Official report shows Saudi foreign workers tax increases inflation

Published:  9 Oct at 6 PM
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Tagged: USA, Australia, Jobs
Saudi Arabia’s controversial foreign workers’ tax levied on companies with high numbers of workers from overseas has, as predicted, increased the country’s inflation figure.

Introduced last November, the tax of US$640 a year must be paid on each foreign worker above a certain limit as compared with the number of Saudis employed. Its original intent was to encourage private companies in the kingdom to employ fewer expats, thus freeing up jobs for Saudi nationals.

At the present time, Saudi nationals make up around 10 per cent of the workforce, according to government estimates, and unemployment figures are relatively high at around 12 per cent. However, many private company owners report difficulties in filling positions with Emiratis, forcing them to employ non-nationals sourced from overseas.

According to the president of the Council of Saudi Chambers, Abdullah al-Mubti, the introduction of the tax has forced inflation rates higher. The Labour Ministry, he told Arab news on Tuesday, should have consulted businessmen and other ministries before handing down a decision which would obviously result in a negative impact on inflation.

Chair of Jeddah’s Chamber of Commerce Saleh Kamil agrees and opposes the tax, saying that unemployment amongst Saudi nationals cannot be remedied by introducing schemes which will impact negatively on the economy, inflation and services. Saudi Arabia’s Saudization policy has also come under criticism by local business leaders in the last week, and is also focused on driving Saudis into private sector jobs.

Government estimates of unemployment in the oil-rich country suggest 12 per cent of its nationals are not working, also stating that 90 per cent of employees in the private sector are from overseas. Earlier this year, the government’s crackdown on illegal workers resulted in the deportation of hundreds of thousands of expat labourers.
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