On Saudi Arabia: Its People, Past, Religion, Fault Lines - and Future (25 page)

If proximity to government—or more crassly, payola to princes—once ensured wealth, scarce managerial talent now determines the fate of large Saudi businesses, which increasingly must compete in a global economy to survive. This puts a premium on hiring and retaining qualified human talent. Indeed, government, once the driver of economic growth, now is seen by most Saudi businessmen as a roadblock to growth because of its glacial decision making and endless red tape.

For at least the past five years, government and business have engaged in a tense tug-of-war over who is to blame for rising youth unemployment. Private-sector businesses employ roughly nine expats for every one Saudi. The government’s mandated “Saudization” of businesses has set annual goals for hiring Saudis in various economic sectors. Because government controls visas, it technically can deny Saudi businesses a new supply of expatriate labor.
Yet in 2009 the government issued nearly one million visas, double the number issued in 2005, bowing to business pressure at the expense of Saudi employment. For their part, many businesses complain they can’t invest to grow the economy without qualified labor, and Saudi labor all too often isn’t properly trained or committed to a strong work ethic. Training new hires on the job, businessmen argue, reduces a company’s productivity, raises costs, and thus hampers international competitiveness.

This “Saudization” campaign has become yet another government roadblock that businessmen seek to circumvent by bargaining for expat visas with officials who control visa approval—or simply by buying them from corrupt officials, princes, or other businessmen who acquire visas for ghost workers and sell them to the highest bidder.
For instance, a business procures more visas than it needs for a project, then sells the surplus to other businesses in need of quick labor or to individuals who want to bring a relative to the kingdom. Corruption is open to all. Visas can fetch $1,500 or more.
Of course, occasionally those who purchase a visa discover it already has been sold and used by someone else, and they are left holding the bag, as they cannot report the crime to authorities without implicating themselves.

A whole new business has developed in recent years, in which the Saudi sponsor of foreign workers allows those workers to run businesses established in his name and pay him a fee from their profits—a complete reversal of the sponsor running a business and paying the workers from its profits.
This illegal conduct, especially rampant in the construction industry, allows Saudi businessmen to earn money while doing nothing, but it fails to develop business acumen
or to provide jobs for young Saudis. Again, this is just another example of the rampant disregard for rules and regulations by a growing number of Saudis, who seem bent on grabbing whatever they can from their country and justifying their conduct by telling themselves that their royal rulers aren’t fairly sharing the national oil wealth.

This corrupting and corrosive influence on the economy has done nothing to increase Saudi employment.
If the private-sector workforce in 2006 totaled 4.8 million foreigners and fewer than one million Saudis, three years later the foreign workforce had increased by 30 percent to 6.2 million, while the Saudi workforce remained largely static. All that has increased is corruption.
A survey by the Riyadh Chamber of Commerce in 2005 showed that 77 percent of businessmen felt they had to “bypass” the law to conduct their operations, and businessmen say it has only gotten worse.

A Saudi prince insists that “eighty percent of the corruption is simply because government doesn’t work, so people pay bribes to get services. Government grew too fast, and we didn’t have proper management, but we will change that.” Saudis’ patience with unaccountable government, however, is wearing thin.

Another roadblock to faster economic growth is the social and religious prohibition on employing educated women.
Some 60 percent of university graduates each year are women, yet the Saudi labor force is only 12 percent female. Most of those women are employed as teachers or doctors. While some young women are beginning to push into careers in computer technology, interior design, nursing, and cosmetology (as we saw in
chapter 5
), their numbers remain small because the religious establishment—and therefore many families—remains opposed to the mixing of men and women in the workplace.

More recently, the government has begun talking about allowing women to teach kindergarten-age boys, which undoubtedly would improve the teaching as well as employ qualified women. Enter the religious scholars. Women surely cannot teach in a boys’ school, where they would encounter
male teachers. But the religious establishment objects even to little boys attending school with little girls and sharing their female teachers. Thus female teachers for boys are permitted only in private schools. Meanwhile, most Saudi men don’t want to teach school at all, so yet another occupation is filled by foreigners.

