JEDDAH — A number of businessmen have heavily criticized the Ministry of Labor for hastily enforcing the decision to impose a SR2,400 annual levy on each expatriate worker in businesses that employ a majority of foreigners. At the same time, some business owners said they will ask their employees to shoulder the extra cost defeating in effect the whole purpose of the levy, which is to make employment of foreigners more expensive to encourage Saudization. However, many other businessmen said they will pay the new fee themselves in order to avoid disruptions in their operations. A member of the transport committee at the Jeddah Chamber of Commerce and Industry said he will not pay the additional fee of SR2,400 to renew the work permits of his foreign drivers. His drivers will pay instead. “We have been saying this decision will do more harm than good to the public as prices of products and services are definitely going to increase. The effect will be felt soon in the food and transport sectors,” said Abdul Hadi Al-Qahtani. “No one can comply with this requirement without increasing prices,” Al-Qahtani said, adding that taxi drivers have already started increasing their fares. He said unlike in the past, cab drivers are now insisting on charges shown on the fare meter, which could be much higher than the normal rates they used to demand after taking the distance into account. “Due to the heavy traffic on city streets, the consumer will now have to pay a high price because the fare meter keeps running even when the vehicle stops at traffic lights,” Al-Qahtani added. According to Al-Qahtani, the ministry should have excluded sectors such as transportation, construction, bakeries, fishing and cleaning, from the new levy. “Saudization of these sectors is a real challenge; young Saudis are not willing to take up labor-intensive jobs,” he said. Amin, a member of the fishing coop, said the decision is creating new problems for the sector. “We cannot find Saudis willing to work with us. Can the minister get us Saudi workers?” he asked. Amin said he will stop his fishing activities if the ministry is not ready to reconsider its decision. “About 60 of us (Saudis) work in this sector. If this decision sticks, we will send our workers back to their home countries and stay at home without work, and then live on social security,” said Amin. The owner of a construction company in Jeddah who preferred to remain anonymous said his company has decided to pay half of the amount while the workers will pay the rest. He said they have discussed this matter with various officials but “no positive move has come forth.” The business owner believes the decision will negatively affect the economy. “When the Nitaqat system itself has not been successful, how can they enforce such a drastic measure without damaging the economy?” asked a source, who added that many businesses have already started or are seriously considering moving to neighboring countries. The construction sector was in the doldrums ever since the announcement of the new decision. Despite marathon meetings between investors in this sector at the chambers of commerce and negotiations with the ministry, there is no sign of authorities relenting to their demands of at least a postponement of implementation. Market sources estimate that between SR14 billion and SR19 billion will be collected from employers if the decision is fully implemented. Jamal Kaaki, a bakery owner, said the Nitaqat system has forced him to employ many Saudis in his baking units. “Saudi females proved productive, but the young men have no commitment. As a result, I incurred a loss of SR45,000 in a short while. I fired four non-Saudis and will have to fire more soon to adhere to the Nitaqat requirements. Now, the new SR2,400 levy is going to upset my budget further,” he said. Kaaki said the decision that came on the heels of the Nitaqat, which itself was a big challenge, will add to his troubles. “Before we had only to worry about meeting Saudization targets, now we need to find means to pay the levy.” Kaaki decided to pay the amount instead of firing his non-Saudi employees without whom he cannot run his business profitably at least for the short term. He, however, said that he was not going to increase the prices of bread, but will reduce output to offset losses. “At the same time, we will raise the prices of desserts and pastry,” Kaaki said.
