LITERATURE REVIEW

Stereotyping is an indefinite notion about a person, and/or group of people where certain

set of characteristics are related to them. These set of descriptions can be positive or negative,

depending on the perceptions of people (Lippmann, 1922).

Lippmann (1922), in his book public mind, explained that stereotypes are fundamental

elements of human psychology. They do not rise from the individual perceptions, instead, they

are the product of our culture, and the flash of our surrounding that reflects our thinking and

what we believe we are seeing. He further asserted that through this perception process we gave

rise to our heroes and perceives the devils in the society. Lippmann (1922) further associated

stereotypes to the "pictures in the head," or the mental perceptions of reality. From there the term

generalizations about a group of people came into existence.

When stereotypes occur, prejudice also occurs. Allport (1954) explained that the

prejudice and stereo types appears as a product of human thinking. He further asserted that in

order to understand the world, we must classify the information into mental categories. Once the

classification is done, we can judge the situation or people.

Stereotypes also emerge from personal fears from other groups. For instance, people

believe that the person with mental illness is prone to violent behavior. This common belief is

revered by the researchers that the mentally ill people have no tendency to show violent behavior

except a few. The stereotypes tend to associate the isolated behaviors of one member of a group

with the entire group (Grobman, 1990).

The stereotypes tend to differentiate them from others, their targets usually are people

who are outside their cultural paraphernalia, for example, in US, not young, not white, not male,

not heterosexual, not middle class etc. the group of people who least represent the culture of

stereotypes are the prime victims (Fiske, 1998). According to Hamilton & Gifford (1976)

stereotypes also exist when they correlate a group with particular characteristics.

Hamilton & Gifford (1976) also noted the biasness on the basis of size of correlation. The

stereotypes perceive minorities as more negative than the majority of group on the basis of their

size. Many researchers claim that the complementary stereotypes support status quo to satisfy

their desires about their views and perceptions towards the world as fair (Kay and Jost, 2003).

Stereotyping and Prejudice at work results in discrimination. The most common form of

discrimination is that the employers show unwillingness to hire migrants and minorities even if

they have to compromise their profit ratios (Evans and Kelly, 1991).The racists consider them

self as fair and un prejudiced to people and show sympathy and give support to minorities but

they often seed negative attitudes towards the minorities in the mind of people. They don’t

consider themselves as racist and tries to avoid the situations where they have to take decisions

due to their racial bias (Gaertner and Dovidio, 2005).

The biasness and racial discrimination of employers have profound impact on the hiring

of competent minorities with potential of being hired. If these people are hired, they counter

unfavorable working environment and limited opportunities to grow (Frazer and Wiersma,

2001).Many theories on disparate evaluation standards explain what happens to these hired

minorities and who advances or who lags behind. Foschi (1989, 2000) explains that the

employers often use the characteristics like race, ethnicity, and gender to evaluate the

performance of an employee.

The performance is also perceived by the stereotyped employers on the basis of

comparison between within-group (Biernat and Manis, 1994; Biernat, Manis and Nelson, 1991).

The evaluators set low expectations from the performer but set high evaluation standards which

results in no employment or chances to advance (Biernat and Kobrynowicz, 1997).

When the person gets uncertain about things that appear important to him or her, then he

in such scenario, associate himself with the social group he belongs (Mullin and Hogg, 1998). By

doing this he relies on stereotypic decisions (Bodenhausen, 1993) which lead him to

discriminating other members or group outside his social group for example women and

foreigners (Fiske, 1998; Zanna, 1994; Hewstone, 2002).

The research has indicated that the discrimination can increase under the increased

competition but no one has predicted about the inefficient discrimination based on differences of

perception of people (Altonji & Bank, 1999; Coate and Loury, 1993; Haagsma, 1993; Rosen,

2003).

The different countries around the globe have different set of beliefs, norms, cultures,

practices. The behavior of people tends to be shaped by these factors. Some people show

flexibility towards situations while others are rigid. Their judgments are based on their beliefs

and perceptions usually which means it can be biased sometimes. The people tend to be

individualistic in their decisions and life practices and some cultures tend to have collectivists

whose decisions are based on the group approach.