Whatever the complex of its causes, high unemployment is producing disillusionment among young Saudis. Government wealth isn’t created by taxing the enterprises and incomes of Saudi citizens but rather comes from oil. In the eyes of most young Saudis, that oil revenue is simply buried treasure, and they expect to get their full share.

Unlike the generations who grew up before the oil boom of the 1970s, this young generation has never known harsh deprivation. As a result, the young feel little if any gratitude to the ruling Al Saud family for providing free education and health care and cheap gasoline, water, and electricity. These they feel they deserve. Instead, they resent what they don’t have, by comparison with the ostentatious opulence that oil has funded for the royal family and some of the privileged private elite. “Ask not what you can do for your country but what your country can do for you” is the mentality of most Saudi youth.

Saudi optimists argue that so long as global oil prices remain anywhere near current levels, the regime can survive all sorts of economic inadequacies and inefficiencies. That proposition, however, now is being tested.

A 2008 color photo of a Saudi Gulf War veteran and his wife and nine children living in a tent in Mecca, the holiest site in Islam, speaks volumes both about poverty and about the failure of government and individual Saudis to live up to the teaching of their religion to care for the poor.
Arab News
ran the large photo prominently atop page three. The veteran of the war to liberate Kuwait described how he had become destitute when rising inflation made earnings from his taxicab insufficient to cover rent and food. As a result, he gave up his house for a tent. “
I pity my children,” he told the newspaper. “Sometimes they faint because of heat and insect
bites.” (The following day the newspaper carried another story—the account of an anonymous Saudi donor who had stepped forward to give the veteran a home.)

In addition to government programs for the poor and unemployed, there also are a number of efforts by prominent private citizens to create jobs to lift Saudis out of poverty. Abdul Latif Jameel, a wealthy Jeddah businessman, funds scores of job training centers around Saudi Arabia to teach the poor simple skills like cooking, sewing, and retail sales. But in another Saudi paradox, the primary obstacle to creating jobs is the government itself. The grandiose new programs that the government announces with regularity are largely propaganda and increasingly are seen as such by cynical Saudi citizens. Whenever one grand plan fails, government spinners all too often react by announcing a new one, under a newly designated government agency, with a new acronym, a new headquarters, and of course, a new budget.

Gone is the General Organization for Technical Education and Vocational Training, created in 1980. It has been replaced by the Technical and Vocational Training Corporation (TVTC). But little of substance has changed. The TVTC has sole responsibility for promoting vocational education in the kingdom. The Higher Education Ministry, which runs the kingdom’s twenty-five public universities, and the Ministry of Education, responsible for the 5.5 million Saudi youth in both public and private schools K–12, are the other two major institutions responsible for preparing young Saudis for the world of work.
The latest five-year development plan provides for spending a whopping 350 billion Saudi riyals (some $100 billion) on education and training between 2009 and 2014, a sign that the government is eager at least to be seen as reversing its poor record for educating and training youth.

The kingdom’s amply funded training programs don’t work well for many reasons, including a shortage of Arabic-speaking trainers. A visit to the new High Institute for Plastic Education, one of the kingdom’s eighty vocational training centers, some forty-five minutes outside Riyadh, is illustrative.
Everything is state of the art, including a new
$19 million building equipped with nearly $40 million of the latest plastic fabrication equipment from Germany, but the center is staffed by experts from Japan, the Philippines, Indonesia, and India, none of whom speak Arabic. It is the same at a center that instructs auto mechanics, and at another seeking to train electricians. Even if the trainers could talk to the students, most of the young Saudis appear too sullen and lethargic to want to learn. Many of the trainees appear to be interested only in the government stipend they receive for showing up.

If training Saudi men raises a number of complex issues, training women is even more complicated. For men, at least, statistics are available showing the kingdom’s need for electricians, plumbers, mechanics, and auto repairmen. But no such data exists on requirements for female employees—or even what jobs women will be allowed to hold in five years. Teaching is saturated, and 250,000 women are waiting for available teaching jobs. How many women might be willing to work in gender-sensitive fields like marketing or accounting, where men now dominate, isn’t known; nor is it clear what roles Saudi society might allow women to fill in the future.
One sign of how badly women want to work: some 25,000 women applied for 480 places in technical training colleges in Riyadh, Al Hasa, Tabuk, and Buraidah.

