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The Announcement of Saudization
One of the first countries to fully implement a nationalisation scheme was Saudi Arabia. As part of their Vision 2030 reforms, the government passed the Nitaqat law in 2016 which targets companies in any private sector with more than 9 employees to hire a certain percentage of Saudi nationals. The percentage is dependent on the size of the company and which sector it operates within. If the company has fewer employees, it is exempt from the law but must employ at least one Saudi national in its work force.
There is a large number of expatriate workers in the private sector currently, mostly originating from Pakistan, India, the Philippines and Arab countries such as the Lebanon or Egypt. The changes were implemented in stages, beginning in September 2018 and being completed in January 2019, with each stage targeting a different sector. After this date, companies within these sectors must be able to prove they meet the employment regulations, which has caused a significant drop in the amount of visas being issued and renewed during this period.
These new quotas imposed on companies, along with the increase in fees and taxes charged to foreign workers and their families from the middle of 2017, are intended to retain skilled foreign labour in the country. It has been rumoured that as Nitaqat progresses, the fees will be decreased or cancelled altogether as the employment balance is reached.
What effect has Saudization had on the economy?
According to International Investment, the drastic decrease of expat workers in sectors in which they are traditionally employed has caused an employment crisis in the country. Some 1.5 million foreign workers have left since the implementation of Saudization in 2016, whilst only 50,000 of their jobs have been filled by nationals, according to General Authority for Statistics.
Much of the retail sector has seen store closures due to the new regulations. There has been a rise in illegal activities to try and circumvent the Nitaqat, known as “tasattur” where a Saudi national is the named owner of a business but pays expatriates to run the store in their name. It’s estimated that 30% of the retailers which fall into the sectors under the employment rules have been forced to close in the last 6 months alone.
Further Changes to Expat Worker Visas
The UAE and Malaysia are the most recent countries to announce plans for new employment regulations. They both have big draws for foreign workers, with the UAE having the largest expat community in the world and Malaysia being known as the cheapest place to hire expats for job opportunities.
The Malaysian foreign work visa system currently has three tiers, ranging from Category I to Category III. Category I is for jobs paying RM10,000 and up, Category II is for work paying between RM5,000 and RM10,000, and lastly, Category III is for those earning below RM5,000. For local companies, there is a big draw to hiring skilled workers who come to the country seeking jobs in the lower tiers.
The government is planning to phase out Category I and II, only granting work visas to expats whose positions will see them earning over RM 10,000. This is intended to ensure that local companies cannot simply rely on cheaper foreign labour and open up lower levelled skilled jobs to its nationals again, boosting employment within the country.
Official employment bodies however are expressing concern at the announcement of the plans, making the point that the government must be careful to differentiate between foreign workers who intend to work in the country on a single project for a short period of time and expatriates who wish to settle there long term. Both of these are extremely important to the success of the Malaysian economy, with the Federation of Malaysian Manufacturers president stating “if Malaysia does not absorb such talent, other countries would readily do so and it would be Malaysia’s loss.” It’s clear that there is strong opposition towards these changes, pointing to many areas of improvement which could be made to boost the employment situation in Malaysia without the need to target immigration.
Meanwhile, the UAE is focusing on expanding it’s current range of specialist and vital sectors as well as boosting some existing ones, with the aim to create more positions rather than trying to give roles generally filled by expats to UAE nationals. This limits the possibility of a Saudi-esque crisis by retaining vital labour in the country, while diversifying the economy to create more job opportunities that could potentially be filled by expats in the future.
Does this mean that jobs for expats will be difficult to find?
Although these new regulations sound like bad news for expat communities, in reality the situation isn’t so clear cut. There are many changes coming in to benefit foreign workers in these countries.
Schools in the UAE are now generally issuing 2 year contracts to their employees as standard, to enable them to gain better experience and connections within the country and find further employment more easily when required.
When a work contract expires, the current time frame to find a new position before having to leave the UAE is 1 month. A top banker in the country is campaigning for this to be extended to 6 months, a more reasonable window in which to find suitable employment. There is a fear that an expat may take any position in order to stay, which could see a loss of skills where they are needed.
There have long been calls to further extend residency visas for expats in the Emirates, and from February 2019 the government began taking applications for 5 and 10-year permits for business owners. There are strict guidelines to obtain them, but this is certainly a big step forwards for workers looking to extend their stay in the country. There are also changes being implemented to make it much easier for expats to sponsor their families to join them in the UAE, which is relaxing what was previously a confusing and strict process.
Across the way, Qatar have recently become the first Gulf state to issue permanent residency visas to expats, a monumental decision which we predict will see many other countries in the region follow suit. There is a desire to attract and retain qualified talent, and the chance of settling in the country long-term is likely to appeal to many workers.
The UAE and Qatar in particular have relied heavily on their expat populations to turn them into the successful business hubs they are today. The likelihood of their governments endangering their infrastructures by taking a similar approach to Saudi Arabia is unimaginable. Their approach feels more like an attempt to give improved career prospects to nationals and to build on their current success as opposed to a reduction in expat numbers.
Overall, the changes being made actually seem to be making life easier for overseas talent wishing to make these states their home in the future, rather than decreasing the possibility of landing a dream job overseas. Having handled over a thousand documents since the changes came into place, we certainly haven’t noticed a decrease in the demand for overseas applicants in many of the popular job roles we serve, such as teaching, finance, aerospace, engineering, construction and sales.
What does this mean for expats going forwards?
It’s clear that any current or planned changes won’t negatively affect those wishing to start a new life in one of these countries in the future. If you are intending to relocate overseas, you will likely need legalisation services as part of your residency visa application process. Wherever your documents were issued, and wherever you’re planning to move to, we can help. Simply visit our site and request a personalised quotation based on your requirements.
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