Introduction

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 
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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  

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 
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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.

Overview  on the Campaign

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 Clause No. 39 which illegalize change of 
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border-crossing individuals, by detaining, punishment, and deporting them. 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 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 
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stated that these actions will help the market “increase the nationalization  percentage in the facilities,” 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.

The Saudis. 

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 
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control of capital in the private sector. Citizens have become increasingly  reliant on the social and economic benefits provided by the state, and on the  other hand, state has become independent of society as oil revenues spared the  state the need of collecting taxes from citizens.

Thus, citizens.

Thus,  over the years of the second oil boom, the percentage of Saudi workers to the total labor force accelerated downwards from  74.8% in 1975, to 47.3% in 1980, to 33.3% in 1990. By the dawn of the ninth  decade, with the decrease of oil price, increase of population, and inability 
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whiles citizens themselves find it greedy, opportunistic, and lacking proper  working conditions. As both sides this undesire, Al-Shihabi argues that GCC  governments opted to substitute its Arab employees in their bureaucracies with  citizens, with decreasing expenditures on developmental projects.

Oil 

Oil  price increase from $22 dollars in 1990 to its peak, $144 in 2008 which allowed for the accumulation of approximately $2  trillion available for use in mega projects, which promoted the private sector  to continue importing foreign labor, making the population growth rates in the 
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recommendations of International Monetary Fund and International Bank. One of  the characteristics that differentiates the foreign labor this time is reliance  on them by ordinary citizens as a source of income, not just major capitalists. 

With 

With  the saturation of the public sector, some citizens has opted for the private sector, not as employees but rather as  employers through renting multiple-story buildings and shops, trading of visas,  or working as a front image of establishments managed by expatriate workers, 
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distributed between small- and mid-size enterprises and domestic jobs. The  sponsorship system (kafala) served as one the ways to distribute oil wealth  through the importation of cheap foreign labor and controlling the surplus  value it produces.

Before produces.

Before  the Campaign

In the beginning of 2013, the total labor force  was 11,286,744, with employed being 10,634,733, and non-Saudi employees were  6,003,616, which is 56,45% of the total employees. Consistent with our 
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“services” occupations; and by sector 26%.5 are in construction, 22.3% in  wholesale, and 15% in domestic jobs. In fact, three quarters of jobs created by  the Saudi market in the three years between 2009-2011 were fulfilled by foreign  workers.

Apparently, 

Apparently,  most of the the jobs created by the Saudi markets does not require high levels of education. Statistics point to  weak qualification of labor force as the working permits for professional  occupations that require “high or very high qualification” were only 12% of the  total permits.

Stances 

Stances  of Stakeholders

Interests of business persons and firms are  represented through the Chambers of Commerce in 28 cities/provinces across the  kingdom, under the umbrella of Council of Saudi Chambers. Chambers of Commerce 
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appointed by the Ministry of Commerce and Industry. Business persons and firms  were cautious at best, and alarming and condemning at worst, while trying to  show up supportive of enforcing the Residency Laws and Law of Workmen and Work,  and ending unemployment among Saudi youth.

On youth.

On  the highest level of business owners, after more than  a year of expiry of extended  grace period, Director of Council of Saudi Chambers, Abdulrahman Al-Zamil was  careful to be in support of the correction campaigns undertaken by the 
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representing them such as the Chambers of Commerce, several investigations  reported that their fears of the campaign of the ministry. One reported a small  business owner saying that the difficulty of obtaining legal work visas might  drive them out of the market.

Reactions market. 

Reactions  of Foreign Labor and their Governments

Even though there are no accurate governmental  data on the number of foreign labor in Saudi by nationality, al-Riyadh  Newspapers reported estimates of the on the migrant labor by nationality, 
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million and 453 thousands, second place was shared was Egyptians and Pakistanis  that numbered a million and 6 thousands, fourth place was Yemenis that numbered  894 thousands, and fifth and sixth places were occupied by Filipinos and  Bangladeshis, numbering 447 thousands and 391 thousands respectively.

