Irregular Workers Correction Campaign in Saudi Arabia

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In April 2013, the then Saudi King, Abdullah bin Abdulaziz Al-Saud issued a direction to the Ministry of Interior and Ministry of Labor to grant workers who are in violation of the law of labor and residency a three months grace period to correct their status, under the penalty of deportation._king_2013 Directions came after the two ministries started a inspection campaign in the premises and facilities of firms to make sure of the validity of its workers’ legal documents, whose count could mount up to hundreds of thousands, according to local newspapers._king_2013 These inspections came to be known “the correction campaign of the status of foreign labor.” This paper will look at direct results of the campaign in light of the goals set by the labor market regulating agencies, and will provide a background on the historical context of the labor market and the political economy of Saudi Arabia, and the wider Gulf Cooperation Council (GCC) countries.

This correction campaign represents a vital case study for the policies of the GCC countries in the area of labor market and demographics, as it is the first-of-a-kind initiative to adopt active labor market policies (ALMP) to encounter the structural problems in the labor market and demographics. The campaign has two prongs: providing subsidies for firms that employ Saudis and discourage employing non-Saudis by increasing their cost, and enforcing the law on foreign irregular workers. Since Saudi is the largest country among GCC countries in terms of GDP and population and because of the far-reaching implications of the campaign on millions of citizens and noncitizens,  it has become of vital importance to study it, starting from its causes, stances of the different stakeholders, to its results and implications.

The main hypothesis of the paper is that this law enforcement campaign has had a very negative effect on specific non-Saudi communities, especially the Yemeni community, for the  accompanying media campaign that worked on demonizing the foreign labor, setting it as a scapegoat for the economic and security troubles in the Kingdom. On the other hand, the effects of the campaign on the unemployment rate among Saudis has been very limited mainly because the majority of occupations of the foreign labor require low skills with limited wages, which Saudis are reluctant to take on. Economic implications are mainly an increase price levels and and delays in completion of projects and construction of facilities which depend on the labor of foreigners. This raises questions on the effectiveness of the campaign, and whether it represents a long-term solution for the structural distortion in the labor market in the Kingdom.

  1. Overview on the Campaign

The governmental direction came after four months of the legislation of Committees of Management and Human Resources in the Shoura Council a proposal to deal with workers in violation of labor and residency laws, through amending the Article No. 39 which illegalize change of sponsor, making the law more strict._visa_2013 it also abolished the Article No. 233 of the law which include punishments for violators of the former article. the proposal burdens the security agencies with the responsibility of chasing workers under the sponsorship of other than their original ones, self-employing foreign workers (commonly known as “amala saeiba”), absentees, and apprehended border-crossing individuals, by detaining, punishment, and deporting them._visa_2013 The proposal details the punishment against firms and individuals that employ irregular workers, including preventing and restricting them from recruiting foreign workers in the future.

Irregulars workers are generally divided into three types: expatriate workers who are still in the country despite having their working permits expired or revoked, expatriate workers with valid working permits but they have “escaped” from their employers and have been reported as “escapees,” and expatriate workers working for other than their original employers without updating their information according to the Residency Regulations and Work and Workmen Law. The Minister of Labor then, Adel Fakieh, stated that these actions will help the market “increase the nationalization percentage in the facilities,”_faqih:_2013 and will help Saudis opening their own business after getting rid of “illegal competition.” The Ministry reiterated afterwards that the campaign will help increase the number of working Saudis._60_2013

The surprising decision has caused a shock in business and official circles and in labor-exporting countries due to the millions of expatriate workers in Saudi. Branches of Ministry of Labor and and General Directorate of Passports of Ministry of Interior were overcrowded with numerous workers seeking to update their information according to the Residency Regulations. After the Ministry of Labor and General Directorate of Passports emphasized that the grace period will not be extended,_-jawazat:_2013 a royal direction to extend it by three months,_joy_2013 indicating how official agencies were taken by surprise with updating the information of over one million workers. By the end of the original period, more than half a million were forcibly deported, which increased to around a million after the extended grace period out of 6 million workers.Iaccino 2013 The status of 4.7 million workers was corrected._over_2013

In an attempt to prove its positive effects, Adel Faqih, Labor Minister, announced that 250 thousands Saudis have benefited from the employment services during the correction campaign. In May 2014, Mufrej al-Haqbani, Vice Labor Minister, announced that the correction campaign has increased the rate of employment from 35 thousands t0 65 thousands monthly, incre