Saudi Shoura Council slams expat fee plan

Scheme would have seen firms fined US$640 for each foreign worker over quota
(Photo for illustrative purposes only)
By Daniel Shane
Tue 20 Nov 2012 11:41 AM

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.

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