Labor-exporting 

Labor-exporting  governments were worried about the fate of its citizens affected by the Saudi campaign. Indian embassy, who is  responsible for around two millions, mobilized and was in continuous  communications with Saudi Ministry of Labor and  
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workers in violation with the Residency Laws. In a report covering the news of  arrest of 30, a Fillipino embassy official stated that  “Needless to say, the embassy is monitoring  what is happening to our people there and it is ready to extend assistance to  any Filipino who is arrested because of the violation of the Saudi labor law.”

But law.” 

But  not all migrants were recipients of care by their embassies as it was the case of Indians and Filipinos. Yemenis, for  instance, didn't get any official help by their embassy, even though they  represent the second largest community of Arab workers in the Kingdom (approximately 
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role by the Ministry of Migrants Affairs and the Yemeni embassy in Riyadh. The  secretary of the Yemeni community in Riyadh was reported saying, “the Ministry  of Migrants Affairs  does not want real  representatives of migrants, but rather clients serving as tribal sheikhs.”

Field sheikhs.”

Field  Results of the Security Campaign

With the end of grace period announced by the  King, Ministry of Interior started it field campaign to punish violators of  Residency Regulations and Law of Workmen and Work, and it has not stopped until 
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Yemenis disproportionately, a former official in Saudi embassy in Yemen  answered, “if the correction campaign targets Yemenis and exclude others, the  process of issuing new work visas would have not continued daily in the  embassy.”

Other embassy.”

Other  statistics issued by the Ministry of Interior might be utilized to gauge the degree of nationality community was  affected, without implying that the campaign targeted specific nationalities.  According to statistics of immigrants caught at the Saudi borders for Shawwal 
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immigrants ranged from 44 thousands to 19 thousands during the months of the  1435 AH (November 2013 - October 2014). It can be assumed that a not very low  percentage of those who try succeed into getting into the kingdom, otherwise no  one would try.

These 

These  statistics are not surprising when considering the wall installed on the Saudi-Iraqi border, and the difficulty of  crossing the sea, “because of the advanced techniques and radars that the guard  borders possess enabling them to detect crossers by sea” as the spokesperson of 
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period that ended in November 2013, the number of deported Yemenis in March  2013 totalled about 130 thousands, and security Yemeni officials expected the  deportation of additional 80 thousands with the beginning of the security  campaign in November 2013.

Thus, 2013.

Thus,  even though the correction campaign has not appeared to target specific nationalities, it probably affected  disproportionately the labor of a country that tied to Saudi culturally,  socially, and geographically, yet with much lower income. The negative 
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Yemenis had been followed by a civil war between the north and the south in  1994. The ramifications of the correction campaign might go beyond the borders  of the Kingdom, affecting the internal situation in Yemen, which does not seem  to be a considered consequence of decisions-makers.

There 

There  are no available data from the Ministry of Labor or Ministry of Interior on the breakdown of deported labor by sector and  professional occupation. However, labor-intensive sectors would be the most  negatively affected, when 84.5% of the labor is concentrated in the private 
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Chamber of Commerce and Industry, Abdullah Radwan, said that “labor market is  in chaos because of the large number of deported foreign labor during the  correction campaign,” and “firms and contractors are facing incomplete  projects, with high wages and weak demand being imposed.”

According 

The  Peculiarity of the Campaign

Announced goals of the campaign do not differ  substantially from the Saudization policies undertaken by the government since  the 90s as a solution to the problem of increasing unemployment among Saudis. 
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carried by the Ministry of Interior and the closing of violating firms and the  rampant checkpoints in cities, and the horror and feeling of insecurity that  prevailed among the irregular foreign labor with the advent of “law and order”  phase.

The 

The  force used by the Saudi authorities prompted condemnation from western human rights organization. Joe Stork, deputy director  of Human Rights Watch's Middle East and North Africa division, stated that  “Saudi authorities have spent months branding foreign workers as criminals in 
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crackdown. Now the Saudi government needs to rein in Saudi citizens who are  attacking foreign workers.” The organization documented the violence witnessed  in Manfouha neighborhood south of Riyadh, where many numbers of Ethiopians  reside.

