SANED’s benefits for the Saudi labor market
A royal decree was issued last Thursday that extended a number of government financial initiatives designed to support the private sector, Saudi workers, individuals and investors to help them to cope with the negative impact of the coronavirus disease (COVID-19).
The financial initiatives included supporting Saudi nationals working in the private sector and suspending the collection of fines and financial penalties. Other initiatives included postponing payment of value-added tax (VAT), accelerating VAT reimbursement, and postponing the collection of customs duties on imports for 30 days.
I believe that supporting Saudi nationals working in the private sector is one of the most important financial initiatives undertaken by the government over COVID-19, since all affected companies can apply to the General Organization for Social Insurance (GOSI), a semi-government body responsible for implementing the provisions of the social insurance law in Saudi Arabia, for compensation for wages under the SANED scheme. SANED is an insurance program designed to support Saudi workers and their families financially during a period of unemployment for reasons beyond their control. The scheme is intended to bridge the transitional gap between previous jobs and the opportunity to obtain a new role, by providing a minimum income to workers and their families. It will cover 70 percent of Saudi workers in the most affected companies, and a maximum of 50 percent of those in the least affected companies, to be determined by the relevant committee. The government allocated SR9 billion ($2.4 billion) at the outbreak of the pandemic to support the initiative, covering up to 60 percent of the wage of an employee up to a maximum of SR9,000 per month.
It has been reported that more than 90,000 businesses and 480,000 people have benefited from the SANED scheme during the past three months, with SR3.5 billion distributed so far.
I believe that the SANED scheme will help to stabilize the Saudi labor market by limiting the negative impact of COVID-19, maintaining the nationalization rate at an acceptable level and helping to keep workers employed where possible, whilst providing an alternative income in case of job loss. Fortunately, the extension of the Kingdom’s financial initiatives has coincided with the gradual return of economic activities and the complete lift of the COVID-19-induced curfew, which will support the growth of the economy and enhance the role of the private sector.
The extensions were preceded by other urgent initiatives; since the start of the epidemic, 142 initiatives have been launched to help people across the Kingdom, targeting individuals, private sector enterprises and investors, to the tune of SR214 billion.
I hope that all of these aids will succeed in putting the private sector back on the path to growth and development, and in turn will contribute to the health of the national economy.
• Talat Zaki Hafiz is an economist and financial analyst. Twitter: @TalatHafiz