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New expat fee rattles contracting sector

Last updated: Wednesday, November 28, 2012 10:05 AM

Saudi Gazette report

RIYADH — The Ministry of Labor’s decision to impose a SR200 monthly fee for every expat worker in companies that employ majorities of foreign workers has deepened the divide between the ministry and construction contractors.

Many contractors have expressed their inability to abide by the decision. They intend to cease work on ongoing projects, and pay penalties for projects delays.

At a press conference here, contractors from various sectors asked the Ministry of Labor to provide them with Saudis who are willing to work in the contracting sector.

The ministry’s decision lacks any data or studies to prove its positive impact on achieving Saudization, they charged.

They have sent three letters to the minister explaining the negative impact of the decision. However, they are yet to receive an answer. They added that the arbitrary nature of the decision is a reflection of the minister’s promise to exempt contractors from the decision if they achieve a 50 percent Saudization rate.

Achieving this percentage means releasing 3 million expat workers that have to be replaced by Saudis. This cannot be achieved now, but may happen in 10 years.

Fahd Al-Hammad, Board Member of Riyadh Chamber of Commerce and Head of the Contractors’ Committee, said, “The problem lies in the current projects and government contracts that were signed before the decision. The contractors do not wish to engage in arguments regarding national directives, but it is impossible to achieve.

“We welcome and are thankful for the ministry if it can provide us with the means to achieve 50 percent Saudization in the contracting sector,” he added.

Muhannad Azzawi, assistanct head of the contractors committee, said for the past 10 years contractors have been paying SR150 to support the Human Resources Development Fund. Contractors have not benefited from the fund.
Member of the Maintenance and Operations Committee in Riyadh Chamber of Commerce Fahd Al-Nasban said the problem lies in the timing of the decision.

He questioned whether the minister of labor is aware of the magnitude of the ongoing projects, or knows of any Saudi who is willing to work as a laborer in the contracting sector.

Ahmad Al-Faleh, Member of the Maintenance and Operations Committee, said that there is no clear mechanism for the compensation of these additional fees. As such, financial claims will be held up for a long time.

He called upon the minister to freeze the decision, as there are those who are waiting to raise their prices. Due to the market philosophy and a lack of follow-up, once prices are raised, they will never come back down to their previous levels.

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