There is no relationship between the Ministry of Labor and unemployment

There is no relationship between the Ministry of Labor and unemployment

Fahad Deghaither

By Fahad Deghaither
In developing countries, the Ministry of Labor is always blamed for the lack of job opportunities in the market. For example, the Saudi Ministry of Labor has been blamed many times for the rising number of college graduates who do not find work. I am sure you remember the late Labor Minister Ghazi Al-Gosaibi and how he was blamed and in some cases verbally abused because Saudization percentages were low during his time in office. Former Labor Minister Adel Fakieh also received a barrage of criticism for the same reason.

People seem to mistakenly think that the Ministry of Labor is responsible for finding jobs for Saudis. In fact, this is not the ministry’s job. The ministry is responsible for regulating the relationship between employers and employees and passing laws on this. It is also responsible for publishing information about unemployment rates, average salaries, etc. The government and the ministry are not responsible for creating job opportunities.

I hope the ministry will conduct an exhaustive study about the current jobs available in the market. This study should not focus on the number of jobs, rather on the type and level of these jobs and the salaries, perks and other allowances that they offer. If such a study were to be conducted, then we would discover that the private sector labor market is crippled. We would discover that there are only two sectors that provide jobs and there are millions of expatriate workers who are ready to accept low salaries. In fact, there are no jobs that meet the expectations of ambitious Saudi college graduates, even those who graduate from Western universities.

Of course, there are exceptions. The banking sector creates a large number of job opportunities because the banking services have seen major developments since the 1990s thanks to the Citibank Group, which established the Saudi-American Bank. In fact, the Group has taken the banking industry to unprecedented levels in the Kingdom and the Middle East. More importantly, the Group needed a large number of highly qualified employees to keep forging ahead in achieving success.

Another example is that of the four telecom companies operating in the Kingdom. These companies continue to compete fiercely to attract more customers. As a result of this competition, they need more employees. That is why Saudis can find lucrative jobs in these companies. Their marketing departments need dozens of employees, not only one or two. Their customer service departments need thousands of employees to ensure that the company is ahead of its competitors in the market. The finance department uses enormous and sophisticated invoicing programs, which are run by qualified employees.

Let us assume that the banking and telecom sectors did not have important players like the above, where would the thousands of employees working in these two sectors go? Aramco, SABIC and other similar companies play a pivotal role in creating thousands of job opportunities for employees. However, these companies provide only 25 percent of the total number of jobs in the private sector. This means that we will continue to worry about high unemployment. Therefore, the ministry needs to conduct the above-mentioned comprehensive study to understand the real problem and work on solving it using new methods and mechanisms.

What about the remaining 75 percent? How are we going to create jobs for them? Some might say the best solution is to stop relying on expatriate workers. This is illogical. The Saudi market has thousands of job opportunities but the majority of jobs do not require highly skilled workers. For example, jobs related to maintenance services account for the majority of unskilled jobs.

The hospitality sector, especially furnished apartment buildings, employs thousands of expatriate workers who do not know anything about hospitality but they take on these jobs and get paid low salaries. Fast food restaurants employ a large number of workers who can do different tasks that do not require many skills. Groceries employ hundreds of thousands of untrained expatriate workers, as most Saudis would not work in a grocery store because the salary is low. Unfortunately, there are no tourist activities in our country. We do not attract tourists wishing to see archeological sites. These sectors and activities account for the above 75 percent.

The Ministry of Labor should not be blamed when the investor hesitates or thinks twice before he or she decides to invest in certain sectors. If one wants to know the reasons why investors are not interested in certain sectors, one should ask the Saudi Arabian General Investment Authority which has become part of the Ministry of Commerce. They have all the answers to any questions related to the above reasons. An attractive investment environment should be created to spur investors to invest. Once we have realized the main problem and found the proper solutions, we can say we have taken the first step in the right direction.