Words suffixed with ‘isations’ have a tendency to create discomfort in Pakistan; be it globalisation, Americanisation or anything else. The latest fear monger is Saudisation.
It has been few years since Saudi Arab has been trying to localise its job market - 72 percent of which consisted of foreign workers, according to 2006 numbers. Put simply, the Saudisation drive is meant to replace the expat labour with a trained and qualified local labour in a planned and phased manner.
These efforts have been ongoing since the 1990s. The measures included a requirement to increase Saudi manpower by five percent annually as well as banning expatriates from certain sectors. In more recent news, the Kingdom’s Ministry of Labour set employment quotas for firms in a programme called ‘Nitaqat’, which roughly translates as zones or ranges.
Under this regime, which was introduced in 2011 to be fully implemented by 2013, private firms are rewarded (or penalised) for ensuring (or not ensuring) a certain level of localisation. The level of desired localisation depends on the size of the firm measured by its total number of employees.
Aside from increased employment for Saudi nationals across all sectors, Saudisation is also aimed at recapturing and reinvesting the income which is otherwise remitted out of the country. This is where the fear part comes in for Pakistan.
Over the last few years, Pakistan has become increasingly dependent on remittances from Saudi Arab. In fiscal year 2012, remittances from Saudi Arab stood at $3.6 billion, making it the single biggest contributor to total remittances inflows.
How does the central bank-led Pakistan Remittance Initiative view this? Well, one may have to wait a long time to find that out. BR Research has been chasing the State Bank of Pakistan for more than a month; but despite several emails and repeated reminders over the phone, silence and excuses prevail.
In the absence of the official central bank view on the impact of Saudisation on home remittances and the public unavailability of any detailed study by Pakistan government’s overseas labour office, one is forced to rely on anecdotal off-the-cuff analysis.
Anecdotal evidence suggests that most Pakistani workers in Saudi Arabia are employed as blue collar workers, which means that the impact on remittances may be minimal. Here is why.
For Saudi government, localisation is important. The kingdom is battling unemployment, and with the bulk of economic output coming from oil, opportunities for being employed in the non-oil private sector are limited. Against the backdrop of gradually increasing women in Saudi workforce as well as better educated Saudis in general, labour management has become a bit of challenge.
But the bigger challenge for Saudi government is to change the mindsets of its people. The Saudis, like their oil-fed counterparts in the UAE, have become accustomed to seeing themselves as ‘natural middle class’, and accept only that work which meets their middle class expectations.
This burgher-‘isation’ of Saudi mindset, therefore, may work as a blessing in disguise for Pakistan, which, as mentioned earlier, mostly provides lower end blue-collar workers to Saudi market. Well, at least there is some ‘isation’ that Pakistan could take comfort from.