Saudi restrictions on retail, wholesale roles held by foreigners come into force

Saudi Arabia’s Ministry of Labour and Social Development will from Tuesday begin enforcing restrictions on foreign workers working in four retail roles.

Inspectors will monitor automobile and motorbike showrooms and shops selling items including clothing for men and children, home and office furniture, household goods and utensils.

These outlets must ensure at least 70 per cent of their staff are Saudi nationals.

The new regulation, which will eventually apply to 12 retail roles, was first announced in January.

Read: Saudi bars foreigners from 12 job roles

Outlets selling electrical appliances and electronics, watches and optical instruments will be subject to the staff limit from November 9 and those selling medical appliances and equipment, building and construction materials, vehicle spare parts, carpets and confectionary from January 7.

“We anticipate there to be a mixed impact on the retail sector in light of these developments,” said immigration firm Fragomen’s manager for Middle East and North Africa Ali Haider.

“The government’s more gradual approach towards roll-out does grant some retailers time to plan for contingencies and their staffing needs; however, there will be an immediate rush towards filling vacancies in the short-term, with some of the ‘smaller’ firms experiencing greater challenges.”

In the build-up to the September 11 deadline there were reports of dozens of shops closing due to a reliance on foreign labour.

Read: Several shops ‘shutting down’ in Saudi as nationalisation deadline looms

Saudi Gazette reports that inspectors have gone through a training regime to enforce the new rules.

It cited a ministry source as saying the guidelines for affected outlets are if a shop employs one worker they must be Saudi.

If they employ two workers then one must be Saudi and those that employ four, 10, 30 or 100 workers must ensure two, seven, 21 and 70 are Saudi respectively.

Read: Saudi prepares inspectors as new restrictions on foreign retail jobs come into force

Bank of America Merrill Lynch (BofAML) said in a February report that “tens of thousands” of expats could lose their jobs under the restrictions, although there was no specific data available.

Read: Saudi work ban could see tens of thousands of expats lose their jobs

Government figures showed 76,968 non-Saudis were employed in clerical roles, 296,066 in sales roles and 3.8 million in service roles. This compared to 539,115, 253,168 and 361,211 Saudis employed in each area respectively.

“Overall, we anticipate this and other Saudisation initiatives to have a positive impact on long-term economic outlook, even if the short-term implications can be challenging for businesses operating in the country,” said Haider.

“Such measures would of course limit unemployment and bolster economic parameters, but also create an avenue for businesses to ‘give back’ to the economy – a social cost that simply cannot be overlooked in today’s market.”