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Entering the Private Sector, But Where?

A McDonald's restaurant stands near the center of town on July 15, 1996 in Riyadh, Saudi Arabia. (Scott Peterson/Liaison)

A McDonald's restaurant stands near the center of town on July 15, 1996 in Riyadh, Saudi Arabia. (Scott Peterson/Liaison)
A McDonald’s restaurant stands near the center of town on July 15, 1996 in Riyadh, Saudi Arabia. (Scott Peterson/Liaison)
The most intriguing news stories to come out of Saudi Arabia in the past few weeks had nothing to do with oil or with any of the conflicts in the countries surrounding the Kingdom. They concerned two little-noticed developments that showed how far Saudi Arabia has come in its efforts to build an industrialized, private-sector economy outside the oil industry, and how far it still has to go to achieve that goal.

First came an announcement from the US Department of Commerce that it would impose duties on imports of steel pipe from eight countries, which the department found were selling in the US market at prices below the cost of production—a practice known as “dumping.” One of the eight countries was Saudi Arabia. Among the others were Turkey, South Korea and Taiwan.

The fact that Saudi Arabia is producing finished steel products and exporting them into the same markets as those industrial powerhouses is a striking sign of the evolution of the Kingdom’s economy. Driven by the need to find jobs for an exploding population of young citizens, and by the knowledge that it cannot live off oil revenue forever, Saudi Arabia is committed—at least in policy, if not yet in fact—to economic transformation. The ultimate goal is to reduce the government’s role as the preferred employer and expand the private sector to provide jobs outside the oil industry.

The oil industry still dwarfs all other ventures, but Saudi Arabia is now manufacturing and exporting a broad range of products, from yogurt to air conditioners and pharmaceuticals.

The other news item was the announcement that the Riyadh International Catering Company plans to hire 4,000 young Saudis to work in its growing chain of McDonald’s restaurants. The company is the franchisee for McDonald’s in the central, northern and eastern regions of Saudi Arabia, where, according to its website, it operates more than 80 restaurants and “maintains an active social responsibility agenda.”

Chain restaurants and fast-food outlets are immensely popular all over Saudi Arabia, but as a rule many Saudis do not want to work in them. They prefer sit-down jobs, usually in government, that confer social status as well as comfortable salaries and relaxed working conditions. Those preferences, along with the education system’s bias towards advanced degrees rather than technical instruction, have kept Saudis out of the starter jobs that give young workers their starts elsewhere—jobs in retail, hotel operations, taxi services and of course, restaurants. Private-sector employers generally prefer to hire imported workers, who work harder for lower salaries.

“Foreign employees are attractive because they are cheap, but also because they are more easily controlled” Steffen Hertog, an expert in Gulf labor markets, wrote in a recent study. “Throughout the Gulf states,” Hertog wrote, “the prospect of public employment also distorts education incentives, leading notably to the widespread choice of degree programs that are irrelevant for the private market.”

According to a report in Arab News, the Chamber of Commerce and Industry in Abha, in the south, conducted two job fairs at which it offered 7,996 private-sector positions but received only 2,359 applications. The statistics, the newspaper said, “confirm Saudi youth’s reluctance to work in the private sector” and their preference for government jobs.

Now those attitudes are beginning to change, slowly but at an increasingly accelerated pace, as the need to find work—any work—forces young Saudis to take jobs they would have shunned in the past. The government has stepped up pressure on private-sector employers to hire more Saudis, and economic reality is forcing more young Saudis to accept entry-level positions. To address the skills mismatch, the Ministry of Labor has engaged EdX, the online education venture created by Harvard and other major universities, to offer Internet-based courses that will “bridge the gap between education and employment in Saudi Arabia and throughout the Arab world.” The courses will emphasize English instruction, information technology and skills required by growing industries such as health care, the ministry’s announcement said.

Riyadh International Catering Company says on its website that it “employs the most capable candidates in positions that range from restaurant floor level to the boardroom” and that its workforce is already more than one-quarter Saudi. What is not clear is whether young Saudis who aspire to those boardroom positions will be willing to start at the bottom—in the kitchen, or at the drive-in window—to work their way up to them. More and more young Saudis are learning that they can’t all be hired right out of school as managers or supervisors. They may have to take entry-level positions, show up on time and spend hours on their feet each day.

That could be a harsh reality check for the younger generation, especially if it remains true, as a Saudi columnist grumbled the other day, that “we do not have any respect for time, let alone skills necessary to manage it. We stay up late and never go to bed early, which causes insomnia, psychological pressure and low productivity.” He was exaggerating for effect, but it is true that outside the oil industry, workplace discipline has never been the Saudis’ strong suit. That too will have to change.

All views expressed in this blog post are those of the author and do not necessarily represent the views of, and should not be attributed to, The Majalla magazine.

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Thomas W. Lippman
Thomas W. Lippman, a former Middle East bureau chief of the Washington Post, is the author of six books about the region and an adjunct scholar at the Middle East Institute in Washington.

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