Saudi reviews fees on foreign workers after exodus

More than half a million expats left the kingdom’s workforce in the first half of 2018



Saudi Arabia is reviewing its policy of imposing fees on foreign workers after an exodus of expats over the last year and a half, according to reports.

Bloomberg cited sources as confirming the fees are unlikely to be cancelled altogether but a ministerial committee is looking to modify or restructure them.

A decision on the matter following the review, which is designed to match the government’s fiscal needs with the abilities of the private sector, is expected in the coming weeks.

The kingdom saw more than half a million foreign workers leave the workforce in the first half of the year following the introduction of new fees, taxes and restrictions on employment in some sectors.

Read: Saudi unemployment steady in Q2, foreign labour force down 290,000

Since January 1, private sector firms have been charged SAR300 or SAR400 ($80-107) monthly fee for each foreign worker they employ.

Firms and workers have also endured higher fuel and electricity prices and the introduction of a 5 per cent value added tax since in 2018.

These factors, combined with a SAR100 ($27) monthly fee for each dependent introduced toward the middle of last year, have seen many Saudi-based expats send their families home or leave the country altogether.

Read: Saudi labour ministry denies reports of increase to dependents fee

The non-Saudi workforce decreased roughly 900,000 from Q2 of last year to the same quarter of 2018, from 10.78 million to 9.89 million, according to figures from the General Authority of Statistics.

Private sector firms in some sectors are also grappling with new Saudisation requirements that mean the majority, or all, of their sales staff must be Saudi nationals.

These rules already apply to shops selling gold and jewellery and mobile accessories and car rental offices and have recently been applied more broadly across the retail sector.

Under plans announced in January, Saudis must hold 70 per cent of sales jobs at outlets selling 12 types of items.

The first phase, which came into force in September, hit automobile and motorbike showrooms and shops selling items including ready-made clothing for men and children, home and office furniture, household goods and utensils.

The second phase beginning on November 9 applied to outlets selling electrical and electronic appliances, watches and glasses.

While a third phase will come into force from January 7 for shops selling medical equipment, construction materials, auto spare parts shops, carpets and confectionery.

Read: Saudi ministry warns new retail job restrictions 12 days away

Second quarter economy data released in late September showed Saudi gross domestic product, adjusted for inflation, expanded 1.6 per cent from a year earlier.

This was largely thanks to the government sector, where growth jumped to 4 per cent from 2.7 per cent as authorities boosted spending.

In contrast, the private sector expanded 1.8 per cent, up from 1.1 per cent in the first quarter

Read: Saudi economy posts fastest growth in over a year in Q2 but private sector still sluggish