Saudi Arabia has been taking serious steps towards nationalizing local industries in a bid to tackle chronically high unemployment rates among citizens. The country's largest firm and the most profitable company in the world, Saudi Aramco, recently announced it's joining in on these efforts.
The revelation came during an address by the company's vice president, Mohammad Al Shammary, at the opening session of the three-day Saudi Logistics Conference. In his speech, the official said the company has already "launched a comprehensive localization program in an effort to develop services to contribute to raising the level of local content in the field of energy to reach 90 percent by 2020."
This increase of local content will lead to a rise in the contributions of small and medium companies to the kingdom's gross national product, which will, in turn, enable the firm to provide thousands of employment opportunities to nationals working in the energy industry.
Saudi Aramco is currently working on developing the King Salman Energy Park, as Al Shammary stated, which is being built on an area covering more than 50 square kilometers. The city is expected to attract the largest global suppliers and service providers in the energy sector.
"Once completed, the city will contribute the annual income of up to SR22 billion to GDP. It will also help the localization of more than 22 new facilities, in addition to providing tens of thousands of direct jobs," the executive added.
In addition to building a huge futuristic city, the company is also exploring the introduction of artificial intelligence to its facilities.
Saudi Arabia is still moving towards nationalizing its workforce
Despite the fact that the Saudization of several industries is facing major obstacles, Saudi authorities aren't slowing down efforts to nationalize jobs in the country. In contrast, officials are signing more agreements to Saudize major parts of several sectors. In September, the kingdom announced it will be nationalizing large parts of its agriculture industry.
Saudization comes in line with the kingdom's Vision 2030 and National Transformation Program. Both initiatives are focused on decreasing the country's chronically high unemployment rates by nationalizing jobs usually filled by expats. However, in recent months, many have criticized these efforts and questioned their success given the fact that local unemployment rates have been unaffected by the exit of hundreds of thousands of foreign workers from the kingdom.
Though vacancies are opening up for locals, Saudi business owners have previously disclosed having difficulty getting nationals who are "accustomed to undemanding work in the state sector and generous unemployment benefits" to work for them. Some local private companies even went about finding loopholes to a law that required them to hire a specific percentage of Saudis when they couldn't find locals to fill up jobs. They resorted to a process called "fake Saudization," which involves hiring Saudis and paying them low salaries not to work but to be legally registered as workers at their establishments.
Saudized sectors at a glance
The kingdom issued a royal order early September banning local government departments from seeking consultancy services from foreign firms and limiting them to working with Saudi companies instead.
In recent months, the country partly nationalized its retail sector, which was previously dominated by expats and foreigner input. Last year, there were 330,000 nationals working in the retail and wholesale sector, versus 440,000 (men and women) in 2019.
The country's public sector in its entirety is also moving towards Saudizing its entities. In 2017, the kingdom's Ministry of Civil Service ordered all ministries and government departments to terminate contracts with expatriate workers within three years. Only Saudi nationals will be able to replace those who lose their jobs in the government.