Saudi Labour Ministry cracks down on majority expat firms

Private sector companies based in Saudi Arabia are to be fined if the number of expat employees overreaches a set total.

The Saudi Labour Ministry’s announcement on Tuesday came as a shock to its expat community, as it means that firms employing a majority of expat workers will be fined $640 dollars per year for each excess expat. According to Moufarrej Haqbani, Saudi’s Deputy Minister for Labour Planning and Development, the money raised from the fines will be used by the Human Resources Fund to train up Saudi youth.

The statement made it clear that expat workers with Saudi mothers, household help, and citizens from the Gulf Cooperation Council countries will not be affected by the fines. The announcement also stated that the move would increase local workers’ competitive advantages and decrease the need for more expensive expatriate labour.

In brief, the Labour Ministry is attempting to change the culture of the private sector from recruiting expats to utilising home-grown talent. The decision will affects the number of expat jobs available in the kingdom and will curb violations of the sponsorship laws whereby workers disrupt the balance of supply and demand by taking more than one job.

Official estimates reveal that Saudi Arabian private companies employ nine foreigners to every one local worker, with migrants from Southeast Asia especially sought after as they work for minimum wages refused by locals. The situation, according to the Ministry, has contributed to the 10.5 per cent unemployment rate in the country.

A visa quota restriction scheme introduced last year has had minimal results in persuading firms to employ more Saudi workers, with the new regulations assumed to be the stick rather than just another carrot. Either way, it seems that private companies will now need to make a choice between being fined or using cheap overseas labour.

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