Establishing a minimum wage for foreign workers is an idea whose time hasn’t yet arrived, according to Saudi Arabia’s Minister of Labor. Saudi Gazette reports that the Minister is busy trying to get a minimum wage for Saudi employees nailed down first. The situation, though, is like the quandary of the chicken and the egg.

Foreign workers earn low salaries, sometimes appallingly low, and easily one-third to one-quarter of what a Saudi would earn. As a result, employers are reluctant to pay multiples of those salaries to Saudis who may or may not perform as well on the job. But no Saudi is willing to take the low salaries offered to expat workers. At present, Saudis must earn a minimum of SR 3,000/month; foreign workers are sometimes paid SR 1,000 — before the employer starts extracting fees and costs. The salary of SR 3,000 is far from princely; it’s roughly US $800/month. At that salary, no one is getting rich, no one is buying a house, no one can afford to get married and raise children.

There’s no question that if foreign workers received a minimum salary of SR 3,000/month, salaries for Saudis would necessarily rise also. That would raise the cost of doing business which would raise the price of goods and services. And that would fuel inflation.

It’s a messy situation that’s the result of decision made long in the past to import cheap labor. Now the problem is to find ways to get rid of the cheap labor, replace it with expensive labor, and somehow keep everything in balance.

Fakieh mum on minimum pay for expats
Fatima Muhammad | Saudi Gazette

JEDDAH — Labor Minister Adel Fakieh said setting a minimum wage in the private sector requires a comprehensive study into the situation of both employees and private business owners. The minister made the comments at a press conference held Saturday to mark a social dialogue on wage policies in the Saudi market.

Fakieh said his ministry will hold regular meetings to discuss the ministry’s decisions and will also publish all drafts of the ministry’s decisions on its website so the public can comment and express their views.

Proponents of the minimum wage say it will create job security for employees but opponents claim it will erode profits and eventually harm employees as business owners slash jobs to save money. It is commonly understood that a minimum wage, if approved, will not apply to expatriates.


May:27:2013 - 07:06 | Comments & Trackbacks (4) | Permalink
4 Responses to “Not Ready for Expat Minimum Salaries”
  1. 1
    Bob Said:
    May:27:2013 - 08:26 

    Ask one of the expats sweeping the streets in yellow jumpsuits how much they earn a month – 300 Riyals. That is how much they get after their salaries get whittled down with various “costs”

  2. 2
    dan Said:
    May:27:2013 - 09:07 

    I don’t know how reliable the statistics are, but something like 60% of expats supposedly earn less than 1000 SR per month; it would be more accurate to write that “expats are sometimes paid more than 1000 SR per month”.

    There have already been a few expat labour strikes this year, and these led to the 3 month moratorium on enforcing the new rules; I would expect to see this moratorium extended further, as the Saudi state will not want to be dealing with labour disruption as the country heads into the Ramadhan and Haj seasons and the key decision makers/enforcers disappear abroad for the summer.

    Effectively, the Saudis have imported a very large slave/proletarian class, whilst simultaneously auto-generating an indigenous urban proletarian demographic that is going to increase substantially over the next few years, which has no prospect of decent remunerative employment and is going to experience a sharp decline in living standards in the context of galloping domestic inflation and failing public services/infrastructure.

    Ouch.

  3. 3
    Chris Said:
    May:29:2013 - 10:52 

    When I worked in Yanbu, the gentleman who cleaned my office made more from cleaning 10 cars 5 days a week at work (the company I worked for knew he did this and even supplied the water and soap free for all the cleaners who did this) than he did from his official job. He had a 2nd job in a restaurant that also paid him more than his cleaning job did.

    So he got less than 6h per day to eat and sleep.

    He also sold mobile phone cards.

    The company I was working for paid his employer SR1500/month for his services, he received less than SR300/month after they deducted money for his accomodation. He and the other cleaners were housed in an old construction camp that was officially condemned.

    Probably hasn’t changed much.

  4. 4
    Aunty May Said:
    May:31:2013 - 23:30 

    It is a disgrace that one has to witness modern day slavery in the Gulf region.

    One day when the oil runs out the pendulum will swing the other way. As one Saudi citizen said to me in regards to the oil running out …”each dog has its day”.

    Meanwhile, if those of us who are aware of the exploitation, then present some of these people with gifts. For example, my friend’s maid who earns very little compared to western expats, I gave a new laptop, which has changed her life. Or if you are going to send money back to your country, when waiting in line at the bank, identify the person who you believe needs this and give several hundred riyals. It won’t dent your pocket but will greatly assist that person. It is about spreading wealth around and sharing kindness.

    Whoever exploits workers will one day pay a heavy price; for what goes round comes around.

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