as it depends wholly on public sector investment, a lot of it foreign. There are rumors flying around about them needing a government bail out.
Andrew–I’ve been thinking about your question of the impact on the youth, which is an excellent one.
While I cannot speak to the current crisis and Saudi, based on other experiences the youth are affected directly: fewer job opportunities on graduating, leading to delay in other life stages like marrying, children, etc, fewer career advancements, general uncertainty; and indirectly: parents lose income which impacts on the whole family’s lifestyle, opportunities, and the youths ability to pursue further education, go abroad, etc., and the increased level of stress among family members that impacts on all. Where there are large numbers of unemployed young people, particularly men, there seems to prime recruitment for “unfortunate” activities.
Thanks for the question, I hope you will contribute your further thoughts as well.
@Saudi Jawa – hmmm…if KAEC needs a bailout, that is not good news at all!
This article: http://mathaba.net/news/print25.shtml?cmd40=i-42-b6cba4be698701502c8554e11c8bca66 advises that 22 per cent of Saudi’s population are below the poverty line. It also states that some of the beggars one sees in Saudi are not only Saudi nationals but ones with University degrees. It makes an interesting read and makes one ask where is the disconnect?
[...] not justified, and the economy overall is strong and getting stronger. After all, Saudi Arabia was well-shielded from the worst of the global economic recession, and has reinvested large sums of treasure in diversifying its economy and renewing education as a [...]
[...] not justified, and the economy overall is strong and getting stronger. After all, Saudi Arabia was well-shielded from the worst of the global economic recession, and has reinvested large sums of treasure in diversifying its economy and renewing education as a [...]