Saudization (localization)–a critical review

This paper introduces the concept of Saudization and critically reviews its existing and potential impacts and consequences. It identifies that Saudization has positively contributed to reducing the overall percentage of foreign labor. However, there have been some difficulties, such as a decline in competitiveness among regional business companies with respect to a business friendly environment, and reduced direct foreign investment, which influenced the reduction of the tax on foreign investors. Saudization should place importance on skill development among Saudi nationals by strengthening educational and vocational training, and providing time-specific incentives, rather than relying only on a quota system. Saudization should be implemented more through market forces and incentives. Collecting comprehensive information on the nature and magnitude of Saudi unemployment could be a first step in developing appropriate Saudization policies. This paper suggests appropriate coordination and consultation between the government, the private sector and the public at large, so that any policies on Saudization become more easily acceptable and executable in both the public and private sector.