Saudi expat hiring stalls as war deepens PIF spending cutbacks

Summary

• Recruiters told AGBI that expatriate hiring in Saudi Arabia has slowed sharply since the Iran war began.
• Public Investment Fund subsidiaries have frozen budgets and shifted from mass recruitment to selective, outsourced hiring.
• Rising Saudisation quotas are pushing demand toward local candidates while foreign applicants face fewer roles and lower pay.

The latest

Saudi Arabia's expatriate jobs boom is fading, recruiters told AGBI, with fewer openings, tighter salaries and a flood of candidates laid off by subsidiaries of the $1 trillion Public Investment Fund. Mark Butler, a partner at Saudi recruitment firm Sterling Bell, said the war has intensified PIF cutbacks that were already underway. Real GDP contracted nearly 5 percent year on year in the second quarter.

Details

• The trigger: Butler told AGBI that PIF has cut funding and curtailed hiring since the Iran war began in late February, and since hostilities between the kingdom and Yemen's Houthis resumed in July. The fund has been the driving force behind the Vision 2030 development programme.
• The GDP hit: Real GDP shrank by almost 5 percent year on year across April, May and June, driven largely by a drop in oil production and supply chain disruptions caused by the war.
• The boom it replaces: Riyadh created more than 3 million jobs over the past five years, more than any other city in the world, according to UK-based consultancy Oxford Economics, partly on the back of hiring by PIF and its affiliated companies.
• Giga-project hiring: Companies set up to deliver flagship developments, including the entertainment city of Qiddiya and the futuristic metropolis of Neom, launched hiring sprees to scale up workforces with overseas talent. Recruitment consultant Rita El Mendri, who worked on mass hiring contracts outsourced by PIF companies, said: "It was insane."
• Budgets frozen: El Mendri said budgets have been frozen for the past couple of months since regional hostilities escalated, and that firms in the PIF portfolio are moving from mass recruitment toward a selective model leaning on consultants and third-party companies rather than large in-house teams.
• Across sectors: Workers from marketing to construction have reported hiring freezes tied to the economic uncertainty created by the regional fighting, recruiters said. Search executives described a market that has grown steadily more competitive since February, with tighter salary bands and more applicants chasing each role.
• The Saudisation squeeze: Demand for Saudi nationals has risen as localisation targets set minimum employment quotas. Companies must ensure 70 percent of specific roles, including project managers and engineers, go to Saudis, who make up only 22 percent of the total registered workforce.
• Competition for locals: Butler said rising quotas have intensified competition for strong Saudi candidates, questioning where employers can still find nationals who are not already hired. Foreign-born applicants face fewer jobs and slimmer salaries, and he said the era of importing expensive expatriates has ended.
• The long horizon: Butler said major events including Expo 2030 Riyadh and the 2034 World Cup will eventually require recruitment drives, but that new jobs will remain hard to come by for the foreseeable future. Neither he nor the other recruiters named a timeline for budgets to thaw.

Background

The Public Investment Fund is the central vehicle for Vision 2030, financing giga-projects that recruited heavily from abroad to staff up quickly. Saudisation rules set sector-by-sector quotas requiring employers to reserve fixed shares of designated roles for Saudi nationals.

Between the lines

Two pressures are converging on the same candidate pool. Frozen PIF budgets cut the volume of openings, while a 70 percent quota on roles such as engineering and project management concentrates the remaining demand on a national workforce that accounts for 22 percent of registrations. That explains why recruiters describe both a hiring slump and fierce competition for Saudi hires at once.

What's next

Watch third-quarter GDP data for whether the near 5 percent contraction persists, any sign PIF unfreezes subsidiary budgets, and the first recruitment drives tied to Expo 2030 Riyadh.

Source: AGBI, Oxford Economics