Kingdom of Saudi Arabia plays an important role in the world economy. It has one-fifth

of the world’s proven oil reserves. The economic and political situations of many countries are

affected by the decisions and actions taken by Saudi Arabia (Ali, 2008). The kingdom has

revised many commercial, local, investment and labor laws. The government has introduced

effective judicial system in the country and expects that this will speed up the process of

judgments related to business, investments, local laws and labor unions. These laws have

enhanced the confidence of various international investors in the KSA’s markets (Ali, 2008).

Large numbers of MNC’s are operating in the country since 1940. These western managers have

utilized the services of South and East Asian foreign workers who work for less wage rates and

are readily available for work. This practice has limited the exposure of western managers to the

culture and political frame work of KSA (Ali, 2008).

Rees (2007) suggests that many Middle East countries rely heavily on the expatriates or

foreign workers to utilize them in the development projects. This emphasis can have profound

impact on the political, economic and social conditions of the host and home countries of

expatriates.

The intake of foreign workers in the Middle East countries started after the rise in the oil

prices in 1973. The Gulf States underwent various developmental plans with inadequate labor

force. The combined workforce they had was only about 1.3 million (Abella 1995).The national

labor took least interest and involvement in the governmental development plans (Al Lamki,

1998; De Boer and Turner, 2008; Forstenlechner and Mellahi, 2011; Mellahi, 2007) the

government and multi-national corporations had to face challenges due to this (Budhwar and

Mellahi, 2007; Rees et al., 2007).

The Saudi workforce has faced tremendous changes since latter half of twentieth century.

It was mainly due to the changed living pattern of people and the rise of modern economic

system in the country. Many MNC’s brought foreign workers in the country. The domestic labor

growth was steady at an average of 5% in the country; foreign labor was still required between

the years 1975 and 1985. This increased the employment rate in the country. The domestic labor

market was numbered at 58% of total employment in 1975. By the year 1980 the numbers

reversed and the employment of foreigners had risen to 58% of total employment in the country

(Helen, 1992).

In early 20’s to late 30’s of nineteenth century, there was lot of industrial and

architectural work establishments in the country. To meet the needs of labor supply, many non-

Saudi workers were required due to labor shortage in the country (IPA, 1999).The labor

shortage, due to rapid economic growth, increased with the oil exploration programs by the GCC

countries around 40 years back. The GCC region governments have flexible policy towards the

foreign workers in these countries. The government showed lenient attitude towards the

employers who recruited these workers (Mohamed, 2002).

The employments of foreign workers or expatriates in the various developmental

programs lead to mass unemployment of local labor in the country. The local employment rate

dropped substantially leaving them behind the foreign workers who offered their services at any

given rates. The government of Saudi Arabia took an initiative to master this disparity by

localization or Saudization program in order to create and propose jobs to its local workforce.

The Saudization (or localization) was initialized to replace the foreign labor force with

the skilled and qualified local labor through proper planning and sequencing. Al-Harbi (1997)

explains that this policy favors domestic labor at large. This policy is based on three main

objectives (Looney 2004 in Al-Dosary and Rahman 2005) which includes increased ratio of

employment to locals across all the sectors of economy, to save the income remitted by

expatriates to their home countries, and reinvest that income in the development of the country.

Al-Dosary and Masiur Rahman (2005) explains that this policy is beneficial to reduce the

unemployment rate in the country by replacing foreign workers with Saudi nationals. Harry

(2007) further explains the role of government is of major employer of citizens throughout the

country.

ESCWA (2000) explains this policy of Saudi Arabia as an indignity to the foreign labor

in order to favor its own people. ESCWA further explains that between the year 1994 and 1999,

the jobs given to nationals were increased to 44.2%. As per the Saudi policy of national

recruitments, this ratio increased by the 2005. During this time more than 200,000 positions

filled by foreigners were given to the Saudi nationals. The government passed a law that all

business establishments will require to hire at least 25% Saudi nationals.

