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Saudi king to reimburse SMEs for expat work permit fees
| Published: | 11 Feb at 6 PM |
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Saudi King Salman has approved reimbursements of around three million dollars to struggling businesses for fees charged for expat work permits as well as cancelling rate hikes for those who couldn’t pay.
Since 2017, Saudi companies have been forced to pay swingeing fees for every expat employed, in a bid to persuade firms to stop hiring foreigners and rely on the local population for workers. In addition, the fees are also charged for dependents’ visas, resulting in a high number of families being sent back to their home countries.The payment system for annual work permits was also changed to a single yearly payment including the rate for every foreign employee. The annual fee hikes taking place every year to 2020 were considered crucial for the creation of more jobs needed to reduce the 12.8 per cent rate of local unemployment.
However, small and medium-sized businesses as well as the construction sector have been hard hit by the changes, in particular by the annual ‘collective invoice for work permits, and have been lobbying since the effect of the increases began to bite into profit forecasts. Around 10 million expats are working in the kingdom, with the majority employed in lower-paid, dangerous jobs that Saudi citizens refuse to take on, with finding acceptable jobs for the hundreds of thousands of unemployed Saudi nationals certain to challenge the economic leadership of Crown Prince Mohammad bin Salman. The announcement of reimbursements for businesses struggling to make the necessary payments will be welcomed, but the fate of the Saudization scheme itself is another story for another day.
Since 2017, Saudi companies have been forced to pay swingeing fees for every expat employed, in a bid to persuade firms to stop hiring foreigners and rely on the local population for workers. In addition, the fees are also charged for dependents’ visas, resulting in a high number of families being sent back to their home countries.The payment system for annual work permits was also changed to a single yearly payment including the rate for every foreign employee. The annual fee hikes taking place every year to 2020 were considered crucial for the creation of more jobs needed to reduce the 12.8 per cent rate of local unemployment.
However, small and medium-sized businesses as well as the construction sector have been hard hit by the changes, in particular by the annual ‘collective invoice for work permits, and have been lobbying since the effect of the increases began to bite into profit forecasts. Around 10 million expats are working in the kingdom, with the majority employed in lower-paid, dangerous jobs that Saudi citizens refuse to take on, with finding acceptable jobs for the hundreds of thousands of unemployed Saudi nationals certain to challenge the economic leadership of Crown Prince Mohammad bin Salman. The announcement of reimbursements for businesses struggling to make the necessary payments will be welcomed, but the fate of the Saudization scheme itself is another story for another day.
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