Saudi Arabian Businesses Struggle With Rule To Replace Foreign Workers With Locals : Parallels The Saudi kingdom says it is trying to wean the economy off an oil and foreign worker dependency. Employers say it has not been easy.
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Saudi Arabian Businesses Struggle With Rule To Replace Foreign Workers With Locals

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Saudi Arabian Businesses Struggle With Rule To Replace Foreign Workers With Locals

Saudi Arabian Businesses Struggle With Rule To Replace Foreign Workers With Locals

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  • <iframe src="https://www.npr.org/player/embed/612240877/614935627" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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STEVE INSKEEP, HOST:

It's said that many businesspeople prize stability. No matter the taxes or regulations they face, there's a case to be made for keeping the rules that your business already knows. Business owners in Saudi Arabia do not have that luxury. The Saudi crown prince has decreed a dramatic shift in the economy, inviting outside investment and relying on more than oil. In principle, this could be good in the long term. In practice, there's a lot of pain in the short term. NPR's Jackie Northam visited a mall in the capital city.

JACKIE NORTHAM, BYLINE: If you're in need of any computer accessories or cell phone help while you're in Riyadh, you want to come to the Mobile Market Center. It's a two-story mall with shops selling all kinds of gadgetry. We popped into a small cell phone accessory shop, where we're offered a cup of Saudi coffee and some dates by the owner.

ABU SAUD: My name is Abu Saud.

NORTHAM: Abu Saud owns three shops in this mall. He was a happy man, and business was good until the Saudi government told him to replace his foreign workers - usually South Asians who are skilled at fixing cell phones - with Saudi workers. But they didn't last long in his shops.

SAUD: For me, I give them very high salary. But the problem - they didn't like.

NORTHAM: Abu Saud says Saudis are used to jobs in a government office.

SAUD: Each one - he liked to have a table. He's a boss - even he just graduated. He just - he want to be a boss - direct.

NORTHAM: Soon, many other types of retail outlets will also be required to only hire Saudi workers. It's causing a lot of problems for businesses, says this accountant. NPR is not using his name, so he could speak freely.

UNIDENTIFIED PERSON: During the last year, we have seen a lot of small and medium entities going of business because they cannot afford it.

NORTHAM: The accountant agrees Saudi Arabia needs to reform its economy. But the changes should be made slower, more carefully.

UNIDENTIFIED PERSON: I mean, in my office, every day I get new regulation either from the minister of commerce or minister of finance or the tax department. Everyone is changing their own regulations and the bylaws.

NORTHAM: The changes are part of a sweeping plan to wean the kingdom off its dependency on oil revenues and create jobs, especially for young Saudis. About three-quarters of the population is under 30 years old.

JOHN SFAKIANAKIS: So I think this is very welcoming because the old Saudi Arabia - to be honest, the system was not viable. The country was going to collapse.

NORTHAM: John Sfakianakis, with the Gulf Research Center in Riyadh, says the plan, called Vision 2030, is being driven by the kingdom's 32-year-old Crown Prince Mohammed bin Salman.

SFAKIANAKIS: Today, you have a very young crown prince who is ambitious, who needs to push the envelope. Why? Because demand is changing for oil. Technology is changing. Saudi Arabia needs to be part of that. And Saudi Arabia doesn't have time.

NORTHAM: For decades, oil helped Saudi's royal family keep a compact with the population. Saudis would be taken care of - free health care and education through college, cheap utilities and gasoline, often a government job and, until recently, no taxes. In return, they did not challenge the royal family's absolute rule. But a slump in oil prices since 2014 and a rapidly growing population has stretched the kingdom's budget. Bernard Haykel, a Saudi Arabia specialist at Princeton University, says now Crown Prince Mohammed wants to change the compact.

BERNARD HAYKEL: He's saying that, you know, we are no longer able to afford this nanny state that provided everything to the people. And so the terms of the social contract have to be renegotiated.

NORTHAM: The crown prince is sweetening the deal - loosening the ban on cinemas and concerts, allowing women to drive and go to work. Now you see Saudi women working in malls and at hotel receptions, unheard of until a few months ago. And he also organized the now-famous Ritz Carlton roundup.

(SOUNDBITE OF MUSIC)

NORTHAM: The lobby of the Ritz Carlton Hotel in Riyadh is opulent, with marble floors, plush furniture and rich tapestries. In November, the crown prince rounded up a couple hundred of Saudi Arabia's wealthiest and most influential people and brought them to the Ritz, where they were detained for three months until they handed over more than $100 billion. There were cries that it was an unlawful crackdown on the crown prince's royal rivals and that it could scare off investors. But economist Motashar al-Murshed says the move was hugely popular with regular Saudis.

MOTASHAR AL-MURSHED: This move is done for the benefit of the Saudi population, for the Saudi economy and for making the Vision possible.

NORTHAM: In other words, if regular Saudis are going to feel the pinch of the new reforms in the kingdom, the richest ones will, too. Jackie Northam, NPR News, Riyadh.

(SOUNDBITE OF HIJAZ'S "NAHADIN")

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