Labor market changes behind fall in remittances

Labor market changes, new nationalization policies, fears of taxes on remittances and slowdown in some sectors, particularly construction, are the reasons behind the fall in expat remittances from SR157 billion last year to SR90 billion this year, said experts.
According to Fahad Al-Salmi, member of the board of the Jeddah Chamber of Commerce and Industry, serious nationalization efforts in sectors, such as telecom, have resulted in more employment of Saudis.
“More attention needs to be given to the retail sector where more than 1.7 million jobs do not require special qualifications. Besides, the private sector should be convinced on the importance of supporting nationalization plans. Vision 2030 is aimed at providing at least four million jobs to nationals, which means the more jobs should be generated,” he told local media.
Salim Bajajh, an economist, said that the recent news about the possibility of imposing fees on remittances will reinstate fears among some workers sending money home, particularly the cash earned from additional work. “This will move expats away from official channels in banks for such transfers.”
Nationalization, such as that of the telecom sector, may reduce the incidence of commercial cover-up as well, which creates significant losses to the national economy of around SR200 billion annually, he said.
Bajajh said the imposition of fees on transfer of sponsorship will encourage expatriate workers to spend their money locally and reduce commercial cover-up practices.
Omar Abu Al-Khair, an investor in the construction sector, said the decline in remittances can be attributed to the declining projects, especially in the construction and contracting sector, as more than two million workers are employed in the sector.
“Directing some of these investments inwardly will have a significant and positive impact on liquidity, especially if combined with establishment of new small businesses to employ young people,” he said.

Source: Arab News