Saudi fines for expat workers to cost companies billions

Published:  5 Dec at 6 PM
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Over the next year, fines levied on Saudi companies for each extra expat worker hired over a certain level are expected to cost billions.

The controversial new laws, announced recently and due to come into effect within the month, apply to Saudi companies which hire more expat workers than locals. Over the next year, companies affected are expected to have to pay up to £1.7 billion in total fines.

The Saudi newspaper Arab News is reporting that a good number of Saudi companies are refusing to downsize the number of their expat workers. According to Saudi government spokespersons, four million overseas staff are involved, thus potentially raising £1.7 billion in fines for the Saudi government.

The booming private sector in the country depends on foreign workers, with nine out of ten employees coming from overseas. Businesses are saying that expat staff offer essential skills the local population cannot provide, with others hiring southeast Asian workers at cheaper rates unacceptable to locals.

According to Terri Lundberg, a long-term Saudi Arabia resident, most large corporations will be forced to keep on their skilled, professional expat workers as Saudis are not able to fill the positions. She adds that major corporations will absorb the cost of the fines, but fears smaller businesses will face a problematic financial burden.

The new fines are part of a government initiative aimed at reducing the kingdom’s dependence on overseas workers at all levels. This 'Saudization' policy will attempt to facilitate the transfer of skills from the expat workforce to Saudi nationals, with its first step taken last year with the restriction of work visas for foreigners unless a greater number of locals were also employed.
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