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Article Excerpt
Although expatriation issues are at the core of international human resource management (HRM) practice and discourse, impatriation (hiring foreign nationals for fixed-term temporary employment) is as yet underresearched. This is true even though several economies, many of them in the Middle East, rely heavily on impatriates to develop and sustain their economies. This article presents the case of the Kingdom of Saudi Arabia (KSA) as an example of such an economy, and proposes a model of impatriate adjustment, followed by a case study and with specific reference to HRM implications.
Globalisation, and the impact that globalisation has had on the practice and theory of management and of the management of people, has attracted increasing interest among scholars and practitioners alike (Sparrow, et al., 2004; Global Relocation Services, 2004; Frenkel, 2006). Within international HRM scholarship, limited research has evaluated HRM systems and practices within Middle Eastern economies (for an exception see Ali, 1995; 1999). This is a major oversight for a region that is at the core of the world economy, offers unparalleled growth opportunities for foreign investment (Rice, 2004), and contributes significantly to world trade (World Bank, 2003; Wilson, 2001; Kavossi, 2000).
In their quest for rapid and sustainable economic development, many of the region's countries have come to rely heavily on temporary migrant workers: the Gulf economies in particular (Bahrain, Kuwait, Oman, UAE, Saudi Arabia, and Qatar) as well as Libya. This phenomenon is not new. Many Western developed countries have relied for a long time on temporary migrant workers in times of skill shortage or to carry out lowly, menial, and undesired jobs; however, the extent of their deployment in the Middle East is considerably higher. The presence of impatriates in this region has in fact outgrown the indigenous workforce, and typically represents a majority. In most of the Gulf countries, over 60 percent of the working population is foreign (Ruppert, 1998; World Bank, 2003), with the largest number of impatriates in the Kingdom of Saudi Arabia.
By presenting the case of the Kingdom of Saudi-Arabia we draw attention to an important feature of the labour markets in the Middle East. We first outline the characteristics of the labour market in the KSA that have necessitated a national level response to human resource management and labour market reform. We then propose a development model for managing the adjustment of impatriates in heavily dependent economies at the national and corporate level. This, to the best of our knowledge, is the first such proposed model. The research literature often addresses adjustment issues of expatriates (typically, the individual middle-to-senior executive from a developed economy posted to another developed economy as well as to developing or transitional economies for a limited period). This article explores the role of impatriates: foreign employees recruited by local companies at all organisational and skill levels, typically for a particular position, usually over a fixed-term period. We highlight in particular implications for the HR function in organisations in which the majority of employees are temporary migrant workers. We suggest that HR has an important and overlooked role with respect to facilitating the successful cultural and work adjustment of impatriates, including enhancing their productivity and well being. We end with a case study to help us reflect the model against prevalent practice.
Demographics of the Labour Market in the Kingdom of Saudi Arabia
The Saudi Ministry of Labour estimated there were approximately seven million foreign workers in Saudi Arabia in 2003, making up almost one-third of Saudi Arabia's total population of about 23 million. Expatriate labour across all occupations and skill levels constituted around two-thirds of the total workforce in 2003 (Pakkiasamy, 2004).
The large share of impatriates in the Saudi labour force is a consequence of its rapid economic development following the oil boom revenues of the 1970s. The rapid growth of the economy generated an equally rapid increase in employment. Employment trebled between 1970 and 1980, and more than doubled between 1980 and 1995. The rising demand for labour was largely met by attracting impatriates (Madhi & Barrintos, 2003).
The KSA is also one of the most important markets among developing countries, representing $US 25 to 30 billion worth of annual export potential to international exporters (World Bank, 2003; Rice, 2004). The attractive incentives offered to foreign investors have been drawing multinational enterprises from around the world to form subsidiaries and joint ventures in the country, in turn fuelling the demand for skilled labour (Bhuian & Al-Jabri, 1996; Yavas, et al., 1990; Bhuian, 1995).
According to Pakkiasamy (2004), only 15 percent of impatriates in Saudi Arabia are engaged in skilled labour industries (oil, healthcare, finance, and trading); the rest are mostly employed in industries with a need for low-skilled labour (e.g., agriculture, food) and services (e.g., restaurants, domestic service). Impatriates from Europe and North America dominate the high-skilled positions; low-skilled workers originate primarily from South and Southeast Asia.
Recent figures indicate that the KSA has between 1 and 1.5 million impatriates each from Bangladesh, India, and Pakistan; and around 900,000 workers from the Philippines (World Bank, 2003). Together, these communities account for around 30 percent of Saudi Arabia's temporary foreign worker population. Migrants from nearby and neighbouring countries, especially Yemen and Egypt, also constitute a large part of Saudi Arabia's impatriate community. Westerners count for some 100,000, and their numbers are on the decrease. Saudi nationals work in the public as well as private sectors, and are overwhelmingly male. In Saudi Arabia women have generally limited opportunity to work (they constitute merely 10 percent of the workforce: Rice, 2004) and most that do work are employed in banking, education, and health. Mainly men--natives and impatriates--comprise the country's manpower in the literal sense.
Typically, impatriates enter Saudi Arabia on a working or labour visa sponsored by a Saudi company or an individual. The company is responsible for the initial processing and thereafter renewal of the visa and the employee's residence permit for one to two years. In other words, no...
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