Saudization and Structure of the Labour Market in Saudi Arabia

Abstract

Until 1960s, most of the population in Saudi Arabia lived a nomadic or semi-nomadic existence with only a small pockets of settled population. Under the impact of the oil boom revenues of 1970s, the Saudi economy grew from a poor subsistent economy into a rich modern one. The main economic activities were mainly subsistent farming , livestock raising and serving the pilgrims of the holy places. The country has adopted a five year development plan approach since 1970, which required importation of foreign workers to fill the gap of skilled and unskilled workers to meet the accessive labour demand of the development projects. This paper is divided into four section . The roots of the current situation can be traced back to the way in which the labour market developed in Saudi Arabia. The next section will consider human capital development in the country . Section three is about the regulations which govern the labour market in Saudi Arabia and their effects on this market. The fourth section is devoted to discussing current labour policies and their effects on the economy and business. The paper concludes that inequality in the application of the labour regulations between Saudi and non-Saudi workers has distorted the labour market in the country and created a monoposony situation. It also argues that the localization or Saudization of the labour market could be successfully applied to white-collar employment, but that it will prove a challenge in blue-collar employment, especially in case of dirty and hazardous work.