Structural demand for migrant labour: a bottom-up analysis of labour market segmentation in Saudi Arabia

Combining insights from the new labour market segmentation approach and the labour process theory, this qualitative case study research critically examines how workplace dynamics shape the divisions of labour in Saudi Arabia. It draws upon secondary sources and in-depth investigation in a joint venture in the Saudi petrochemical sector. The results question the prevailed institutionalist explanations on the reliance on migrant labour in the Arab Gulf capitalisms. Analyses of secondary data on the Saudi labour market and the case study firm show the need to account for both, (1) the institutional structure that controls the standards of living of migrants (exemplified in the Iqama and Kafala systems), and (2) employers' discriminatory practices to ensure the lowest cost of labour, in particular contracting, pay and training. Both factors have resulted in the employer not only limiting upskilling for migrants but also avoiding the employment of high-cost labour i.e. Saudis, which feed back to the labour market at large. Theoretically, the paper highlights the need to consider the 'value of labour power' to grasp the reality of the migrant division of labour in the Arab Gulf countries.