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New levy on foreign workers unfair, say business owners

Last updated: Friday, November 16, 2012 12:17 AM

Saudi Gazette report


JEDDAH — The Labor Ministry’s imposition of a new fee on private sector firms that employ more foreigners than Saudis has drawn opposition from several private sector firms and companies.

Owners of a number of companies have said the new move would adversely affect their business prospects and jeopardize their efforts to train Saudi jobseekers to replace foreigners.

The ministry’s decision also triggered a controversy with regard to the effective spending of the huge revenues set to be generated through these fees, according to a report in Al-Madinah Arabic daily.

The ministry started levying an annual fee of SR2,400 for each excess foreigner working in the private sector effective on Thursday, the first day of the new Hijra year (Muharram 1, 1434).

Prominent businessman Saleh Al-Sari, owner of Al-Sari Group, said large companies would be affected badly by the new decision.

He said: “The number of foreigners working in such companies is much higher.

“Saudis are not in a position to carry out some of the jobs being done by foreigners.

“It was assumed that the ministry would force the companies and firms to conduct training courses for young Saudi jobseekers instead of levying SR2,400 per each excess foreign worker annually.”

Ziyad Bassam, member of the board of the Jeddah Chamber of Commerce and Industry, said the ministry must monitor and evaluate Saudis working in the private sector with regard to their punctuality at workplace and performance in work before embarking on a move to levy huge fines for employing too many foreigners.

He also noted the decision would also help reduce the number of foreign workers and create more job opportunities for qualified Saudi jobseekers.

The ministry’s imposition of the fee also resulted in a rift between the ministry and businessmen.

According to the ministry, the decision would help increase the competitive advantage of Saudi workers by reducing the gap between the cost of expatriate and local labor.

It added: “This would also contribute to strengthening the Human Resources Development Fund.”

Owners of companies claimed most companies hire foreigners mainly for jobs where they could not find any qualified Saudis.

They complained the new decision would impose on them a huge financial burden.

The businessmen also asked where this huge amount of money from the fines would go.

They said the ministry should have forced private companies to undertake free training programs for Saudi jobseekers within their premises instead of levying huge fines, apparently to fulfill the same objective.

A ministry spokesman did not comment on what would happen to the money generated from such fines. Hetab Al-Anzi said the ministry had issued a circular earlier explaining how revenue generated from the fines would be spent.

However, businessmen said the circular did not mention anything of the sort.

Deputy Labor Minister for Planning and Development Moufarrej Haqbani said on Tuesday that the money generated from the fines will go to the Human Resources Fund and will be used to train Saudi youths for jobs. The decision will reduce the recruitment of foreign workers and curb the violation of sponsorship regulations where some workers take up more than one job, disrupting the demand and supply balance, he said.

Haqbani clarified the fine will not be applied to foreigners with Saudi mothers, citizens of other Gulf Cooperation Council countries or domestic help.

Companies that have equal numbers of Saudis and non-Saudis will also be exempted from the new measure.

He added: “The ministry is trying to change the private sector culture from one of importing cheap labor from abroad to one of developing national talent that is needed by the sector.”

He said details of the mechanism for implementing the decision would be available on the ministry’s website (

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