Saudi Arabia considers plan to restrain expat remittances

Akbar Ponani | Nov 26, 2011, 07.05PM IST

JEDDAH (SAUDI ARABIA): Saudi Arabia is seriously thinking of imposing some kind of curbs on the huge amount flowing out through expatriate employees in the country. It may suggest a limit in foreign workers’ remittance out of the country in which they constitute nearly one third of population. Concern over expats’ remittance arose especially after the central bank data had disclosed that the amount transferred outside the country in the second quarter of the current year was $7.1bn which is equivalent to 17 percent of Saudi Arabia’s current account surplus at a time of historically high oil revenues.
Saudi Arabia is keen to use more of its monetary resources domestically under a $130bn government spending plan announced this year. It also wants to develop its economy reducing its reliance on oil revenue. As some observers have remarked – “the Saudi economy has gone through a number of rough patches over the decades without compromising the basic stability of the monetary situation.”Expatriates account for nine out of 10 private-sector jobs in Saudi Arabia, the world’s top oil exporter. They fill roles that range from domestic service and factory work to management positions in large finance companies. Almost all residents work here purely for purpose of making as much money as they can and sending as much of it back home to their families. This means their income isn’t being utilized in the strengthening of the economy of the country of their residence.

Most of the money is remitted by lower-paid workers, mostly from south and southeast Asia, who frequently carry cash with them on trips home rather than making formal bank transfers. Higher-paid workers tend to spend more of their income inside Saudi Arabia because they are more likely to bring their families with them, but they often have their salaries paid directly into foreign bank accounts.

Labour minister Adel al-Fakieh said in an Oct 22 television interview that the labour ministry was “preparing a monitoring programme aimed at reducing the huge quantity of transfers of foreign workers”. However, in the real world, it would be difficult to develop practical measures to limit remittances, partly because money can be taken out of the kingdom in many different ways.

At the same time, foreign workers are needed to keep the economy running. “Foreign workers are producing more than they consume, making a net contribution to the economy. The only way to avoid this is to have Saudi workers instead of foreigners”, said an economist in the capital city of Riyadh.

Economists also point to a perception among private companies that a substantial proportion of Saudis are unwilling to work hard, lack the skills to replace foreign workers and are protected by a legal framework that makes them hard to sack.

( Source:

http://timesofindia.indiatimes.com/nri/middle-east-news/Saudi-Arabia-considers-plan-to-restrain-expat-remittances/articleshow/10883262.cms)

“What the whole world wants is a good job. That is one of the single biggest discoveries Gallup has ever made” – Jim Clifton, Gallup Chairman and CEO

Are we witnessing a shift in global migration patterns ?

What the whole world wants is a good job. That is one of the single biggest discoveries

Gallup has ever made” – Jim Clifton, Gallup Chairman and CEO

Here is a  completely subjective observation: I think global migration patterns are shifting. In a BIG WAY.  No, I am not talking about painted Storks from Siberia, but human beings.  My hypothesis is that there is a marked shift going on in where people are choosing to live and retire. While there are several reports which will inform you of how this is happening, the human element or the nature of this shift is not being captured completely by these reports.

People will go where there are jobs. This is a simple law of nature, and more and more jobs are being created in India and China. This is also happening in tandem with the growing protectionism in the US about jobs and keeping “American jobs for American people”. As someone in the job market now, I am facing this reality on a daily basis. The amount of fear and paranoia is staggering to say the least. And un-healthy too.

I had lunch with a friend recently, and she was pointing out to me that she “does not see future” in the US, and is planning on heading over to Qatar, to join her husband; who works for a large organization there. “I don’t feel it is wise to invest in a country, which does not seem to guarantee the future of its citizens. I would rather invest it in a country which does. This is coming from a woman, who has a PhD and is one of the smartest women I know.

My guess is corroborated with this well documented report by Gallup, done in 2007, called “Global Migration Patterns and Job Creation[i]”, which sought to capture what “the world is thinking”.

Jim Clifton, Chairman and CEO of Gallup points out in the report : “ It’s the same with the 3 billion people who live on $2 a day or less — the hungry half of the world’s population. What they’re thinking is very different from what most government agencies and NGOs understand and report. While we’re rushing them food and medicine, most of them feel the only real solution is jobs”.

It seems like very few people in the policy circles are paying attention to this. While money is being thrown at all other aspects such as Health, Education, not much is being spent on job-creation.

Clifton adds  :”Another example: One of the most important questions in the world is, “What do Muslim women want?” Discovering what Muslim women want has been as big a surprise to us as anything we have ever seen. Muslim women want all the freedoms that their counterparts in the Western world have — they want the right to vote, to have the same rights that men do, and to hold leadership positions in government”.

 

 

I also believe that with a newly formed Arab world, ( in the context of the Arab spring) with a dynamic, and (hopefully) reformed bureaucracy; there will be new ways for the private sector to engage with the citizens.

I remember clearly how strongly the government and the private sector were tied together ( and still are) in the UAE, where almost everything needs “wasta”, or influence. The biggest trading families in the country are the ones closest to the ruling family.

I am assuming the same is true in Egypt, Tunisia and other countries in the MENA region too. Once this bond if broken, and new patterns of relationship are formed, there will hopefully emerge a more legitimate and equal playing field.

 

India, China : Elephants in the room ?

With the Economist obsessing about the two Asian economies almost every other week, how can one ignore them ? As an Indian, in tune with what is going on back home, I believe the future definitely is in India. Not only because I am seeing the shift in the country (as an expat, who has lived abroad for 4 yrs, I have seen a tremendous change) and arguably “progress” in those years.

Many of my friends from Maxwell School have gone back to India. A few of them who are here are considering the move back, because the “good jobs” are actually back home.

And my test-run job hunt during my visit to Hyderabad recently, with Monster jobs, got me 3 interview calls in just 1 week. It has taken me several weeks to get 3 calls here in the US.

I am convinced that this is a pattern which is going to last for a while, and that expatriate career aspirants seeking high-paying careers are better off looking at their home countries, than in the US.

This is not to sound the death-knell on the American job market, but a critical look at what is going on here.

We are living in interesting times, and also witnessing the great debates in a way, which is truly transformative and also staggering in scale. I believe that the decisions that policy makers and groups of individuals make will determine our destiny.