Feb 01 2012 |
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Nitaqat program building pressure on employers for speedy Saudization
By By KHALIL HANWARE JEDDAH: The implementation of the Kingdom's Nitaqat program will definitely ease pressure on the jobs market for Saudis, but it will take some time for the results to be apparent, Said Al-Shaikh, senior vice president and group chief economist of the National Commercial Bank, said on Tuesday.While releasing the survey for the Business Optimism Index (BOI) for Q1, 2012 with Dun and Bradstreet (D&B), Al-Shaikh said the present unemployment level is unacceptable. "The Ministry of Labor is taking the lead and as the growing population is entering into the labor force every year it will put more pressure on the private sector as well as the government sector to employ more Saudis," he said.
Under Nitaqat, he said, those companies which will not fulfill the requirements set by the Labor Ministry will be penalized. So the companies will be doing their best to lessen the dependence on foreign workers in the future to accommodate more Saudis.
He said the government's intention is to provide unemployed youths an opportunity to become qualified for jobs, so the Hafiz program is a temporary phase to make them comfortable when they are unemployed.
Economic recovery in 2011 was hit by the devastating tsunami in Japan, the "Arab Spring", political disagreement in the US and Europe in times of extreme financial strain, and the worsening sovereign debt crisis in Europe.
The BOI survey reveals that Saudi Arabia's hydrocarbon sector optimism has moderated in Q1, 2012. The overall BOI composite score for the sector is 40 - 23 points lower than the score in Q4, 2011, which is at a seven quarter low and due to lower BOI scores for all three parameters.
Al-Shaikh said: "Largely attributed to the rising global uncertainties, especially on fears about the implications of the European sovereign debt crisis on the global economic outlook for 2012, the Saudi business sentiment has weakened in Q1, 2012 compared to Q4, 2011. Consequently, 31 percent of the respondents in the non-hydrocarbon sector have indicated that they do not anticipate any negative factors to influence their businesses in the Q1, 2012 compared to 46 percent in the Q4, 2011."
Chhabra said: "Saudi businessmen remain quite optimistic about the beginning of 2012; however a drop in optimism levels is observed compared to the previous quarter. The hydrocarbon index has dropped to 40 from 63, which displays a robust outlook, but is less optimistic than a quarter ago. This is mostly because respondents expect business conditions to remain unchanged."
The composite index for the non-hydrocarbon sector stands at 54 in Q1, 2012, six points lower compared to the index in Q4, 2011. Nonoil growth in the Saudi economy is expected to remain robust supported by government spending, the survey showed. The massive government stimulus is faltering into the economy and raising domestic consumption.
The BOI survey shows that the manufacturing sector outlook has improved since Q4, 2011. The composite index for the manufacturing sector stands at 55 in Q1, 2012, 6 points higher that the index value in the fourth quarter of 2011.
Optimism levels in Saudi Arabia's construction sector eased off from the all-time high reached in the last quarter of 2011. The composite index stands at 59 in Q1, 2012, down from 74 in Q4, 2011.
According to the BOI survey, the retail sector in Saudi Arabia has displayed robust expectations for Q1, 2012 but weaker than in the previous quarter. At 49 in Q1, 2012, the composite index is down by 16 points from the Q4, 2011 figure.
The transport and communications sector index has posted a decline of 9 points to stand at 47 in the first quarter of 2012 compared to 56 in Q4, 2011.
Respondents in Saudi Arabia's financial and business services sector expect a strong first quarter in 2012. The composite BOI score for this sector is at 55, decreasing by 9 points from the previous quarter.
The Saudi stock market (Tadawul) is witnessing a sudden surge in volume and value of traded shares in January. Over SR8 billion shares are changing hands daily at the Tadawul recently. Al-Shaikh said this is due to what's happening globally.
"Large investors used to go internationally, for example, to invest in international markets in the US and Europe. Now may be these investors are less inclined to invest abroad because of economic uncertainty. So, these investors are getting their investments back into the Kingdom," Al-Shaikh said.
© Arab News 2012
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