Expatriates are calling for fair contracts that specifies a minimum wage and payment of iqama renewal fees, insurance premium and a foreign labor fee recently imposed by the Ministry of Labor by the employer.
The labor ministry decision to impose the fee of SR 2,400 on expat workers have forced them to look for better contracts. Some expatriates who have contracts that do not include iqama renewal and insurance fees will not be able to pay the new foreign labor fee.
A report issued by the IFC, World Bank and Price Waterhouse Coopers says Saudi Arabia has the world’s third least demanding tax framework for corporations.
After studying 185 world economies, the report said companies in the MENA region pay a total average tax of 23.6 percent, compared to a global average of 44.7 percent.
Corporations in the GCC make 17.6 payments per year and spend on average 158 hours dealing with regulations. Other GCC nations that ranked high include Bahrain at No. 7, Oman at 10 and Kuwait at 11.
Mohammed Rahman, a Pakistani accountant at a private company in Jeddah said: “All countries worldwide are suffering from inflation, while the salaries of residents and expatriate workers are decreasing. In Saudi Arabia, most private sector employees, especially expats, are still earning below-average salaries. The new Labor Ministry foreign labor fee of SR 2,400 is not covered in my work contract. I am wondering who will pay these taxes? Do I have to pay or does my company pay?”
Rahman said the widening gap between the Labor Ministry and private companies should be eliminated or expatriate workers will become the victims.
“We have already complained about our low salaries and the fact there is no minimum wage for expatriates. Prices are rising on a monthly basis. We have to pay for rent, school fees, health care and now this new fee. My contract with the company doesn’t cover iqama renewal or taxes,” he said.
Kitta Agusalim, a nurse in a private clinic in Jeddah, said the expats who came to Saudi Arabia years ago when there was no inflation, are being paid much lower salaries.
“The pressure on expatriate workers can be attributed to the Saudization plan. We notice there has been no increase in our salaries since we came to Saudi Arabia 10 years ago, but there is a huge increase in insurance fees and iqama renewal fees. The fee to renew an iqama increased in the last year and is now about SR 2,000. Now I will be asked to pay fees in addition to increased insurance and iqama fees, which accounts for about SR 80 of my monthly salary,” she said.
Emad Swalmeh, a Jordanian employee at a pharmaceutical company in Jeddah, said Saudi Arabia must implement labor regulations that are accepted worldwide.
“Saudi Arabia is a member country of the International Labor Organization which is responsible for drawing up and overseeing international labor standards. Therefore it must implement these standards. The labor market in Saudi Arabia is not well regulated in the area of pay and working hours. So many expatriate workers are exploited by low pay and high fees that are not covered by work contracts,” he said.
He blames private sector companies for taking advantage of the absence of an authority to regulate and oversee expatriate worker contracts.
“The government must bridge the wage gap between Saudis and expatriates for fairness and the success of Saudization. They should establish an authority to ensure fairness in all expatriate contracts. Fees levied on expatriates must be based on labor market forces and not on the Saudization plan,” he said.
“There is no doubt that expatriates are affected by inflation in the Kingdom. Expats are sometimes obligated to pay high fees for schools and rent. The increasing government fees are imposed to encourage them to leave the country. Most expats will be unable to pay any of these fees,” he added.