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. When asked to comment on the issue, Fakieh refused and instead insisted the discussion be restricted to the effects of setting a minimum wage on Saudi employees in the private sector. He added that his ministry is currently looking at ways to boost employment of Saudis in industries that have traditionally preferred to hire expatriates who are willing to work for low wages. The minister also claimed the country's Saudization program known as Nitaqat is the best way to create more room for Saudis in the job market and added that Nitaqat has helped 400,000 Saudis find stable jobs over the past two years. While rejecting accusations that the private sector was falsifying employment records of Saudis, the minister said companies are asked to register Saudis immediately in the social security program, thereby leaving no room for fraudulent employment claims. Fakieh said the delay in implementing new labor regulations was due to the fact that they had to be approved by the Shoura Council and then higher authorities. “Setting a minimum wage for Saudis in the private sector is a major issue in the Kingdom due to multiple factors,” said Mansour Al-Shathry, head of the human resources committee at the Riyadh Chamber of Commerce and Industry. “The main issues are the presence of expatriates who work for low wages, high market competition, and consumer demand for less expensive products and services,” he added. Ahmad Al-Humaidan, Deputy Minister of Labor for Labor Affairs, said setting a minimum wage depends entirely on the market and added that the ministry has encouraged the practice of paying Saudis a minimum wage by only counting employees who earn a minimum of SR3,000 toward companies' Saudization quotas. “If a Saudi isn't getting SR3,000, then the company isn't recognized as employing a Saudi which means it is unable to fulfill their nationalization quotas. This practice indirectly helps in setting a minimum wage,” he said. According to Al-Humaidan, the meetings the ministry is set to hold will address various issues related to wages such as the relationship between wages and living conditions, strategies to deal with wage variations and setting a minimum agreed upon wage. According to several studies included in Tariq Al-Khateeb's research which was presented at the event, 60 percent of expatriates working in the Kingdom are working for a monthly wage that is less than SR1,000. Al-Khateeb stated that there is a general absence of a clear system that can specify a minimum wage but according to his research, the proposed minimum wage should in fact be SR4,000. Al-Khateeb recommended establishing a higher committee for specifying a minimum wage that takes into consideration economic factors such as inflation. Other fathers that should be taken into consideration include the experiences of nearby countries, particularly Bahrain which recently began implementing a minimum wage. Another study conducted by Hay Group stated that five percent of Saudis in the private sector receive wages that are less than SR3,000 a month, while a staggering 55 percent of expatriates receive less than SR3,000 a month. Saudis getting less than SR3,000 typically only have a high school education but many expatriates with undergraduate degrees receive less than SR3,000. Saudi businessman Abdullah Dahlan said such studies only take large companies into consideration while completely ignoring small businesses, which will be hit hardest if a minimum wage law comes into effect. “Setting a minimum wage will result in an increase in operational costs. Therefore, it will be difficult to set a decision that all parties will agree on.”
