Time to do the right thing for labourers in Saudi Arabia

23 August 2016

Riyadh needs to expedite workers’ wages claims to ensure the well-being of those stranded at camps 

It has taken immense diplomatic pressure, months of protests and immeasurable suffering on the part of thousands of construction workers stranded in the GCC’s biggest projects market, but finally Saudi Arabia is doing the right thing.

The government has now taken the onus upon itself to take the contractors such as Saudi Oger to task who haven’t paid their workers in months and left them penniless, without food or medical attention, and forcing them to endure horrible living conditions of labour camps, some of them without power at times in scorching desert sun.

Authorities are going to pursue such firm through Saudi Arabia’s judicial system and get the workers their dues but there is no clarity when that will happen.

The kingdom has hired lawyers to pursue the wages claims of the stranded foreign workers through the labour dispute system, according to Labour Minister Mufrej al-Haqabani.

Saudi Oger, the contracting firm owned by the family of former Lebanese Prime Minister Saad Hariri, which has helped build multibillion-dollar infrastructure and social development projects in the country, is the only contractor said to still be withholding payments to workers on a larger scale.

“Saudi Oger – now we’ll take it to the courts. Now we are responsible for that. We’ve hired lawyers,” The minister was as cited as saying by the local media. “As the ministry, we will go through the labour dispute courts to go after Saudi Oger and to collect the claims.”

Some argue it is a case of too little too late. The government expressed the same resolve earlier this year and when it used fines and suspension of government facilities by labour and immigration departments for the violating contracting firms as punitive measures, which had little or no effect.

Saudi Oger currently owes SR3bn ($800m) to its employees in salaries, in addition to the payments due to contractors and exporters, and the cash it requires to service loans obtained from local and international lenders.

Even if the company is pursued through the lengthy labour dispute process, it may still not have enough cash to pay the workers at the end.

Already the company is being sued by about 200 of its French employees in France. Talks between a lawyer representing the employees, mainly engineers and managers of the company’s projects in Jeddah, Riyadh, and Dammam, have failed.

The workers, regardless of their nationality or rank haven’t been paid in months and financial hardships for them and their families are incalculable. Perhaps, more so for thousands of Pakistani, Bangladeshi, Nepali, and Filipino labourers abandoned at the labour camps, for whom getting the cash in hand it is an absolute essential before they can even think about starting a new life in their home countries.

This, probably, is the reason why these workers have chosen to brave gruelling conditions, and have refused to leave without financial compensations, fearing they will lose it if they exit the kingdom. Same is the case for 2,500 Indian workers of Saudi Oger, most of whom have decided to stay here, despite government’s offers of a free passage back home and facility of exit visa paid for by the government.

Diplomatic pressure

Riyadh is facing increasing diplomatic pressure about workers’ rights and non-payment of wages by contracting companies.

Countries taking up the cause of the unpaid works include the Philippines, France and Bangladesh. India was the latest to send one of its foreign ministers to negotiate safe return of about 10,000 workers and payment of their dues.

The government in the kingdom is now also visibly concerned about the wage issues and the well-being of the workers.

Recent media reports suggest that Labour Ministry, along with embassies and consulates of different countries, have started taking care of, at least, the basic services at the some of the camps. King Salman bin Abdulaziz al-Saud has also set aside SR100m ($26.7m) to help the stranded workers, but it is not known how this amount is being spent, who gets to benefit from it and why the stranded workers are not being taken care of.

Perhaps, the government’s own austerity campaign and struggles with fiscal shortfalls are the impediments for a substantial allocation of funds.

Saudi Arabia’s financial muscle is seriously dented with the decline in oil prices. The country last year ordered a freeze on the award of new projects and withheld payments to contracting firms as it strives to plug the anticipated $86bn budget deficit this year.

The government slowly started releasing the payments earlier this year but it seems the damage is already done, for some contractors, irreversibly. Tens of thousands of jobs have been lost in contracting sector including 70,000 alone at Saudi Binladin Group (SBG), which at one time was the kingdom’s biggest contractor by turnover.

However, government insist that the most financially distressed contractors have started clearing wages of workers and Saudi Oger is the only exception.

SBG has also now started paying overdue pay, Al-Haqabani said, adding that the executives of the firm have promised him that the payments would be cleared before the end of September.

He has reiterated that the problems at Saudi Oger were not reflective of the condition of the kingdom’s overall labour market and employment situation of foreign workers.

“This is a small segment… of the labour market,” Al-Haqabani said. ”We have more than 10 million expatriates working happily here in the country.”

The current labour crisis in contracting industry has brought a lot of unwanted attention to the kingdom and it has painted a negative picture of the Saudi Arabia’s labour market at international level.

It seems the government was caught off guard. It appears policy makers did not realise the gravity of the issue and, perhaps, did not think about the far reaching impact of withholding payments to contractors in order to meet other, more important, expenses.

The damage is done but what the government now needs to do is to resurrect its image and send out a clear message that the workers’ rights in Saudi Arabia are protected.

One way of doing that would be to expedite the overdue payments through the labour dispute channels and take care of workers at all the labour camps, and not just the few.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications