Saudi Binladin Group (SBG) has laid off 50,000 staff as the biggest contractor in Saudi Arabia struggles to manage cash flows amid delayed payments from the government and a ban that bars it from winning new contracts in the kingdom.

The group has terminated the contracts of workers and has given them permanent exit visas to leave the kingdom, according to the Al-Watan newspaper, which cited unnamed sources.

The laid-off staff make up about half of SBG’s work force. The company’s LinkedIn page says it has more than 100,000 workers across multiple subsidiaries. The public building and airports division of the company alone employs 55,715 people, which includes engineers, architects, technical and administrative staff, skilled, semi-skilled and unskilled workers.

The workers, however, have refused to leave the country without getting paid. Some of the staff have not received wages for months, according to the news report, which added that the staff has been protesting outside of SBG’s offices in the country on an almost daily basis.

A spokesman for the firm could not be reached by phone and did not reply to MEED’s emailed request for comment.

Labour protests

SBG has had a series of pay disputes with workers this year. In March, it agreed to pay delayed salaries to its staff in a deal with labour ministry and Mecca police to end the labour protests in the holy city. About 2,000 engineers, management staff and workers who had not been paid salaries for four months took part in the demonstrations.

The agreement, drafted on Mecca Police letterhead, allowed the workers to stay at home until the salaries are paid by the company after deducting the period of absence. They were also given the option to leave the firm and get final settlement before exit, or they could transfer sponsorship to another company, according to the agreement seen by MEED.

SBG, which prospered during Saudi Arabia’s building boom of the past decade, constructed some of the biggest infrastructure projects in the kingdom, including airports, roads and skyscrapers.

However, like many other contractors in the kingdom, it is now struggling with cash flow issues as it awaits delayed payments from the government.

Riyadh is under increasing pressure by foreign governments to ensure thousands of workers in the construction sectors are paid delayed wages. The government has ordered a freeze on the award of new schemes and has withheld payments as it struggles to plug the anticipated $86bn budget deficit this year. The kingdom is running an austerity campaign, which includes cutting down on infrastructure spending, as it tries to cope with shrinking oil revenues and a slowdown in the economy.

Crane disaster

The financial woes for SBG have been compounded further as the company, which relies mainly on multibillion-dollar state contracting for business, is barred from winning new business in Saudi Arabia until it is cleared in the Mecca Grand Mosque crane accident inquiry.

MEED reported on 1 February that Riyadh had concluded investigations into the September 2015 disaster, in which a crane collapsed on worshippers in the mosque, leaving 100 dead. The government, which has yet to announce the findings of the probe, also ordered SBG to stop work on the Prophet’s Mosque in Medina in December 2015.

To cut costs, SBG planned to layoff 15,000 workers in the third batch of staff retrenchments in its architecture and building construction division, according to an internal email seen by MEED in November last year. It is not known how many people the company has already laid off in previous phases.

SBG’s plans included cutting jobs at its unit Construction Products Holding Company (CPC) and transferring 8,000 workers to the King Abdulaziz International airport scheme to speed up construction and thereafter let them go, according to the email.

The company is currently in talks with Saudi and regional lenders to delay repaying some of the debt it owes. It is dealing with individual banks, especially those that financed the Mecca Grand Mosque Expansion project, for restructuring debt.

SBG is carrying out an estimated SR80bn-worth ($21.3bn-worth) of schemes and a Riyadh-based banker estimated that half of that amount could be leveraged from banks and other financial institutions.