Saudi to start fining firms with expat majorities

Gulf kingdom to implement crackdown on Thursday in bid to create more jobs for locals

(Photo for illustrative purposes only)

(Photo for illustrative purposes only)

Saudi Arabia is stepping up efforts to lower unemployment among its citizens by fining private sector firms that employ more foreigners than Saudis, the labour ministry said in a statement carried by state news agency SPA on Tuesday.

The policy, which will be implemented at the start of the new Islamic year on November 15, will require private companies with majorities of foreign workers to pay a fee of SR2,400 ($640) a year for each excess foreigner.

The fines will not be applied for foreigners with Saudi mothers, citizens of other Gulf Cooperation Council countries - the UAE, Kuwait, Oman, Qatar and Bahrain - or household help, the statement said.

"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," it said.

If it is strictly enforced, the policy could have a major impact on some firms. Roughly nine in 10 employees of private companies in Saudi Arabia are expatriates, according to official estimates; firms prefer to hire foreigners, many from south or southeast Asia, because they command lower wages than locals.

This has helped to boost the unemployment rate among Saudi citizens to about 10.5 percent - a social problem and potentially a political one too in the long run. Saudi Arabia has a population of over 27 million, of which about 9 million are believed to be foreigners.

The Ministry of Labour is trying to change the private sector's culture from one of "importing cheap labour from abroad to one of developing national talent that is needed by the sector", Deputy Minister of Labour for planning and development Moufarrej Haqbani was quoted as saying in the statement.

In order to press private firms to hire more locals, the government last year introduced a quota system which imposes minimum numbers of Saudi employees on companies depending on their size and sector. Firms which do not comply face restrictions on obtaining visas for their foreign workers.

The Ministry of Labour said in September that it had created 380,000 new jobs in 10 months through that system, which has been criticised by some employers for raising their costs or dirsupting their operations. Some companies have complained that qualified Saudi workers are not always available.

In January, Labour Minister Adel Fakeih said the Middle East's largest economy needed to create 3 million jobs for Saudi nationals by 2015 and 6 million by 2030, partly through "Saudi-ising" work now done by foreigners.

Youth unemployment was one of the main drivers of last year's unrest in much of the Arab world, but the unrest did not seriously affect Saudi Arabia, where King Abdullah announced a $110bn package of benefits to defuse any potential discontent.

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Posted by: adan

I think Saudi's demand on every level of work will be realized, I think also that there workforce is on the way and will be highly professionalized. But demands will surely hire expats today and on the way. A working Saudi will be a good habit. Resources both natural and manpower is busy partnership.

Posted by: Kaj RISSLER

I like this discussion! I can only contribute a personal view.
Whatever anyone thinks from his personal experiance, the Saudies care correct to promote integration and foreign skills. Howerever like all countries They are tied with history and change is not easy- look at Iran ( and what the Shah did with the blessing of US) and all turmoil in the world. Sweden were I was born had a narrow escape from communism, other countries not. Absolute rule, normally absolutely corrupts-with few exceptions. Change comes - sometimes by Nature - and this cannot be disputed, but change imposed by rulers is a different thing . Very tricky-
I salute Saudi, if they can bring about a change and an adaption without too much bloodshed and misery. The world through history is filed with this.
Who is right and WHO IS WRONG-gives a good true example of this. It is only possible to try and not cause to much suffering in the process. No one is right - and as the English say You try to muddle through./ K

Posted by: Elham

Every country must take care of the interests of its own citizens, not its guests. Kudos to Saudis and hopefully the same will soon be implemented throughout the Arabian Gulf. Happy UAE National Day.

Posted by: Nirsly


My friend, that applies to every claim.

I travel to Saudi every month, and every firm I meet has a very high percentage of Saudis, in addition to the numerous international firms outside Saudi which have hired Saudis.

What international standards are you referring to? The ones that bankrupted your financial system, and showed all the frauds in your banks? The ones that have caused 25% unemployment in Spain and Greece? The ones where the most senior members of your government have affairs and disclose national security information?

Please tell us which international standards to follow.

Posted by: Wildwine

May be you are correct; but why doesn't the government bring in harsher penalties; e.g. restrict visas to expats, strict rules on qualifications, higher penalties, increased visa fees etc.etc.
Because the government wants to promote a free market. With a highly mobile global workforce, private sector will simply go for best value for money, you can not blame them because the private sector is essentially profit driven. You can not blame the expats either; because their intention when they take a job in the Gulf is not to undermine local population, but to make a better living themselves. It is all demand supply forces in a globalized labour market.
It is a difficult situation for you guys, only time will tell how things will work out.

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