Employees strike at “major” Saudi contractor after delay in wages – report

Over 1,000 workers protest in Jeddah; local media report damaged to company property

(Image for illustrative purpose only - Getty Images)

(Image for illustrative purpose only - Getty Images)

Over a 1,000 workers at a “major construction company in Jeddah” have gone on strike to protest a six-month delay in their wages, local media have reported.

Arab News said that workers at the company, which it did not name, disconnected the electricity supply to the firm’s offices in protest last Tuesday.

The newspaper also reported that employees damaged company property and attacked administrative staff during a demonstration in front of the firm’s headquarters.

A spokesperson at Saudi Arabia’s Ministry of Labour said that it had received a number of complaints and was working to address the issue.

“The ministry received a number of complaints and it has stopped all its services to the company,” said Khalid Aba Al Kheil, according to the report.

The fall in the oil price is putting unprecedented pressure on the Saudi contracting industry. In its 2016 budget, the government slashed its infrastructure and transport budget by 63 percent.

The finance ministry has cut advance payments to firms doing state construction work, the government has awarded fewer contracts, and its payments to companies for work already done have slowed, industry executives say.

Earlier this month, a leading Saudi Arabian businessman asked the king to intervene to ensure that the government makes delayed payments to construction companies, in a sign of growing pressure on the economy due to low oil prices.

Some construction firms have seen scheduled payments from the government delayed by over six months, Abdulrahman Al Zamil, president of the Council of Saudi Chambers business association, wrote in a letter to King Salman.

"If the delay in payments continues, these companies will be at risk of default, or go completely out of business," said the letter, seen by Reuters last Monday.

Partly because of the payment delays, some firms have delayed paying their staff or laid off thousands of workers, and several have begun talks to reschedule debts. Jabal Omar Development said last month it was in talks with creditors after failing to make a 650 million riyal ($173 million) first repayment on a 3 billion riyal government loan.

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