12 March 2007 00:00 [Source: ICB Americas]
Saudi Arabia is considering a plan to increase the cost of hiring foreign workers in order to boost employment among the local population, a source close to Saudi Arabian General Investment Authority said in an interview with ICIS.
The kingdom, like a great deal of the Middle East, has committed to reducing the level of unemployment by targeting specific industries, such as the petrochemical, manufacturing and services sector.
To achieve this, Saudi Arabia is looking at how it can raise employment levels, particularly among those in their twenties.
According to newspaper reports, Saudi unemployment has risen from 9.7% to 12% since 2002, and there are 6.5m foreign workers in the kingdom.
The majority are migrant workers willing to accept lower pay than Saudis.
However, the petrochemical industry is not regarded as the savior of mass employment.
"The oil industries and their directly associated petrochemicals industries are characterized by being highly capital-intensive but labor requirements are limited," said Moayyed al-Qurtas, CEO of Saudi-based petrochemical company Tasnee at a recent industry conference in Dubai.
This is why the kingdom is attempting to move further downstream into the converter and manufacturing arena. Al-Qurtas added that it would be strategically important to locate these industries close to customers who sell in the retail market.
"The Gulf region, with its growing population and high level of income, is becoming more important in consuming a substantial portion of finished goods from petrochemical derivatives," he said.
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