Three years ago, the Ministry of Labor approved a decision to set up recruitment companies to serve the private and public sectors. The idea was to regulate the market for expatriate labor. It was a pivotal decision that had a great impact on citizens, the private sector, the national economy and competitiveness in the market. I think it is high time that the authorities reviewed this decision and discussed its pros and cons. Should the system continue to exist and does it help or harm the Kingdom? These questions are pertinent in light of the fact that the ministry tries to make the private sector use the services of these companies.
It is a matter of fact that the regulations have proved effective in many places. The only downside is that the ministry did not follow other countries that enforced these regulations. It should have picked up where they left off instead of starting over. Let me give you some examples.
In Dubai’s Jebel Ali Industrial Area and in the Kingdom’s King Abdullah Economic City, the recruitment systems support local industries, facilitate recruitment procedures and regulate the market. The recruitment system adopted by the Ministry of Labor is based on exploitation and tends to increase the employment rate of non-Saudis at the expense of Saudis. Its fees are also rather high.
In Dubai, a company or a factory can file a recruitment application and pay 2,000 dirhams which includes visa fees and medical checkups. A bank guarantee equal to 15 percent of the worker’s salary and a return ticket should be provided by applicants. Applicants can select workers through a recruitment office or by directly contacting workers. Once an agreement has been made between an employer and an employee, a copy of the employee’s contract will be sent to Dubai and a visa will be issued without the need for the employee to visit his local UAE embassy. The worker’s sponsor will be the Jebel Ali Industrial Area but his residence card will mention that he works for the factory or company that recruited him.
The recruitment system here is different. The recruitment company charges the applicant a monthly fee for providing a worker. For example, if an employer wants to recruit a worker and the worker’s salary is SR1,000, the employer has to pay the company SR2,700 a month—SR1,000 in salary and SR1,700 to the company. If he wants to recruit a technician whose salary is SR2,000, he has to pay the company each month SR4,000—half will go to the worker and half to the company. This system means we are less competitive than other GCC countries as the cost of the recruitment of workers here is higher than in Gulf states.