Firms accused of exploiting labour laws after cutting Saudi staff

Investors and economists in Saudi Arabia have accused companies of exploiting the country’s labour laws and a lack of creativity for cutting Saudi staff during the current economic downturn.

Local daily Al-Madina cited IT investor Rashid Bin Zouma as saying companies had cut staff due to a fall in sales or production or due to not receiving payment from government departments.

However, he argued they should look for alternatives to firing Suadi employees as it has a negative impact on the economy.

“The companies should have cut their allowances instead and some sections of their operations running to retain the workers,” he was quoted as saying.

Others argued the country’s Article 88 Labour Law allowing firms to fire workers for poor financial performance, low revenue and a general economic slowdown was being exploited.

Bank branch manager Mohammed Al-Mowalled told the publication that there was other options to overcome “financial crises” including mergers, new business ventures and replacing expat workers with Saudis.

Dr Khaled Al-Maimani, head of HR at King Abdulaziz University accused firms retrenching staff of a lack of creativity, with options such as a “merger, opening of new business ventures and temporarily renting their employees to other companies for specific periods” open to them.