The Economic Consequences of Mass Deportation

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Dec 6 2013

Over 800,000 migrants have left or have been deported from Saudi Arabia this year. Migrant-Rights.org has previously parsed the counter-intuitiveness of Nitaqat, which requires firms to employ varying percentage of employees, as well as the ineffectiveness of the mass deportations used, in part, to facilitate its implementation. The coupled strategies have paralyzed several sectors of Saudi’s economy:

Citizens have complained about the lack of services and rising costs of goods, while businessman have lamented the drained workforce. Saudi’s volatile policies against undocumented workers and Nitaqat-incompliant companies not only contravenes migrants’ rights, but have again proven detrimental to Saudi’s economy.

Economists have prophesied the adverse economic consequences of Saudi’s nationalization schemes since before the Nitaqat’s debut in late 2011. Both international observers and local employers warned that the rigid imposition of national quotas coupled with mass deportations would debilitate sectors of the Saudi economy and could even lead to a reduction in national employment rates.  These predictions were in part based on the failures of GCC countries’ previous nationalization plans, as well as the consequences of restrictive migration policies (particularly when high demand for foreign workers still exists). Sector-wide quotas and deportations fail to address the structural causes of either the large undocumented work force or the reliance on foreign workers.

Saudi’s nationalization policies contradict its ends as well as both the immediate and long-term needs of the Saudi economy. The unemployment issue is of course more complex than the trope of migrants ‘taking advantage’ of the Saudi economy and displacing Saudi nationals. Many jobs migrants occupy are often those Saudis rebuke because of their poor wages, poor conditions, or perceived poor social ‘value’ (less than a quarter of such ‘unsuitable’ jobs are excluded from Nitaqat).  Additionally, Saudi nationals lack the skills and experience to fulfill the quota mandates of certain sectors in particular. For example, over 16,000 foreign engineers have left their positions this year. Engineering companies have been unable to replace them with Saudi nationals, despite opening applications to recent graduates or otherwise inexperienced candidates.

Quotas fail to address the reasons expatriates are often preferred to Saudi nationals in both low and high income employment; the dual economy, in which the majority of nationals work in the well-paying, benefited public sector while the private sector is comprised primarily of expatriates, requires resolution.  Though Saudi and other GCC nations implemented programs to improve education, trainin nationals, and even supplement benefits to citizens working in the private sector, they have done little to truly merge these economies – in part, because eliminating this divide is possible only by equalizing the rights and benefits of migrant and local workers.

Of course, the critical role migrants execute in the Saudi economy is evident to authorities and to citizens alike. But the prevailing narrative on migrants, reinforced by state policies, is so purposefully maneuvered to present Saudi as a patron of migrants rather than their co-dependents. Minimizing migrants’ economic (and social) contributions obscures discourse ontheir entitlement to labor rights, perpetuating misconceptions of their ‘temporariness’ and legitimizing the ad-hoc policies that make migrants easily disposable. Acknowledging the dependency on the undocumented workforce in particular makes it less difficult to lambast migrants unable to take advantage of an amnesty riddled with obstacles.

GCC states periodically launch raids and mass deportations in an effort to curb illegal migration, but their strategies have proven inefficient time and time again. This failure is largely because deportations do not address a significant structural cause of irregular migration: the GCC states migration regime, or in effect, the sponsorship system. The sponsorship system induces irregular migration in several ways, in part because it unreasonably restricts the definition of a “legal” migrant.  The sponsorship system bonds migrants’ legal residency to their sponsor/employers; migrants who do not work for the sponsor or occupation listed on their visa, or migrants working part-time for several employers, are all considered irregular.

Migrants are easily pushed into this undocumented status. Migrant-Rights.org’s campaign to end the Kafala system highlights several of these coercive factors:

  • By obstructing the ability for migrants to change employers without the permission of their original sponsor (or by imposing high transfer fees), the system denies migrants their right to employment mobility. Migrant workers are consequently forced to endure terms that may differ from their original contract, including underpayment, excessive working hours, or unsafe working conditions.  Because migrants have very limited recourse to abusive or otherwise undesirable conditions, and can face further exploitation in attempting to legally transfer sponsorship, they are often forced to “abscond.”
  • Some employers also fallaciously report migrants as “huroob,” or runaways, in order to recruit more workers. This status cannot be rectified without the release of the sponsor. Saudi recently pledged to abolish this practice, but it has affected a number of pre-existing “undocumented” workers.
  • Migrants who escape are considered illegal – they are not entitled to any back pay, and can be fined, indefinitely detained and deported. Migrants who cannot afford to purchase a ticket home, as well as migrants otherwise abandoned by their sponsors, can be stranded in GCC states for years. 

Additionally, the high costs of recruitment as well as recruitment practices that amount to trafficking and can coerce or force migrants to enter the country without proper documentation.  Citizens profit from the sponsorship by selling their visas to middlemen, employers, or directly to migrants. Migrants work ‘illegally’ for another employer, while paying the citizen to act as their sponsor and renew their documents. Others establish fake companies and recruit migrants for profit by charging them exorbitant fees, only to leave them stranded without recourse. Employers are complicit in this phenomena as well, as some prefer to recruit from those on “free visas” to save recruiting costs or circumvent visa quotas.  An estimated 70% of visas issued by the Saudi government are traded in the black market.

This also means that amnesty programs are inherently problematic, because they permit “correction” by reverting to the very system that induces undocumented migration. Many citizens have recognized the need for the government to re-appropriate regulation of the migration regime by assigning a government body, rather than individuals, as the sponsor.

A balanced, rights-based approach to reducing the reliance on both a foreign and undocumented workforce would entail a comprehensive review of the structural issues begetting undocumented and irregular work. For example, it would require regularization of workers over a much longer period of time, and would hold unscrupulous employers and recruitment agencies equally accountable for their irregular activities.

Furthermore, a gradual implementation of Nitaqat and overarching nationalization schemes would also avoid the professed ‘need’ for these retributive raids.

GCC countries, several of which are also crackingdown on undocumented workers, in should learn from Saudi’s fallback and adopt a rights-based approach to nationalization and regularization of migrants’ status.  Migrant rights once again urges GCC countries to reconsider crackdowns from both an economic and human rights perspective.

Advancing the rights of migrant workers throughout the Middle East