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Saudi Arabia cushions labour reform with training

Saudi Arabia is changing its approach to labour reforms, trying to soften the blow to companies by providing money for training.

Authorities launched labour reforms in 2011 after the Arab Spring uprisings to head off political unrest by reducing unemployment. They also want to lower the cost to the economy of Saudis' dependence on comfortable but expensive state jobs.

The reforms so far have slowed the economy and slashed profits at some firms, interfering with other policy goals such as diversifying the economy beyond oil. They have boosted the number of Saudis in the private sector, but many workers have not been effective or only stayed in their jobs for a few weeks.

So the government is now adjusting its strategy in an effort to improve the system for both companies and employees.

Through its Human Resources Development Fund (HRDF), the government is spending billions of riyals on subsidising Saudi workers' salaries and sharing the cost of company training programmes.

One example is the funding of training for Saudi academics.

"The agreement between us and Harvard University is that there is annual training for a number of Saudi researchers on sophisticated research methods applied in that university and in other universities and research centres," said Ibrahim al-Moaiqel, the HRDF's director.

One investor said the Fund had helped his company identify and train the right Saudis for the job, helping improve "Saudisation" rates -- the proportion of jobs held by Saudis in the private sector.

"The Human Resources Development Fund has a big role and has been a real support in helping us attract Saudi youth to the right jobs. We trained young people before they joined the labour market. This has led to stability and we have also achieved a high Saudisation rate," said call centre investor Mohammed al-Sager.

The number of Saudis working in the private sector jumped to 1.5 million people by the end of last year from 681,481 in 2009, according to the latest available data in the ministry's annual report for 2013. That brought the "Saudisation rate" up to 15.2 percent from 9.9 percent over the same period.

The government is also spending billions of riyals to help pay Saudi workers' salaries, and is setting aside more money to smooth the path of the most sweeping economic reforms in decades.

At the Etisal call centre in Riyadh, dozens of men were busy helping customers over the phone. One man said the job was exactly what he had been looking for.

"Frankly, I love office jobs where there is a comfort. I applied for a job in customer service, I get a good salary at end of the month. It has complete comfort," said call centre employee Mohammed al-Qahtani.

Reforms in the past three years have focused on pressing firms to employ more Saudis, by making it harder and more costly to hire foreign staff.

But alongside a population of about 20 million Saudi citizens, roughly 10 million foreigners from south Asia and elsewhere work in sectors such as construction, transport and services, receiving salaries that most Saudis would consider too low.

"Yemenis, Syrians and Egyptians are those who are taking the biggest part in the construction works. As for digging works, lifting blocks, hard work and heavy jobs are done by the Pakistanis. Saudis are good for office and engineering jobs," said Daifallah al-Maua'di, a construction worker from Yemen.

The arrangement has been fine as long as oil prices have been high and the government flush with money to create state jobs for its citizens. But the uprisings elsewhere in the Arab world underlined how vulnerable the country would become if a sustained drop in oil prices left it unable to employ Saudis.

The draft law on working hours aims to make private companies more attractive by limiting the working week to 40 hours, down from 48 in many firms, and increasing the weekend to two days from one. State workers have a 35-hour work week plus generous pensions and health benefits.

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