On 

On  the other hand, official authorities justified the campaign by promising that it will provide jobs for Saudis, and Ministry of  Labor announced that it will contribute to the opening of thousands of jobs for  citizens, male and female, but economic reasoning and statistics show that  these promises have not been achieved.

According 

According  to the numbers of the Central Department of Statistics and Information, unemployment rate amongst Saudis for  June 2013 was 11.7%, compared to 11.8% at the beginning of 2013, and 11.7%  midyear 2013. Then, overall, the campaign didn’t help to substantially decrease 
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The likely explanation for the failure of the campaign in decreasing the rate  of unemployment is that most of the unemployed are Bachelor's degree holders,  with 51%, followed by high school certificate holders, with 34.4% while the  majority of deported foreign labor possess low educational qualifications.

Economics 

Economics  of foreign labor

To prove the positive outcomes of the campaign on  employment of Saudis, Adel Faqeeh, the Minister of Labor affirmed that 25o  thousands took advantage of the employment services during the campaign. In May 
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implies that the presence of this foreign labor is harmful to the interests of  Saudi citizens and aggravates the problem of unemployment, and deporting them  -through these campaigns- will result in substituting them with local labor.  But how accurate are these claims/expectations from an economic point of view?

The view?

The  argument that states deported foreign labor will be replaced by local labor ignores the slopes of supply and demand. For  the sake of simplicity, we can assume that, without foreign labor, the supply  of local labor will be weak with high wages (“Local demand” in the graph). 
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Then, in the most extreme case, deporting all foreign labor will not result in  replacing them with local labor, but rather will the number of local workers  will increase with a lesser number, with an increase in wages in elimination of  many jobs occupied by the foreign labor.

Thus 

Thus  the claim that deporting irregular foreign labor with result in replacing it with local labor seem far-fetched under  current market circumstances. But what is the effect of foreign labor on the  general level of wages in the local economy?

Theoretically, economy?

Theoretically,  on the short-term, immigration or foreign labor decreases the wages of workers they are in competition with and  increases the wages of complementary workers.   Low-wages foreign labor increase competition on low-skilled jobs. In the  same time, high-wages local labor are benefited because they will pay less in  return of services that low-wages foreign labor provide, which enable them to  specialize in the jobs that suits their skills and educational levels.

For 

For  instance, the immigration of one million elementary-school-educated workers might result in a severe competition with  the elementary-school-educated local workers. In the United States of America,  for example, wages of high-school dropouts are negatively affected by 
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be an increase in prices and elimination of many jobs. Even if there is  partiality for local workers in foreign-labor-intensive sectors, the new laws  such as the minimum wages for nationals will make the former safe from such  negative effects of completion and the wage decrease it causes.

The 

The  unintended consequences such as increase in prices and the elimination of numerous jobs, were evident in the construction  and contracting sector, where newspaper reports talked about a 150% increase in  wages with the start of inspections that followed the end of the grace period. 
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decreased. While the employers were negatively affected as the return on  capital and investment decreased which might drive many of them out of the  market, which explains the complaints expressed by many employers in sectors as  non-foreign-labor-intensive as the healthcare sector.

Albeit sector. 

Albeit  the results above, the Ministry of Labor shows sign of being in preparation of renewal of the correction campaign, as  Adel Faqeeh, Minister of Labor has stated that at the end of 2014, “the  correction campaign will return strongly because there is no justification for 
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on this security side in his statement to the media, where he said that  “enforcing the regulations is a must on all levels, whether it’s against  irregular foreign labor, businessmen or Saudi individuals,” adding that the  campaign is beneficial to the private sector.

Conclusion

After sector.

Conclusion

After  more than year of the end of comprehensive campaign carried by the Ministry of Labor and Ministry of Interior to correct  the status of irregular workers, and deporting more than a million, numbers do  not show an improvement in unemployment rate, as it has been hovering slightly