‘Hidden economy’ poised to reach SR534bn in 2014

‘Hidden economy’ poised to reach SR534bn in 2014
Updated 06 May 2014

‘Hidden economy’ poised to reach SR534bn in 2014

‘Hidden economy’ poised to reach SR534bn in 2014

The volume of hidden (’underground’) economy in the Kingdom is poised to grow to SR534 billion in the current year, local media said quoting economic experts.
The experts attributed the growing trend of the hidden economy in the Kingdom to a number of reasons including the absence of clear-cut regulations on how to tackle the issue and ineffectiveness of wage control programs, notably in small and medium enterprises (SMEs).
Economic expert Fahad bin Jumaa said the rate (share) of hidden economy in the Kingdom’s gross domestic product (GDP) is over 18 percent.
Based on the estimates of the World Bank (WB), the volume of hidden economy is predicted to hit SR534 billion in 2014. No policies or regulations exist to address the phenomenon with the exception of anti-money laundering system, the expert was quoted by Al-Riyadh daily as saying.
He said the issue of cover-up labor continues to persist despite campaigns against work violators and severe penalties, but there are still large number of feeing workers in the local market which necessitates creation of a system to combat the hidden economy in the Kingdom.
He expressed the belief that the application of wage control program in the current year will not put an end to the hidden economy as the program is still in its second stage and many of firms have not yet applied the program.
For his part, financial analyst Naif Al-Aaid said the application of wage control program in SME firms, which is hoped to disclose financial transfers, will put enormous pressures on foreign workers who are working under the cover of these firms.
To minimize the adverse effect of the hidden economy, he called for the creation of viable systems capable of fighting cover-up business and eradication of irregular money transfer offices run by expatriates in certain densely-populated quarters which could, otherwise, have been transferred by official and legalized money transfer channels.