Saudi Arabia’s National Workers’ Committee proposed a minimum wage of SR 6,000 (US $1,600) for Saudi nationals. Saudi businesses unanimously said, “No!”

All agree that SR 6K would be a decent salary. The businesses, however, say they can’t stay in business if they have to pay that, a four- or five-fold multiple of what they pay foreign workers and at least twice the going rate for low-skilled Saudis.

What’s encouraging is that the businesses aren’t rejecting the concept entirely; they’re just arguing about how deep a cut they’re going to have to take to their bottom lines. If they’re not earning a profit — or worse, if they’re losing money — then there won’t be any jobs, at any salary. Nor can businesses simply raise the prices they charge for their goods and services. Not only are prices of certain goods fixed by the government, but Saudis show great flexibility in finding substitute goods at lower prices, even if it involves Intellectual Property piracy or the black market.

What a sustainable minimum wage would be, I don’t have a clue. But raising a minimum wage on foreign workers would do a lot of good in making Saudis more employable, at whatever wage. Arab News reports…

Businesses oppose SR 6,000 minimum wage for nationals

Saudi businessmen have unanimously rejected a proposal made by the National Workers’ Committee to increase the minimum wage of Saudis in the private sector to SR 6,000.

The committee made the recommendation during the Social Dialogue Forum organized by the Ministry of Labor, which ended its deliberations in Jeddah yesterday.

“We made the proposal taking into account realistic criteria, which showed that the minimum wage should be SR 6,000,” said Nidal Radwan, president of the committee.

“We feel that in order to lead a decent life, a worker needs a minimum of SR 5,837 excluding luxury items and expenses such as telephone and the Internet,” he said.

Although employers refused to consider this amount as a minimum wage, all parties agreed that it guarantees a dignified life. “It is not surprising that employers find it difficult to change what has been the norm for the past 30 years. Therefore, we need rules and regulations that bind employers to pay the aforesaid minimum wages,” he added.

May:28:2013 - 10:14 | Comments & Trackbacks (1) | Permalink
One Response to “Businesses Nix Saudi Minimum Wage”
  1. 1
    Jerry M Said:
    May:29:2013 - 11:20 

    Saudi Arabia’s economy is distorted by so many things, sex segregation is one thing, but the reliance on cheap foreign labor is another. I would think the first step in fixing the foreign labor problem is to guarantee good working conditions. That would raise the cost of labor. I am sure that once this happened a lot of business would start to find ways to automate things that are done completely by hand.

    A lot of smaller businesses would go under, but I doubt there is any other solution. If a business only can exist with underpaid foreign labor, it shouldn’t exist.

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