Companies in Saudi Arabia will shortly face strict new labor laws that are aimed at preventing them from hiring more foreign workers than locals.
According to U.K. newspaper The Daily Telegraph, Saudi Arabia’s labor ministry introduced strict new laws last week that is aimed at deterring companies that are operating in the region from employing large numbers of expatriates. The new scheme will fine organizations for employing more foreign workers than local workers at the rate of 2,400 riyals (approximately $640 USD) per year per excess expat.
The fines will not be applied for foreigners with Saudi mothers or citizens of other Gulf Cooperation Council countries.
At present Saudi Arabia is highly dependent on foreign workers. Approximately nine out of ten people employed in the private sector are expatriates and the expat population makes up approximately one third of the total amount of people living in Saudi Arabia. However, while the area continues to attract workers from all over the world, who enjoy a tax-free income and a high standard of living, the Saudi government are facing increased levels of criticism that jobs for foreigners out number those available to the local population. As such, they are now being forced to implement new policies that are aimed at deterring organizations from employing overseas workers at the neglect of the local people.
A spokesman for the labor ministry said: “The aim of this decision is to increase the competitive advantage of local workers by reducing the gap between the cost of expatriate labor and local labor.”
This news, while positive for Saudi nationals, is now a source of real concern for expatriates who already work in the Middle East and those who intend to relocate there in the future. Many have voiced concerns that other members of the Gulf Co-Operation Council (which includes Kuwait, Qatar and the United Arab Emirates) may also replicate Saudi Arabia’s policies.
In January, Labor 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 “Saudizing” work now done by foreigners. However, it is believed that local unemployment in Saudi Arabia is now in excess of over 10 percent of the population.