Research by Hafez (2009) indicated that reasonable measures have been taken to employ

the citizens of the country as workforce, but they represent only 0.43% as compared to the strong

private workforce. Al Ali (2008) noted increase in the unemployment rate of local workforce.

This high unemployment rate, irrespective of the highest growth rates in the Middle East, is

mainly due to the expatriates who filled the jobs at low wage rate and ruling bargain (Davidson,

2009).

Irrespective of government initiatives to provide jobs to its local Saudis, the rate of

unemployment was getting higher. There were many reasons behind this increasing rate. The

local labor was not cooperative and had high standards for wage rates. The foreign labor, on

other hand, was responsive to low wage rate and was ready to adapt their behaviors. The local

labor markets had lot of expectations from the government and the private sectors.

Mellahi (2007) explained the local labor market demands about the employment offered

to them. The labor market, according to him, wanted incentives and job facilities in private

sectors. This issue was put on fire by the cultural environment of Saudi Arabia where the status

of a person is measured on the basis of his employment, type of work, and social interactions.

The work force was not motivated to perform their work and showed lazy behavior, had

no work ethics; whenever they felt like leaving they left the work. All these factors became a part

of their identity and is found in various studies (Barber, 2008; Bladd, 2007; Godwin, 2006;

Mellahi, 2007; Mellahi and Wood, 2001, 2002; Rees et al., 2007) and noted by many local

journalists in the country (Al Gergawi, 2008, Al Subaihi, 2008).Further, Jones (2008) explained

their attitudes towards workplace as conflict creating and they had attitudinal issues reported by

many studies (Budhwar and Mellahi, 2006;Harry, 2007, Mellahi, 2007).

Morris (2005) explained the perspective of employees about their jobs. He suggested that

the Saudi nationals had certain work related expectations; they saw themselves as middle class

people and wanted jobs that meet this notion of middle class. According to World Economic

Forum (2008) the expectations may include comfort, white collar jobs, managerial roles whether

they deserve or not, DBM Arabian Gulf (2006) further relayed that the retail and service

industries were not as per their aspirations.

The nationals perceive government sector as high paying sector with limited working

hours and flexibility lenient working practices and lot of non-monetary benefits as compared to

private sector organizations (Godwin 2006, Nelson 2004, Harry, 2007, Wilkins 2001).Al-Ali

(2006) further explains their beliefs about career development in private sector jobs. According

to him, the nationals believe there are few opportunities to grow. Harry (2007) concluded that to

attract the locals, the private sector needs to re-design their wage policies and working

conditions.

The failure of localization process in the country has given rise to the negative

stereotyped people (Rees, 2007). These people develop negative perceptions about the person or

a group as per their beliefs. The Saudi nationals considered the labor jobs cheap and regarded

them bad. They believed these jobs are not meant for them. These are slavish jobs only meant for

the people who are less than them in their social lives and background. Such behavior of people

lead to vicious circle, where the companies tends to recruit people at lower wage rate under

quota systems on the positions that are not suitable to them and they cannot possibly succeed

there (Forstenlechner,2008).Moreover, the foreign workers are considered as dangerous, dis

loyal and political spies by these nationals (Whitley, 1993).

Dosary (2004) explains the stereotype Saudi work force behaviors and characterize them

into various factors to explain their exclusion from employment in the private sector. He has

given seventeen factors which, according to him, are the main factors behind the low

participation of Saudi workers in the private sector. These factors include; low command on

English language, exaggerated qualifications, nepotism by the foreign managers to their own

nationals, competition with expatriates, extended working hours, government sector incentives,

high quality of life does not allow them to accept low wage rates, recruitment is based on cost

cut strategies, Saudi worker’s inflexibility towards the work and management, recruitment

policies including ease of hiring and firing foreign workers, inflexible Saudi nationals towards

relocation, followed by Saudi nationals lack training and lack of awareness towards the private

sector policies and working conditions.

A survey conducted in the labor market across all the employment sectors in private jobs

showed that these above mentioned factors have significant impact on the low workforce

participation in the private sector (Al-Ghaith and Al-Maashoug 1996). Besides these factors, the

Saudi nationals’ preferences for the governmental jobs have a deep impact on their decisions

(Dosary and Rahman, 2005; Maimani, 1989).

