This week, members of the Shoura Council, a Saudi advisory body that does not have the power to pass or enforce laws, “slammed” the Saudi Ministry of Labour decision to fine companies 2,400 riyals a year ($640, £402, €500) for each foreign employee above the 50% level, according to a report in the English Language Saudi Gazette.
These members “said the ministry is an executive body, not a legislative one, and does not have the right to increase or reduce any fees for its services without referring to legislative authorities like the Shoura Council,” the Saudi Gazette report added.
“They said the ministry should have referred such a decision to them so its implications could be studied properly.”
The new rule came into force on 15 November, at the start of the new Islamic year.
The new fines are not being levied on those foreigners with Saudi mothers, or who are citizens of other Gulf Cooperation Council countries. Domestic helpers are also not included.
Approximately nine million out of Saudi Arabia’s population of more than 27 million are said to be foreigners, and as many as nine in 10 employees of privately-held businesses there are said to be expatriates.
Saudi business executives have said the new rule could have an adverse impact on their costs of doing business in Saudi Arabia.
With an unemployment rate among its own citizens of around 10.5%, however, the Saudi government has its own priorities.
In explaining the thinking behind the new tax, Saudi Deputy Minister of Labour for Planning and Development Moufarrej Haqbani said in a statement that the money generated from the fines would go to a fund that would be used to train Saudi youths for jobs.
The Ministry of Labour, he added, was trying to change the private sector’s culture from one of “importing cheap labour from abroad to one of developing national talent”.
