Saudi contractors seek damages for labour fees - report

Fees depress contractors' profits

Image used for illustrative purpose. Foreign labourers work at the construction site of a building in Saudi Arabia

Image used for illustrative purpose. Foreign labourers work at the construction site of a building in Saudi Arabia


Contractors in Saudi Arabia are seeking damages from the government for the introduction of new expatriate labour fees which they say have eroded their profits from public projects, a local newspaper reported on Sunday.

In 2017, the Saudi Labour and Social Affairs Ministry issued a decision to impose a fee of 100 riyals (26.5 dollars) per foreign worker for the issuance of a one-year contract, to be raised gradually to 800 riyals (213.5 dollars) in 2020.

"We are in contact with the competent authorities to work out a mechanism to compensate employers who were awarded projects after the issuance of the fees decision," Osama Al-Afaliq, chairman of the Saudi Contractors' Authority (SCA), was quoted as saying by the Arabic language daily Okaz.

"This mechanism aims to ensure that the government will pay damages to the contractors either on a monthly or quarterly basis."

Afaliq said that many contractors have been hurt by that decision and that it would adversely affect plans to replace foreign worker with Saudis as part of the Gulf kingdom's Vision 2030 plan, the report added.

He said the decision was issued at a time when the construction sector was suffering from a downturn due to a decline in public projects in the world's largest oil exporter, a delay in payment of government debt to contractors and higher project costs.

Afaliq disclosed that around 1,700 contracting firms have so far registered with SCA out of more than 140,000 contractors operating in the largest Arab economy.

"This is because registration has not yet been made compulsory…but there are plans to make registration compulsory for all contracting companies and those who fail to register will be barred from government projects," he added in the report.

(Writing by Nadim Kawach; Editing by Shane McGinley)


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