Contractors say 30% wage hike temporary

Contractors say 30% wage hike temporary
Updated 08 November 2013

Contractors say 30% wage hike temporary

Contractors say 30% wage hike temporary

Contractors say the status correction drive has driven labor costs up by as much as 30 percent.
Several contractors said that a state of confusion is prevailing among laborers working in electricity and plumbing. They said they expect wages to keep rising until more legal workers are available in the market.
Prior to the correction period, the construction sector depended heavily on employing illegal expatriates who have since become unavailable.
Abdullah Radwan, chairman of the Contractors Committee at the Jeddah Chamber of Commerce and Industry (JCCI), said correcting expatriates’ statuses and deporting violators is an important phenomenon that will bear positive long-term results.
“The labor market is in disarray because of the large number of expatriates who left the Kingdom during the correction period. Companies and contractors are now faced with incomplete projects. They were forced to accept rising wages because of poor labor supply,” he added.
He said recruitment procedures are long and complicated. The sector is experiencing difficulty in complying with Nitaqat regulations that ensure Saudization (nationalization). Radwan called for extending the correction period to give contractors a chance to find alternatives for violating expatriates.
Abdullah Salasah, an official at a contracting company and former member of the Contractors Committee, said price hikes are temporary and would not last more than one year. He added that consumers and contractors would bear the increased cost.
“Projects are not delayed because of the correction decision but due to sheer confusion. We look forward to reorganizing the contracting sector and acquiring more facilities to recruit labor,” he said.
Hamzah Baker Aoun, deputy chairman of the National Committee for Consultative Offices, said the Ministry of Labor should set up organizational establishments to control labor transfer between sponsors. “There should be companies set up to recruit seasonal and temporary labor,” he added.
Aoun criticized the absence of an entity to monitor and control wages and organize sponsorship transfer to revitalize the market. He hoped the post-correction period would see wages normalize. The contracting, services and retail sectors were among those affected by the correction process, he added.
Abdullah Hanafi, former chairman of the Contractors Committee at the JCCI, said prices in the contracting sector rose 40 percent during the correction period and that it would take more than six months before they would go back to normal.
He refused to comment on delayed projects, but said the correction process affected individual projects, which have experienced a 10 percent delay.