Within global commodity chains, oil represents an important exception to the general rule of transnational or end-user dominance (Czaban and Henderson, 1998:585-563) as at certain historic moments, primary producers have been vested with extraordinary power. In turn, this has led to the creation of a specific form of growth regime within the oil-producing states in the Middle East. The Saudi accumulation regime is oil-centred, with large sectors of industry remaining heavily dependent on state sponsorship.
The assembly of institutions designed to stabilise what has been a highly uneven growth process has certain defining characteristics: this includes a highly segmented labour market, with a clear distinction drawn between indigenous Saudis and foreign workers. Similarly, any balance that might exist in the Saudi labour market has little to do with supply and demand, but with a codification of wage relations, whereby firms historically have traded off ongoing investment and limited job creation for Saudis in return for state patronage and a relatively free hand in terms of the utilisation of foreigners (cf. Grahl andTeague, 2000:162). Human resource management in Saudi Arabia represents a product of the nature of the productive system, and the codification of practices in formal legislation and in unwritten rules governing conduct (ibid.). In this chapter, we provide an overview of the development and changing nature of the context within which HRM operates, and actual practices and problems associated with HRM in Saudi Arabia.
How firms manage their human resources is the product of a wider socio-economic context. In Saudi Arabia, five key factors have shaped and continue to shape HRM policies and practices. These are: the structure of the Saudi economy, the political environment, the structure of the labour market, national HRD strategy and national culture.