SMEs hurt by labor issues

SMEs hurt by labor issues
Updated 10 October 2013

SMEs hurt by labor issues

SMEs hurt by labor issues

Recent laws to correct labor status in Saudi Arabia have affected the performance of small and medium enterprises (SMEs) for the absence of enforced regulations over the past years, experts say. These enterprises have become safe haven for illegal labor force and affected the entire economic fabric of employment in the country.
Owners of these enterprises have been pushing for extending the grace period for correcting the labor status of illegal workers.
“Only 20 percent of the illegal foreign workers have corrected their legal status in the country over the 7-month grace period due to tedious procedural flow of the process across different ministries and the lack of expeditors (muaqbeen),” said Raed Al-Aqeeli, deputy director of the enterprises committee at the Jeddah Chamber of Commerce and Industry.
“Those expeditors have made a fortune out of this business now, hiking their fees by 300 percent,” he added.
These reasons, among others, have given the enterprisers a way to ask for an extension of the correction status time to three more years, he said.
“Despite the extension of the grace period by four more months, it was not long enough due to the involvement of different stakeholders in the process,
“Electronic transactions of the paperwork across different ministries have only delayed the process,” he said. “It takes around three months to register a Saudi worker in the General Organization of Social Insurance, just to be added in Nitaqat, let alone weekly updates of these enterprises to know where it stands in Nitaqat.”
Government online services are not popular yet and not user-friendly for most of the workers, he said, which only delays the process further. Technology can’t replace the expeditors yet, he added.
Saeed Al-Ghamdi said his business has suffered losses because of the late move to correct the labor status of foreign workers. The Ministry of Labor cannot resolve a problem that has accumulated over the years in just a few months, he said. “We want the correction process to go smoothly as per the new laws, but it just takes time, especially with the online transactions to complete the paperwork,” he said. Correction as implemented now has, in fact, affected a lot of enterprises and some will announce bankruptcy soon.
The Ministry of Labor should carefully look at the interests of Saudi investors, he said.