Without being physically present at OilCo and merely relying on the firm’s claim that it is made up of 83% Saudis, it would be expected that Saudis are everywhere in the firm. However, it is clear to anyone visiting or joining the firm that Saudis are by far the minority group. The reason for OilCo’s claim of this extraordinary Saudisation rate is that they do not consider outsourced workers as their employees. Therefore, if outsourced workers were taken into account in the total number of workers, it is estimated that the real rate of Saudisation would drop to no more than 8%.
OilCo deals with several firms providing it with migrant workers of various levels and skill sets. The estimated number of outsourced workers by the end of 2016 is around 20,000, but this can range from 15,000 to 25,000, depending on the amount and size of current projects in the firm. There are around 200 workers occupying basic administrative posts, such as secretaries, but the rest are unskilled manual and semi-skilled labourers. The unskilled labourers are typically gardeners, drivers and janitors, whereas the majority are semi-skilled petrochemical technicians. The technicians are not involved in the process of petrochemical
production, but rather responsible for maintaining the oil refinery and constructing new plants. These workers are predominantly from Bangladesh, India, Pakistan and the Philippines. The total number of outsourced Saudis, however, does not exceed 70 and these work as either clerical staff or bus drivers.
OilCo outsources workers under two types of contract: task-based and time-based. Task- based contracts are used when OilCo requests a contractor to accomplish a project within a specified period of time. In this case, OilCo is not concerned with how many employees work on a project, but rather the time required to accomplish it. In contrast, time-based contracts, which predominate, are used when OilCo requests a certain number of workers for a specified period of time, ranging from one to five years. Under both types of contract, the outsourced workers are paid by the contracting companies, since they are their direct sponsors (Kafeel). Therefore, since the outsourced workers under both types of contract are sponsored by the contracting companies, they are not considered by the Ministry of Labour as OilCo’s employees and as a result, they do not affect the Saudisation rate.
Although OilCo has the state support to directly recruit expatriates, regardless of the current Saudisation requirements, it does not do so and the reasons for this appear to be closely related to the lower cost and higher flexibility that labour outsourcing affords. An interview with one HR manager revealed that outsourcing saves the firm at least 40% of its total labour costs, compared to direct hire, since the outsourced workers receive lower salaries and are not covered by the medical or life insurance provided for direct and indirect employees. Therefore, despite the fact that it is outsourced workers who mainly work for OilCo, the firm is not legally responsible for their safety at any time during their working day. The firm gives basic guidance on safety regulations and assumes that the outsourced workers are already trained to work in petrochemical refineries. For example, in 2015, there was an incident where seven outsourced workers were killed, due to an explosion inside one of the tanks. Since the investigation showed that this incident was the result of a failure on the part of these workers to comply with safety regulations, OilCo was compensated by the contracting firm for the total damage caused in the refinery.
Most notably, the HR specialists and managers interviewed shared the view that outsourcing is inevitable, due to two main reasons: 1) There are insufficient numbers of trained Saudis on the labour market; 2) The firm needs labourers for only short periods of time. An example
of this was given by one technical manager, who argued that when the firm has a major shutdown in its refinery - as has happened frequently within the past few years - it requires a large number of technicians for a short period of time. These are unavailable, except through contracting companies. Likewise, another HR specialist stated:
If the firm wants 20,000 Saudi workers, it will need at least 10 years to train and prepare them. For example, since 2013, we have prepared about 1,200 Saudi workers, so you can imagine what it would be like to prepare 20,000 workers.
Nevertheless, it could be argued that it is possible to prepare 20,000 workers in less than 10 years. However, this implies a huge amount of investment in training within a short period of time, which OilCo seems unwilling to make. Alternatively, the firm could hire migrant workers directly, but this would also imply a higher cost. Therefore, it is evident that outsourcing is mainly about higher flexibility and lower labour costs.
It is worth highlighting here that outsourcing is not peculiar to OilCo, but is rather the norm across the entire Saudi petrochemical industry. One HR manager stated:
…we here in the petrochemical sector do not really do the actual work by ourselves, but we outsource from several contractors. I have a team here under my supervision dedicated to administering these contracts. So, it is mostly outsourcing. Furthermore, OilCo’s workers are almost completely isolated from the outsourced workers and there is minimal interaction between them in the oil refineries. For instance, while OilCo’s technicians work on petrochemical production processes, contractors are mainly involved in the riskier tasks of maintenance and the construction of new refineries. One Saudi technical worker reported that OilCo’s supervisors do not directly communicate with the outsourced manual labourers, but only liaise with the outsourced supervisors over what needs to be done.
Unfortunately, permission to interview the outsourced workers, who work within the refineries, was denied by the firm. However, the analysis conducted in this chapter will reflect on this topic, based on information provided by OilCo’s employees.