RIYADH, 10 August 2004 — The proposed new Saudi law governing end-of- service benefit (ESB) has provoked controversy mainly among Saudis, with one section criticizing it as counter-productive and likely to create instability in the job market for Saudis and the other welcoming the move as a shot in the arm for the Saudization drive.
Describing it as good for both the employer and the employee, lawyer Jaber Nader said it would apply both to Saudis and expatriates. However, he clarified that it cannot be with retrospective effect and all employees have to get their ESB proportionate to their length of service.
“It is the government’s right to introduce the law. However, it will be applicable to newcomers after they have signed the contract with their organization under the new terms. It will be, of course, open to the employee to accept the contract or refuse to sign it. But the idea seems to be to make employees productive and responsible.”
Nader said one implication of the proposed law is that the employees will have to negotiate with their employers for a higher salary, since they will only be entitled to three months’ salary as ESB. The idea is to limit the employer’s liability.
The draft law, which has been submitted by the Ministry of Labor to the social committee of the Shoura Council, has also raised hackles among the expatriates.
Reports appearing in a section of the press have created confusion among expatriates that the new law is aimed at them.
“We have received quite a few calls from expatriates who have expressed concern over the draft law. Rest assured we are more concerned about you than yourself,” an official at the Ministry of Labor told Arab News.
Senior officials were unavailable for comment.
The main thrust of the law is that it limits the ESB to three months. There is also a linkage between ESB and the employees’ productivity. It argues that once the employee realizes that his ESB is not automatic and has to be earned, he would tend to be productive and more disciplined.
The draft law also gives the employer the right to fire his employee if he is not found up to the mark or productive. He could lose compensation and other benefits if his service record in terms of attendance, punctuality and productivity is poor.
According to Labor Minister Dr. Ghazi Al-Gosaibi, the new regulation is intended to prepare the work force for the competition that looms as the Kingdom is poised for accession to the World Trade Organization.
Describing the new labor law as counter-productive, Khaled Al-Sohail, managing editor of Al-Eqtisadiah, a sister publication of Arab News, said it would create instability in the job market for Saudis and work as a negative factor in the march toward Saudization.
Dr. Fahd Mohammed ibn Jumah, a Saudi economist, criticized the new law on the ground that it has many contradictions.
He pointed out that sometimes it has tilted in favor of one party, which is the worker. As a result, it has neither organized the job market nor does it help in employing Saudis in the private sector, he added.
