An impending ban on employing foreign workers in Saudi Arabia’s car rental sector has seen many firms close down to avoid hefty fines, according to reports.
The labour ministry announced in early January that the ban would come into force on March 18 as part of a wider drive to decrease Saudi unemployment that has seen a number of retail and other roles barred to foreigners.
Saudi Gazette reported that some car rental offices had chosen to shut their doors rather than face penalties from the labour ministry, while others were still not compliant with just days to go.
A similar ban on employing foreigners in mobile accessories shops enacted gradually in 2016 saw thousands of outlets shut voluntarily or following inspections as the industry struggled to deal with the changes.
The impact of the ban continued last year, when mobile phone shipments to the kingdom were down 13 per cent.
Car rental sector investor Abdulrahman Al-Ghamdi told the publication that his business did not generate the same profits it used to and companies would struggle to pay high salaries to Saudis due to expenses for buying and servicing vehicles.
But another investor, Fahd Al-Jabri, said Saudi workers would benefit.
“It will benefit many Saudis and create job opportunities for them at monthly salary ranging between SAR4,500-SAR5,500,” he was quoted as saying.
There were also reservations that Saudi citizens would be happy with the conditions offered to workers, which include working on weekends and holidays when demand is highest, according to the former chairman of Jeddah Chamber of Commerce and Industry’s car rental committee Jalal Al-Ghamdi.
He indicated that a lack of opportunities for promotion could be an issue for Saudi staff moving forward.
Last month, Bank of America Merrill Lynch (BofAML) said in a report that recent bans on employing foreign workers in some sectors, including 12 retail roles announced in January, could see tens of thousands of expats lose their jobs this year.