HRIM IN SAUDI ARABIA AND SOUTH AFRICA

HRM in Saudi Arabia and South Africa

HRM in Saudi Arabia and South Africa

Introduction

This paper explores the Human Resource Management in the Kingdom of Saudi Arabia and South Africa. Because multinationals are increasing in numbers in Saudi Arabia and South Africa, there has been a development of western ways of managing human resources in both countries. However, there are still many factors that must be considered in managing human resources in Saudi Arabia as well as in South Africa. These factors include religion and culture. Saudi Arabia has an entirely different religion and culture compared to the west. This paper focuses on the HRM processes that are evident in the organizations found in Saudi Arabia and South Africa. The factors that led to the development of the present HRM processes in both countries are also discussed.

 

Trade Unions in Saudi Arabia

Another advantage of Saudi Arabia lies in the distinct labor-management relations. Trade unions are illegal in Saudi Arabia, and there is no minimum wage. There is no labour unrest in the kingdom. Since 80 percent of the total labour force in the kingdom are non-Saudis, there is no scope for labour unionism. While these unique labor-management relationships have helped prevent strikes in the past, there is no pressure for wage increase, which can make Saudi companies more competitive in the global market.

The rapid economic development experienced by Saudi Arabia since the 1970s has necessitated large inflows of foreign workers. Foreign workers have played a large role in oil exploration and exploitation since the 1930s, but the inflow of foreign workers since 1970 has been facilitated by development plans targetting all areas of the economy. During the 1970s, particularly with the huge revenues from oil exploitation, the Saudi Government expanded its investment in public services and basic infrastructure projects. This was an important step in establishing the agencies needed to manage the development process, and in setting up the basic infrastructure connecting internal and external markets. It resulted in the present situation in which a majority of the labour force are non-Saudi nationals.

In the development plans of 1985-1995, concern with reducing the dependence on foreign labour led to the adoption of a policy referred to as Saudisation, the replacement of non-Saudi with Saudi workers. This was motivated by the decline in oil revenues, and the impact on the government finances of a large public sector. Initially, there were no concerted attempts at implementing this policy in full. More recently, Saudisation has been given a much higher priority.

The scope for Saudisation differs across the private and public sectors, as non-Saudis make up only around 20 per cent of employees in the public sector, while they contribute 90 per cent of private sector employment. In the private sector, a number of steps were taken in 1995 to implement Saudisation. A ministerial decree instructed private firms employing 20 workers and above, to reduce their non-Saudi labour force annually by at least 5 per cent, and to increase ...