Saudi private sector to pay $2.6bn in expat fees - report

Contracting companies in the Gulf state have refused to comply with regulations
Saudi private sector to pay $2.6bn in expat fees - report
GCC expats, American expatriate in Saudi Arabia, expats and Saudi national
By Claire Valdini
Mon 26 Nov 2012 11:22 AM

Saudi Arabia’s private sector is expected to pay around SAR10bn (US$2.6bn) in expatriate fees for this Islamic calendar year, Arab News reported, citing ministry sources.

Contracting firms operating in the kingdom have refused to comply with the new regulations, under which they are charged SAR2,300 for each overseas employee not permitted under their Saudisation quota, added the newspaper.

Saudi-based contractors last week held a meeting in Riyadh to voice their opposition against the regulations. “Contractors will not pay the new fees because they are illogical and have negative impact on both small and medium companies,” Fahd Al Hamadi, head of the contractors’ national committee, told Arabic daily Asharq Al-Alawsat.

Saudi Arabia, which is struggling to create public-sector jobs thanks to a decades-long population boom, is pushing ahead with plans to force more private sector companies to reduce their foreign workforce in favour of Saudis.

Roughly nine in ten employees of private firms in Saudi Arabia are expatriates, according to official estimates. Foreign workers, mainly from South or Southeast Asia, generally command lower wages than Saudi staff.

The Gulf state needs to create 3m jobs for Saudi nationals by 2015 and 6m jobs by 2030, Labour Minister Adel Al Fakieh said in January.

Saudi Arabia’s latest policy, which took effect on November 15, makes it mandatory for private-sector companies with a majority of foreign staff to pay a fee for each expatriate worker.  Fees have increased from SAR100 to SAR2,400 per person.

Domestic workers, foreigners with Saudi mothers and citizens of other GCC countries are exempt from the rule.

“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,” the Ministry of Labour said in a statement last month.

Saudi Arabia’s Shoura Council, which drafts and proposes legislation to the Saudi king, last week criticised the proposal 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 Saudisation, but aggravate them,” said Ahmed Al Dhaylai, a Shoura Council member.

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