Cutting Saudi Arabia worker visas bad for nation’s growth-- Many economists are of the view that such plans of the government could prove detrimental for the nation’s economic development and rates of inflation. According to Farouk Soussa, chief economist of Citi Middle East, imposing tough restrictions could mean shut down for several private sector firms.
And this will have a direct and serious affect on the nation’s economic growth. This has been revealed by Soussa in a recently released research.
As per the new scheme revealed by Adel Fakeih, Saudi Arabia’s Labor Minster, firms in Saudi Arabia will be allowed a time period of up to September 7, 2011 for getting the prescribed number of Saudi workers.
Higher inflation rates in the country likely--It is being stipulated that the new scheme will mean higher rates of inflation in the coming times as firms make efforts to allure more and more Saudi nationals to take up jobs in the nation.
Saudi nationals will be offered higher wage payouts as compared to wages likely to be offered to immigrant workers. Citi has stated that such a step would significantly increase basic costs of doing business in the nation. It will also increase domestic inflation rates, he cautioned.
According to chief economist with Banque Saudi Fransi, John Sfakianakis, productivity will be affected severely in several Saudi Arabia sectors and firms. And the fact to be borne into mind by the nation is that its growth potential and its efficiency gains are crucial for the economy due to its direct relationship between these two, he asserted.
Construction, retail sector in Saudi Arabia to be worst affected—While the affect of new measures will be felt by almost all the industries of the nation, however, those having higher percentage of foreign workforce will be the worst affected, warned Sfakianakis.
This is due to the fact that almost 90 percent of the total workforce of construction sector comprises of expatriate workers. Another sector to have a major impact of the new program by Saudi Arabia will be the retail sector as nearly 80 percent of its employees are immigrant workers, stated Sfakianakis.
This will also unfold more business uncertainty while curbing foreign investment thus jeopardizing steps by the government for increasing foreign direct investment in the nation, he maintained.