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The Saudi take on the expected expat exodus
| Published: | 16 Aug at 6 PM |
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Will Saudi Arabia’s commanding position as a hub for highly-paid expat professionals end due to oil price falls and wars?
As with the rest of the Gulf States, expat workers at all levels make up the majority of Saudi Arabia’s total population. Increasing financial pressures and restrictive laws are expected to eventually cause the exodus of the expat community to more welcoming destinations, but will Saudization be the cause of a negative change in the untried national society? Right now, economic experts are warning the decline in oil revenue since the price crash will result in huge changes in the Kingdom’s population structure.
Questions being asked by clued-in Saudi academics include whether the Saudis themselves are ready or even up to actually running their own country, whether an expat exodus will change the region’s colourful diversity and what may happen when citizens don’t have foreigners to do all the work. The recently-introduced dependency tax with its annual increases has already seen a mini-exodus of families of lower grade expat workers whose earnings aren’t enough to cover its costs.
The estimated departure due to increasing service costs of another two million expat workers by early next year, followed at the end of 2018 by a further half-million single-family workers, will permanently change the structure of the Kingdom. By 2019, the only expats left will be highly-paid professionals, either single or married with no more than two children. This unheard-of reverse migration is likely to cause an economic shock due to the collapse of commercial companies formerly catering for the needs of the wider expat community.
Also affected will be the property market, with rents expected to fall by as much as 50 per cent along with revenue for car dealerships, airlines, relocation companies and transport providers. It’s expected Saudi families will also feel the financial crunch, with parents transferring their children to public schools and downsizing to cheaper housing. The retail sector will be badly affected, as will the electronics, service, maintenance and construction sectors, leading to the remaining expats deserting the Kingdom for more rewarding destinations. Ultimately, the adjustments needed to build a new society may well prove to be unsustainable in the long term.
As with the rest of the Gulf States, expat workers at all levels make up the majority of Saudi Arabia’s total population. Increasing financial pressures and restrictive laws are expected to eventually cause the exodus of the expat community to more welcoming destinations, but will Saudization be the cause of a negative change in the untried national society? Right now, economic experts are warning the decline in oil revenue since the price crash will result in huge changes in the Kingdom’s population structure.
Questions being asked by clued-in Saudi academics include whether the Saudis themselves are ready or even up to actually running their own country, whether an expat exodus will change the region’s colourful diversity and what may happen when citizens don’t have foreigners to do all the work. The recently-introduced dependency tax with its annual increases has already seen a mini-exodus of families of lower grade expat workers whose earnings aren’t enough to cover its costs.
The estimated departure due to increasing service costs of another two million expat workers by early next year, followed at the end of 2018 by a further half-million single-family workers, will permanently change the structure of the Kingdom. By 2019, the only expats left will be highly-paid professionals, either single or married with no more than two children. This unheard-of reverse migration is likely to cause an economic shock due to the collapse of commercial companies formerly catering for the needs of the wider expat community.
Also affected will be the property market, with rents expected to fall by as much as 50 per cent along with revenue for car dealerships, airlines, relocation companies and transport providers. It’s expected Saudi families will also feel the financial crunch, with parents transferring their children to public schools and downsizing to cheaper housing. The retail sector will be badly affected, as will the electronics, service, maintenance and construction sectors, leading to the remaining expats deserting the Kingdom for more rewarding destinations. Ultimately, the adjustments needed to build a new society may well prove to be unsustainable in the long term.
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