Ministry won’t reconsider levy on foreign workers


Published — Sunday 25 November 2012

Last update 25 November 2012 6:57 am

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JEDDAH: The Ministry of Labor has denied reports of any move to reconsider the newly introduced levy on expatriate workers.
“The ministry will not go back on its implementation of the Council of Ministers’ decision No. 353 concerning the higher fees on expatriate laborers when their number exceeds Saudi workers,” Ministry spokesman Hattab Al-Anazi said in a statement.
As a move to counter the likely consequences of imposing the additional fee on private enterprises such as rise in product prices, the ministry will ask the Ministry of Commerce to monitor prices in markets and take deterrent measures against traders who hike their prices, Al-Anazi said.
Denying any link between the Nitaqat program and the expatriate labor levy, the official said even an establishment with fewer than nine workers must pay the new fee. Nitaqat regulations stipulate that an establishment with nine workers needed to employ only a single Saudi worker.
The new levy system was implemented on Nov.15, the first day of the new Hijri year.
Any establishment that employs Saudis less than half of the total number of its workers will have to pay an additional monthly fee of SR 200 for each foreign worker. But no fee has to be paid if the non-Saudi workers are domestic help, sons of Saudi women married to non-Saudis or citizens of the Gulf Cooperation Council countries.
Labor Minister Adel Fakeih is expected to discuss the fee issue with Jeddah businessmen at a conference on Human Resources Development.
While the ministry is confident on the success of the levy, some economists cast doubt on the potential of the new tax to solve the unemployment problem.
“The decision to levy SR 2,400 for each expatriate worker annually will automatically lead to rise in prices in general besides raising the cost of government project contracts,” said economist Abdullah Al-Shadadi. “It will also make a negative impact on the private sector as some firms will be affected by the higher labor cost caused by the levy and, consequently, will be prompted to lay off workers including Saudis.”
He noted that “no goal could be achieved by making surprise decisions as the Ministry of Labor is doing.”
Instead of making new decisions every week or month, the ministry should wait and evaluate the effects of a decision it has implemented and then make the next move, he said.
The economist also believed that the end result of the ministry’s decisions such as the Hafiz and the woman-only shops did not produce the desired results despite the ministry’s claim that it succeeded in finding employment opportunities for nearly 400,000 Saudis.
He also said that most of the job opportunities the ministry created were marginal positions and did not match with the huge budget allocations for human resources development in various development plans.
On the other hand, another economist, Abdul Rahman Al-Ghamdi, supported the idea of the new levy, which makes the recruitment of a foreign worker costlier than a national worker.
He pointed out that the new fee would add SR 10 billion to the Human Resources Development Fund and could be used to employ more Saudis. He said businessmen give lame excuses such as weak productivity of Saudi workers, lack of punctuality in work and inability to face work pressure against employing Saudis. He said the Saudi youth have lately proved that most of the charges against them are false.
“The only way to promote Saudization is to make our youth more qualified to take up any challenging task and not by (the ministry) imposing some decisions,” he said.
He also stressed the need to restructure the education system to make youths ready to work hard and counter tough managerial challenges.
He also blamed the way the Hafiz system has been introduced as “it promoted laziness and dependency” among the youth.

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