Saudi Arabia's lay-off plan 'could cost a million Indian jobs'

Changes to the labour law could have catastrophic consequences for the 2.45 million Indians in Saudi Arabia and those in India who rely on money being sent from the country. Suryatapa Bhattacharya reports from New Delhi

NEW DELHI // The Indian government, concerned about mass layoffs of Indian workers in Saudi Arabia, is looking to help soften the blow for the millions of its citizens living in the kingdom.

With government figures in January revealing 12.2 per cent of Saudis are out of work, the kingdom has implemented an initiative to ensure more can find jobs.

But changes to the labour law could have catastrophic consequences for the 2.45 million Indians in Saudi Arabia and those in India who rely on money being sent from the country.

On March 27, the deadline passed for small businesses to implement the Nitaqat programme, which stipulates that at least 10 per cent of jobs in firms with fewer than 50 employees must be reserved for Saudi nationals.

But nearly 340,000 small and medium-sized firms have failed to meet the requirements, according to the Federation of Indian Chambers of Commerce and Industry (FICCI).

The Indian government is concerned because these businesses employ the majority of the Indians in the country.

Vayalar Ravi, India's minister for Overseas Indian Affairs, plans to lead a delegation of MPs in a visit to Saudi Arabia - possibly this month - to plead for leniency.

The Indian government would like to stagger the implementation of the programme while it puts into place financial packages to help those who lose their jobs to return home or to find jobs elsewhere in the Middle East.

The main aim of the delegation purpose will be to see "the human effect of the law", said Syed Akbaruddin, the spokesman for India's external affairs ministry.

The Indian ambassador to Saudi Arabia, Hamid Ali Rao, has met the governors of Riyadh, Medina and the Eastern province, where the largest number of Indians work, Mr Akbaruddin said.

"There is an continuing dialogue with the Saudi government on this," he added.

So far, India's external affairs ministry has had no reports of anyone returning because of the new Saudi employment policy, but concerns have been raised by business associations, including FICCI, the oldest business organisation in India.

"The interest of Indians working in Saudi Arabia and their dependents would be affected, therefore this matter requires immediate attention," said Didar Singh, the secretary general of FICCI. "If an average of two to three Saudi nationals are to be employed by each firm under the Nitaqat law, that could displace half-to-one million expatriates, that is if more jobs are not simultaneously created."

The Nitaqat policy presents a particular problem to Kerala. An estimated 570,000 of the Indians employed in Saudi Arabia are from the south-Indian state, and send home 550bn rupees (Dh36bn) annually, according to FICCI.

"A large number of Indian workers are employed in Saudi Arabia ... this shows the important role the NRI [non-resident Indian] community plays in the state [Kerala] and the possible effect this change in law could have," Mr Singh said.

Expatriate Indians sent home US$70 billion (Dh257bn) last year, according to India's external affairs ministry and the World Bank.

Saudi Arabia continues to be the favoured destination for low-skilled workers from India, with 289,297 seeking employment there in 2011. The majority drive taxis, clean streets and work in grocery shops.

Concerns about unemployment among Saudis have sparked new calls for the kingdom to ease its dependence on expatriates and introduce the new employment policy. About one in three of Saudi Arabia's 29.2 million residents are foreign workers - mostly from Egypt, India, Yemen, Pakistan and the Philippines.

Some Saudi government departments and municipalities are already complaining about a lack of staff, especially in cleaning companies. Piles of rubbish have accumulated on streets as contractors cannot meet Nitaqat's requirements, the Saudi Gazette newspaper reported.

The under secretary at Saudi Arabia's ministry of labour, Ahmad Al Humaidan, said he would reduce the requirements for the percentage of Saudis required to be hired by contracting cleaning companies, the newspaper said.

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