Even in the presence of these issues and the stereotyped behavior of the Saudi nationals

towards the foreign managers and foreign workforce, the competition among national labor force

in the market is very high for both regular and under employed people (Dosary, 2010)

The low tolerance level, low language proficiency and other varying reasons has led to

reluctance in the private sector when employing these locals. The private sector might be

reluctant to employ them for varying reasons.

Nelson (2004) explained that the private sector employers have long term negative

perceptions about the nationals as less productive, and more expensive than foreign workers. Al-

Ali (2006, 2008) also reported that their low English fluency and trust towards the management

is also a barrier to their participation. Gulf (2007) explains that the employers consider

expatriates because of their cheap wages rates than local labor. Morris (2005) further explains

that the price of these people is less than the national labor. The state has mandated pension to

the national employers, this has increased the payroll cost for these employees (Ballinger, 2007).

Harry (2007) has given another reason for the low national participation in the private sector.

According to him, the rights given by the government to these nationals cause hindrance in their

recruitment.

The private sector is resistant to the localization efforts adopted by the government.

Mellahi and Wood (2001) related four inter linked reasons for their resistance towards these

efforts. According to them, the reasons include cost of labor, perceptions of people in the domain

of society and culture that influence the private sectors and affect the recruitment and retainment

of these people, the level of discipline and control and the failure to adapt the multi-cultural work

environment. Mellahi and Wood (2001: 147) further argue that“ the highly interventionist nature

of the Saudi economy has resulted in a large number of locals having less skills and work ethics

and, possibly, productivity, than their relatively privileged status would suggest.” Which in other

words means that hiring and retaining an expatriate is more profitable to the organization than

hiring local workforce.

Mellahi and Wood’s argument is further nurtured by eight important concerns to private

sector organizations. These includes, lower wage rates of foreign workers as compared to Saudi

national, job training to these people as compared to the Saudis, flexible behavior of the foreign

workforce in comparison with Saudis in terms of time and location (Al-Meer 1991),unfocussed

and unstable attitude of Saudi workers compared to expatriates, ease of hiring foreign labor (Al-

Qattan 1987), ease of firing the foreign workforce if their performance is not up to the mark (Al-

Tuwaijri 1989), the Saudis costly to hire due to the retirement plans and other benefits as

compared to expatriates (Riyadh Chamber of Commerce and Industry 1989), and low level of

adaptability and acceptance by Saudi worker in comparison with foreign workforce (The

Manpower Council1986). Al-Buraey (1995) explained further research is been conducted to

shed light on the different aspects of Saudi workforce behavior.

Milliken & Martins (1996) explained that the diversity of workforce can be advantageous

to the company in terms of creativity and innovation, but it can also lead to varied issues like

employee integration to one specific group over the others and the conformity to organizational

groups (stereotypes).VonHipple et al.(1993) further warned that, these people fail to notice

individual differences and in the context of jobs, they can strongly cloud the thinking of the

entire group causing them to see things through stereotyped person’s mind (Al Waqfi and Jain,

2007). Allport (1954) asserted that the positive interaction between the members of groups can

improve their inter group relations and can reduce the negative stereotyped behaviors.

The World Bank suggested various strategic approaches for the nationalization within the

country. These approaches are; nationalization on board, localizing the key sectors and

emphasizing control across the nation (Dosary, 2004).

Looney (2004) explains that from mid-nineties, there are several efforts conducted in the country

for localization. The efforts were mainly to increase the Saudi manpower annually, reduced

number of foreign workers and nationalization of banking sectors. According to MEED (2007)

the government of Saudi Arabia has set certain percentage for different industries and positions.

For instance, the percentage set by the government for contracting company is 5%

(Arabreform.net 2009) and 10% percentage is set for the nationals in the gold industry (MEED,

2007).

The process of localization works with the quota system set by the government or the

bans imposed on the expatriates (Al-Dosary and Rahman 2005).Shah (2006) further explained

that there are different policies and their effects on the supply and demand for workers.

