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.