(Solution) 7HR01 Question 2 (AC 2.2) Labour market and organisational strategy impacts the management of employment relations

Solution

Question 2 (AC 2.2) Employment relations strategies are shaped by competitive pressures; review how the current labour market and organisational strategy impacts the management of employment relations within the organisation

Current Labour Market Review and Its Impact on Saudi Aramco’s Workforce Nationalisation Strategy

Vision 2030 is now transforming the Saudi labour market by prioritising economic diversification, private sector growth, and workforce nationalisation through the Saudization (Nitaqat) policy (Hobson & Katwyk, 2024). This initiative requires companies such as Saudi Aramco to increase the employment of Saudi nationals in all business sectors which impacts how companies plan, develop and manage their workforce. Given that Saudi Aramco is the world’s largest oil producer, its workforce nationalisation strategy is driven by labour market challenges, such as a skills gap in specialised roles, growing demand for local talent, and shifting workforce expectations (Elbanna et al., 2023). Saudization policies have mandated hiring more Saudi nationals, yet the energy sector continues to depend heavily on skilled expatriates in engineering, geosciences, and digital transformation roles. This brings about a challenge of meeting government mandates without sacrificing operational excellence (Albejaidi & Nair, 2021). Digitalisation and automation are another labour market key factor, as these trends are reducing demand for certain traditional jobs and growing the need for STEM professionals, AI specialists, and sustainability experts. Aramco’s nationalisation strategy has to bridge the skills gap to upskill local employees in relation to global energy transition trends such as investments in hydrogen, renewables and carbon capture (Elbanna, 2024). In addition to this, as private sector companies offer competitive salaries and attractive work models, the company faces growing competition. Younger Saudi professionals such as millennials and Generation Z, prioritise career progression,…..

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