Saudi Binladin Group (SBG), the biggest contractor in Saudi Arabia by turnover, which has laid off thousands of workers in recent months, has told MEED it has fully compensated affected employees.

The company didn’t confirm the number of redundancies, but media reports have suggested that up to 77,000 employees have lost their jobs at the contracting firm, which has built some of the most iconic infrastructure projects in the oil-rich kingdom. 

“The Group is honouring its commitments and the affected employees have already received their full compensations and any other entitlements in accordance with the applicable laws,’’ a company spokesman said in response to questions from MEED. “We will honour the same commitment in case further manpower is released.”

Workers of SBG set fire to several company buses in Mecca, just a day after the company laid off almost half of its workforce, according to media reports.

The company has terminated the contracts of workers – almost all of them foreigners – and has given them permanent exit visas to leave the kingdom. The workers, however, have refused to leave the country without getting paid, the reports added.

The incident in Mecca is the latest labour strife the company has faced. In March, SBG had to seek help from Mecca police and agreed to pay delayed salaries to its staff in a deal with the Labour Ministry to end the labour protests in the holy city.

About 2,000 engineers, management staff and workers who had not been paid salaries for months took part in the demonstrations. The agreement, drafted on a Mecca Police letterhead, allowed the workers to stay at home until the salaries were 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.

The company spokesperson, however, said that most of the “released jobs’’ had initially been recruited for contracted projects with specific time frame and deliverables. Adjusting the size of its manpower is a normal routine, especially, whenever projects are completed or are near completion.

“Our manpower size is always proportional to the nature and scale of the undertaken projects, along with the time spans required to complete them,’’ the spokesperson said. “We do understand that manpower reductions are never easy for all involved.’’

SBG, which had grown significantly during Saudi Arabia’s building boom in the past decade, has mainly relied on multibillion-dollar state contracting for businesses. Like many other contractors in the kingdom, the company is struggling with cash flow issues, mainly due to delays in payments it is owed.

The financial woes for SBG have been compounded further as the company 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.

The company’s financial issues have been exacerbated by the fall in oil price, which has impacted on government spending. As part of lower government revenues, the authorities have capped the award of new contracts and has delayed payments to contractors, including SBG, to free up cash to plug the budget deficit.

Clients and contractors in the kingdom are now under increasing pressure by foreign governments to ensure thousands of workers in the construction sectors are paid delayed wages.