Forstenlechner (2008) asserted that the punishment and visa application systems have improved

the level of opportunities that ensures the integrations of these nationalization processes.

The government relies on General Organization for Technical Education and Vocational

Training (GOTEVT) for the successful implementation of localization process in the country

(Al-Amr, 2001) but due to the lack of clear guidance the enforcement has not been taken

seriously in the country. The foreign workforces have been continuously issued work permits

and visas (GULF 2006).Dosary and Rahman (2005) referred that localization process should

give importance to skill development of Saudi nationals by educating them and giving vocational

training to them. They further emphasized that the government should provide incentives on the

basis of their work instead of following quota system. The success of the localization programs is

interlinked with the business sectors.

Al-Dosary and Rahman (2005) suggested that the remarkable progress has been made in

the private sector via nationalization programs. Mellahi (2007) noted that this achievement is due

to the fear of sanctions from the government, not due to they have any moral or ethical

implications. GULF (2008:2) reported that “The decision to cut the Saudization quota from 30%

to 20% in certain industries highlights the pressure the government is under to strike the difficult

balance between improving stability in the short term and creating jobs for its citizens in the

longer term”. There seems to be slow success rate in some sectors of the country as compared to

the success of nationalization in banking sectors, for example. The success of the localization

process in one sector can have profound impact on other sectors as well.

Saudi government approach is by far laudable, but it has no long term vision, planning

and practical implementation. As per the reports presented by CIA fact book (2011) the rate of

unemployment in the country was 10.8% as of 2010.

The government is hopeful that in long run the demand and supply of labor will be

reverse to the national labor force. The government has established Human Resources

Development Fund (HRDF) to provide necessary funds to the qualifying workforce and provide

funds for their training and recruitment in the private sector. HRDF offers various incentives to

the employers who recruit, train and employ local workforce. 75 per cent of the training costs

are borne by the Human Resource Development Fund for training Saudi national for two years

(Alzalabani, 2004). Ramadi (2005) explained that despite all these efforts, the HRDF results are

not very pleasing.

Byars (2006) suggested that the HR policies are affected by the culture of an organization

and country. The culture of a nation includes values, beliefs, attitudes, and different behaviors of

people that reflect in the policies of HRM. There are large numbers of cultural and social barriers

in the Saudi society that are affecting the successful implementation of localization within the

country Du Plessis (2007).

Ghonemy (1998) suggested that the economy of Saudi Arabia has transformed into the

modern developing economy. If the government wants the localization process to be successfully

implemented then the disparity between private and public sectors must be removed in order to

attract large number of people to work in the private sectors. Many researchers have indicated

the need of synchronization between the public and private sectors with regard to the skill

needed for a job in private sector. The education system in the country is not adequate to meet

the demands of the markets and to train the local workforce for differing working conditions.

To change the mindset and thinking of the Saudi people, it is required to establish career

paths to provide guidance to the people and counsel them to create awareness among them about

jobs, job training, work environment and market demand. This can only be successful if the

government involves the private sector. The changed thinking pattern can further nurture if the

Islamic values are cultivated among the youth of the country by policy makers.

Islam is the religion which removes all the cultural barriers affecting the life styles and

the society of the country. Implementing Islamic values in the society will generate positive

results and will affect all the people in the society (Ghonemy, 1998).

It is desirable to give preference to the human capital in the country. Human capital should be

the prime emphasis of developing countries. The current challenges faced by the government of

Saudi Arabia to implement the nationalization policy, a realistic and ad-hoc approach is required.

Shediac and Hatem (2010) asserted that this approach should focus on three main things;

first, expansion of economic activities to create more jobs for the people. This expansion can be

achieved in the sectors where Saudi Arabia has competitive advantage and the opportunities available

for its local workforce. Second, they should reform the current educational system in the country to

educate the Saudi work force and upgrade the labor skills by giving proper training to them to match

the market needs and requirements. Lastly, the effective recruitment and placement strategies should

be adopted to adjust the local labor and immigrants in the market and various other private and public

organizations. This can help significantly in the improvement of the country. If such a process and

approach is followed, the localization of Saudi Arabia will come out of dream and become reality to

the world.

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