It will take more than training to persuade Saudi men to take jobs that involve manual or menial work, even though many unemployed Saudi men are qualified for little else. The majority of the 8 million foreign workers in Saudi Arabia serve as maids, nannies, drivers, sales personnel, cooks, and waiters—all jobs Saudis shun as unsuitable. From Saudi homes to shop counters to factory floors, these foreign workers from India, Pakistan, Bangladesh, and elsewhere keep the wheels of the Saudi economy turning. A much smaller number of skilled technical and managerial talent from Asia and the West do jobs that few Saudis are yet capable of doing. In sum, few of the expats are contributing special skills and expertise to the Saudi economy; almost all are doing less specialized jobs that Saudis would be fully capable of doing themselves.
Indeed, the influx of foreign menial and manual workers, rather than contributing to the Saudi economy, winds up being a drain. These workers exist at a subsistence level and remit the bulk of their collective earnings to their families in their homelands rather than use it to fuel the Saudi economy.
Remittances from expat workers surged 20.3 percent in 2009 to 94.5 billion Saudi riyals (roughly $25 billion), an 84 percent increase from 2005.

In the dusty expanse of industrial warehouses that stretches many miles between Dammam and Al Khobar, in the kingdom’s Eastern Province, is Zamil Steel, begun as a joint venture in 1977 but now entirely owned by the Zamil family, a band of twelve brothers, all educated in the United States in the 1960s. As the oil boom began, the brothers returned to the kingdom armed with education and a determination to take advantage of government loans to enrich their families and help develop their country.

Yet more than three decades later Zamil Steel’s 6,200 employees are only 25 percent Saudi. That’s because the majority of the work involves hot, grimy manual labor like welding, which Saudi men spurn.
To meet government goals of “Saudization,” Zamil Steel pays beginning Saudi welders 2,300 to 3,180 riyals ($620 to $850) a month, plus an additional $135 transportation and housing allowance beyond that paid to foreign laborers.

Zamil Steel builds warehouses and hangars as well as towers for high-voltage lines and cell phones, selling 70 percent of the output inside the kingdom. A tour of the factory floor finds few Saudis on duty—the bulk of the workers are from India and the Philippines. Such foreign laborers generally come on contract for two or three years, work for low wages, live in substandard dormitory housing, and work ample overtime, both to earn more and because there is nothing to do with their off time other than sleep.

Abdulrahman al Zamil, chairman of the Zamil Group, is one of the kingdom’s most colorful and outspoken businessmen. A wiry elderly man with piercing eyes and a white goatee and mustache, Zamil has a no-nonsense, bottom-line
view of “Saudization.” “
When you build a building you get insurance,” he says. “Saudization is insurance for us. But businessmen are selfish and want to look for a low-cost foreign worker. Without jobs, Saudis will wreck our nation.”

The Zamil Group, established by Abdulrahman’s father as a modest trading company in Bahrain in the 1930s, grew to global scale with sixty sectors of business in some sixty countries employing twelve thousand people, thanks to rapid industrial development and easy government credit in Saudi Arabia in the 1970s. Zamil recalls the family’s first loan from the Saudi Industrial Development Fund, for 1 million Saudi riyals, to launch an air-conditioning business in the Eastern Province. “
My brother wanted to see the cash and carry it to Al Khobar so he took it in a bag by airplane. We never thought he might crash and we would lose it all.”

Despite his own difficulty with recruiting Saudi laborers, Zamil keeps trying and pushes his business colleagues to do the same for their own self-interest in Saudi stability. By Zamil’s reckoning, 74 percent of the estimated 8 million foreign laborers (7 million legally and at least 1 million illegally) in the kingdom are engaged in retail and services, so this is the place, he argues, to focus and force “Saudization.” But this idea quickly runs afoul of cultural and religious obstacles. Saudi men do not want service jobs, while women are not permitted to work in most retail shops, where they would come in contact with male sales clerks and customers.