Scheme would have seen firms fined US$640 for each foreign worker over quota
Members of Saudi Arabia’s legislative Shoura Council have attacked a proposal by the Gulf state’s Ministry of Labour that would see companies fined for hiring too many foreign workers.
Under the Ministry’s proposal, businesses would be charged SAR2,400 (US$640) for each overseas employee not permitted under their Saudization quota, Saudi Gazette reported. The plan was due to come into force from the start of the Islamic new year.
The Shoura Council, which drafts and proposes legislation to the Saudi king, has criticised the idea as bad for business. The council also said that it was not part of the Ministry of Labour’s remit to decide laws on hiring practices.
“I do not need to mention that this will not help in solving the problems with Saudization, but aggravate them,” Ahmed Al-Dhaylai, one Shoura member, one quoted as saying by Saudi Gazette.
“This decision, like many of the ministry’s decisions, will not solve the problem. Undoubtedly, this will produce lots of negative outcomes that the citizens will pay for,” he added.
The Ministry of Labour’s proposal would have applied to private sector firms that employ more foreigners that Saudis. Those with a majority of foreign workers would have had to pay a fee of US$640 for each excess worker.
"The aim of this decision is to increase the competitive advantage of local workers by reducing the gap between the cost of expatriate labour and local labour," read a Ministry of Labour statement posted on the official Saudi Press Agency earlier this month.
Roughly nine in ten employees of private firms in Saudi Arabia are expatriates, say official estimates. Foreign workers, mainly from south or southeast Asia, generally command lower wages than Saudi staff.
This phenomenon has helped increase the rate of unemployment among Saudis to about 10.5 percent.
Saudi Arabia has a population of more than 27m, of which about 9m are believed to be from overseas.