Saudi labor market to benefit immensely from new reforms

RIYADH — The Ministry of Human Resources and Social Development emphasized that the newly launched Labor Reform Initiative (LRI) would be instrumental in regulating the local employment market and improve its competency, transparency and competiveness.

The initiative, which will come into force on March 14, 2021, aims to support the Ministry’s vision of establishing an attractive job market, empowering and developing labor competencies and developing the overall work environment in the Kingdom.

A major objective of the initiative is to further improve the contractual relationship between employees and employers and put an end to many undesirable tendencies prevailing in the local market.

These included a huge presence of unregulated workers and runaway workers as well as workers who do not get salaries on time, and a rapid rise in the number of labor disputes and comparative decrease in the number of Saudi workers.

The ministry sources noted that the number of unregulated workers in the local employment market ranges between 3.5 million and 4.4 million while the number of workers whose salaries have been delayed reached 1221,326.

Similarly, over the last three years there has been 167 percent increase in the number of labor cases, reaching 153,000 cases while cases of runaway workers rose to 1000,861. Coupled with this, there had been a decrease in the number of Saudis in the labor market, as their percentage stood at 21 percent as against 79 percent of expatriate workers.

The ministry said that the LRI is one of the initiatives of the Kingdom’s Vision 2030, and that aims to improve the contractual relationship between the worker and the employer on the basis of the provisions of the labor contract.

This is through taking advantage of international best practices and increasing the competitiveness of the Saudi worker, the flexibility of the labor market, improving the local work environment, and raising the productivity of workers.

Moreover, in the labor market, it will ensure the rights of the parties to the contractual relationship, improving the Kingdom’s classification in international competitiveness indices, and reducing recruitment costs significantly.

The ministry sources said that the government agencies that are partners in the initiative include the Ministry of Interior, the Ministry of Economy and Planning, Ministry of Justice, and the Human Rights Commission apart from the agencies representing the private sector.

These agencies are the Small and Medium Enterprises General Authority, the Human Resources Society, the National Center for Strategic Development Studies, the National Committee for Workers’ Committees, the Family Enterprises Center, the Council of Saudi Chambers and the BCG Company.

The ministry stated that research studies, carried out earlier, recommended reforms to the current labor system so as to increase the flexibility of the employment market.

It is expected that the reforms would contribute to increasing the productivity of expatriate workers, raising the competitiveness of the labor market, retaining and attracting competencies to the labor market, and raising the competitiveness of the Saudi worker while comparing to the expatriate worker.

The meetings with the participation of government and relevant agencies came to the conclusion that the reforms would have a positive impact on reducing cases of huroob (runaway workers), as well as in bringing down labor issues, apart from registering a growth in gross domestic product, and attracting distinguished global talent to the local economy.




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