'Contractors could lose up to SR 7 bn in fees'



ABHA: ARAB NEWS

Published — Tuesday 4 December 2012

Last update 4 December 2012 2:25 am

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The decision of the Ministry of Labor to raise the cost of foreign labor to SR 2,400 per year has caused much debate in the contracting sector. The sector’s losses could reach up to SR 7 billion annually, said a contracting committee.
Discussions, workshops and meetings are taking place between the ministry and chambers of commerce as contractors study a number of mechanisms to obtain reimbursements for their current contracts.
In Abha, the contracting committee of the chamber there said that the decision would worsen the problem of casual labor, as more workers would defect from their sponsors to work in other regions with higher wages. It emphasized the fact that small contractors, in particular, were considering halting all works.
During a meeting of the committee, contractors said that irregular employment is more expensive than the fees paid for an extra expat worker. They claim the decision has a grave impact on many sectors, and it will not solve the issue of Saudization either.
The Ministry of Labor did not respond to the contractors’ demands, the committee said, to send data concerning Saudi unemployment. The committee is in the process of submitting a report to the Royal Court, explaining the damages inflicted on businessmen. At the same time, it asked all contractors to follow the legal procedures in dealing with the decision.
Companies should support all decisions concerning Saudization, said former member of the employment committee in Riyadh’s chamber of commerce, Mohamad Al-Saker.
Unemployment figures are on the rise according to Hafiz, the one-year program for the unemployed that expired last month. The ministry, in its turn, Saker said, should coordinate with the private sector before making any decision.
The committee said that the sector’s losses could drive small and medium-sized enterprises and subcontractors out of business.

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