RIYADH, 25 August 2005 — The announcement by Custodian of the Two Holy Mosques King Abdullah ordering a 15 percent pay hike for Saudi employees has had a positive response, with more joint stock and private sector organizations offering salary increases to their employees.
Mobily responded to the royal decree by announcing a 15 percent raise in the salaries of its 1,200-strong work force. “Both Saudis and non-Saudi will benefit,” Humoud A. Al-Ghobaini, corporate communications liaison manager of Mobily told Arab News yesterday. He said the new pay scale would be effective from next month.
The Al-Yamamah Establishment has come forward with a 15 percent salary increase for all its employees, while the Savola group declared a 10 percent pay rise for its Saudi staff, except those at the managerial level.
The Al-Sahli Investment Group said that as a goodwill gesture it would give a 10 percent increase to its Saudi employees and a five percent to expatriates.
One of the employees of the Saudi Basic Industries Corporation (SABIC) told Arab News that SABIC was considering a pay increase for its employees, both Saudis and non-Saudis. He said although no formal announcement had been made by the management, the staff remained hopeful.
Speaking on behalf of the Saudi Public Transport Co. (SAPTCO), Yasser Hamad Al-Sanad, public relations manager, said the management had not yet taken any decision even in respect of Saudi employees.
According to financial analyst Salim J. Ghalayini, it would take sometime for the private sector to heed the government directive. “They will have to look into their budget and decide how they wish to pay out. They could adopt a flexible approach in determining the level of increase.”
Speaking to Arab News, financial consultant Motashar Al-Murshid said that with the huge liquidity now in the market thanks to the royal decree, there was an urgent need to regulate the capital market, so that only high quality IPOs could be floated.
“Lately, there is an unhealthy trend in the Saudi market. IPOs that do not add value to the Saudi economy are being floated by food and travel services. What we need are IPOs from the petrochemical and high-tech sectors that could make a significant contribution to the economy,” he said.
According to Motashar, $40-50 billion had been siphoned out of the Saudi real estate market and invested in other Gulf states in the aftermath of 9/11. He said the stock options provided by the 77 listed companies on the Saudi Stock Marketwere totally inadequate to cope with the injection of liquidity into the market.
The problem has been further compounded with the decision of the Ministry of Commerce and Industry to suspend all permits for new real estate projects following the discovery of some irregularities in transactions. However, in the absence of speedy measures by the Commerce Ministry to resolve the issue, Saudi investors are diverting their funds to real estate projects in the neighboring states.
“This problem could become more serious with further increase in liquidity following the royal decree,” he added.
