Saudi Arabia Denies Rumours About Public Wage Cuts

Saudi Arabia will not be slashing public salaries and allowances in an effort to curb spending during the current period of low oil prices, an official said in a statement to the Saudi Press Agency (SPA).

The statement follows comments on social media about a report, which indicated that the government is mulling a reduction in public expenditure to offset a $39 billion deficit in its 2015 budget.

A report by Associated Press last week also quoted SPA as saying that there would be “more efforts to reduce current expenditures, especially expenses of salaries, wages, allowances and the like, which represent nearly 50 per cent of the approved budget expenditures” for 2015.

However, an unnamed finance ministry official brushed away such rumours, saying that there was no validity to such statements.

“The comments on social media that the government plans to cut wages, is baseless and has no validity,” the source said. “Neither Finance Minister Ibrahim Al-Assaf nor any other official from the ministry have made statements in this regard.”

Saudi Arabia has historically relied on its public sector to create jobs for its local population.

However, a population that has grown rapidly over the last few years has limited its ability to do so. Compounding the problem, Saudi citizens are said to prefer the cushy benefits of a government job to long hours in the private sector.

According to a report by the International Monetary Fund (IMF) that quoted statistics from Central Bank, about nine in 10 working Saudis were employed by the public sector, which largely depends on oil revenue for its funds.

The IMF further warned that reducing such reliance on public-sector jobs must be a priority for the world’s largest oil producer to ensure long-term growth.

In line with that, the Kingdom too has sported a policy shift in the last two years that encouraged more Saudi nationals to join the private sector.

But despite its efforts, the uptake of private sector jobs by Saudi nationals have been dismal.

According to a report by the Riyadh Chamber of Commerce and Industry (RCCI) earlier this year, only 1,760 Saudis applied for over 11,750 vacancies that were made available by 70 private companies and other organisations in Riyadh.