Saudi Arabia to introduce minimum wage law soon

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Saudi local media reported private sector workers are set to get a minimum wage within the next four months as part of a government drive to make jobs more appealing to nationals and curb unemployment.

The gulf kingdom has a jobless rate of 10%. Most private companies prefer to hire foreigners, mainly from Asian countries, who agree to work for wages as low as SR1,800 ($480) a month. Many Saudi nationals earn SR2,000 ($533) as monthly unemployment benefit.

Government jobs, which offer security and higher salaries, are preferred by Saudis.

“There was a royal order for the labour ministry to study this issue in collaboration with the private sector,” Labour Minister Adel Faqih was quoted as saying in Daily Okaz newspaper on Monday.

“We are now in the final stages of this study, which will be announced within the next four months,” he said.

Media reports have suggested the government could set a minimum wage of SR2,000-3,000.

Riyadh tightened visa and employment rules last year to try to increase the employment among locals. A “Saudisation” scheme was introduced in the mid-1990s  that set quotas for the number of Saudis each company must hire.

Foreign workers, including labourers and expatriate professionals, form a third of the desert kingdom’s population of 27 million. Saudi nationals account for only 10% of the private sector workforce.

Saudi Arabia has faced small protests by the Shia minority in its oil-producing Eastern Province.

Last year, hundreds of university graduates and teachers staged rare protests in Jeddah and Riyadh to demand jobs and better wages and vowed to continue demonstrating until their demands were met.

The groups later dispersed after government officials assured their demands would be considered.

King Abdullah pledged last year to spend about SR400bn ($110bn), or more than 18% of gross domestic product (GDP), on building houses, creating new jobs, expanding health care facilities, increasing salaries and other benefits.

Deputy Labour Minister for workers affairs Ahmad Al-Humaidan announced on 17 May the government is taking practical steps aimed at scrapping the individual sponsorship (kafala) system.

Authorities hope shifting from the sponsorship system will help boost the ‘Saudisation’ drive as more Saudi citizens will take jobs previously filled by foreigners.

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