Saudisation programme causing project delays

Saudi Arabia’s construction Industry national labour programme as a drive to get more of its nationals employed in the construction industry is having a negative effect on the delivery of projects, according to local industry experts.

Companies in Saudi Arabia have operated since a ministerial resolution in date of June 2011, under the Saudisation programme, a system of penalties and incentives that encourages firms to employ a greater percentage of Saudi nationals.

Saudi contractors are said to be experiencing labour problems due to this requirement.

Full implementation of this was required by last year, with government figures stating that it has provided around 255,000 jobs to Saudi nationals since it came into effect.

However, a source has told local news agencies that the programme, along with the government’s visa crackdown of last year that saw tens of thousands of foreign construction workers sent home, has had a devastating effect on Saudi Arabia’s construction industry.

“Many projects in both the public and private sectors are pending.  Various buildings under construction in the Saudi capital look abandoned because workers are nowhere in sight,” said the source adding that the expense of securing visas for additional foreign workers became too great for most small contractors to afford.

“The price of visas is too costly. . . . with an additional SAR 2,400 per year for each expatriate worker.  In fact, some contractors have abandoned their projects,” he said and if in need of 50 visas or more for foreign workers they have to pay SAR 8,000 per visa.

It is said that some contractors with deep pockets are able to continue their work on projects such as the King Abdullah Financial District (KAFD), although with a reduced worker force.

Construction ‘not meeting Saudisation target’

Building contractors are struggling to meet Saudi Arabia’s Saudisation quotas and are calling for targets to be cut.

Companies in Makkah are calling on the government to cut the percentage of Kingdom nationals which should be employed in the industry from 13% to 3% because they cannot find locals with the required skills set to take the roles.

The appeal is being made by members of the Makkah Chamber of Commerce and Industry’s contractors’ committee, according to local news agencies.

Committee member Saud Al-Saedi says the government needs to be more specific about the trades which should be Saudised as it is not feasible to meet the quota in every industry.  Put simply, very few Saudis have manual labour skills.

Lawyer Saif Al-Turki, who also sits on the committee, said: “The Saudisation quota should be reconsidered because 95% of the work requires skilled workers, for which Saudis cannot be found in sufficient numbers.”

He also called on the Labour Ministry to stop Saudi workers leaving their jobs in the contracting sector and to penalise those who do.

The Nitaqat system has hit the sector hard because very few Saudis have the different skills set required for manual labour jobs and it is estimated that just 2% of construction industry jobs are fit for Saudis but only in administrative capacities.