Saudi Arabia’s decision to extend the amnesty period for another four months for foreign workers to obtain legal status in the country a day before a previous three-month amnesty expired has received all-round welcome. The welcome is more pronounced among analysts, businessmen and expatriates.
Custodian of the Two Holy Mosques King Abdullah extended the amnesty in view of the huge number of foreigners who are waiting for the rectification of their status and the requests of the ministries of the interior, foreign and labor. The extension to Nov. 3 from July 3, has brought respite to hundreds of thousands of expatriates who feared deportation.
Commenting on the new extension, John Sfakianakis, chief investment strategist at Masic in Saudi Arabia, said: "It will allow those who couldn't legalize their residence more time to do so. The time provided is reasonable given the extent of the problem of illegal workers and the time it takes to process their application. It's an unexpected burden on the public administration work force." He added: "There will be clarity and fewer distortions in the labor market that will aid the government's efforts toward Saudization."
However, Sfakianakis said: "There will be short term costs associated for some sectors such as obviously the contracting business but over the medium term there will be a smoother adjustment both at the human resource front and output front. This adjustment is happening without any evidence of inflation buildup in labor costs or other input costs for the economy."
He added that there will always be voices of discontent but that is common when new policies are applied. "Nitaqat breaks from the policies of the past and ushers a new policy addressing the supply side challenge of labor," Sfakianakis added.
"The extension will certainly help the embassies process paperwork and get their expatriates out of the country. Without the extension, a lot of people would have been stranded," James Reeve, assistant general manager and deputy chief economist at Samba Financial Group told Arab News.
"I think the Nitaqat system has had some beneficial impact in terms of getting Saudi nationals to work in the private sector (particularly in retail). This has to be a good thing even if it means higher staff costs for the companies concerned," he added.
Asim Bukhtiar, vice president/head of research at Riyad Capital, said: "The deadline extension will allow authorities more time to process the flood of workers leaving the country. When the dust settles there will be economic impact considering a sizable portion of the population will disappear. This will mean fewer consumers and more empty apartments."
He said: " The construction sector is bracing for difficult times ahead. Taking cheap labor out of the equation will mean significant changes for all in the coming months."
Earlier this year Saudi Arabia began to crack down on the many foreign workers who have violated their visa terms with surprise inspections on streets and in company offices.
Tens of thousands of people were deported or decided to leave the country under this pressure, raising concern about possible damage to the economy if deportations continued.
The government then announced an amnesty during which workers would be forgiven any fees or fines for visa violations such as overstaying or switching jobs, but bureaucratic delays mean many have still not regularized their status, Reuters reported.