Since the recent introduction of expat worker fees in Saudi Arabia, the country has seen a steep rise in foreigner workers leaving the country.
The two types of fees introduced included charges for each familial dependents of expat workers which were implemented in July 2017 and has continued to increase in price since this time. More recently, in January 2018 another fee was introduced which requires businesses to pay out for employing foreign workers.
Why Expat Charges were Introduced?
The primary driver for these charges being introduced, formed part of the government’s economic transformation plan, to increase revenue from industries other than oil.
Understandably, the charges have not been popular with business owners who rely on cheaper labour that expat workers usually provide.
Impact of Fees
The aim to boost the economy and stimulate the private sector does not appear to be having the desired effect. Instead, the kingdom has seen a mass departure of expat workers which has undermined the very intention for the implementation of such charges.
As such, since the charges have come into effect, many expat workers living in Saudi Arabia have been forced to send their families home and even consider doing the same themselves.
Such rapid policy changes have left the economy continuing to struggle. Despite expat workers leaving, unemployment has increased to higher than its ever been in the last 10 years and businesses serving expat families have lost significant revenue.
As a result of this growing problem, the Saudi Arabian government have been forced to consider the possibility of modifying the policies implemented. Whilst it’s unlikely the charges will be abandoned completely, they may well be improved to have a less detrimental effect on Saudis already-struggling economy.
The review is set to resolve the government’s financial requirements, together with the needs of the private sector to ensure it can continue to grow.