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Saudi Businessman Says Minimum Wage Will Offset Unemployment

Saudi Arabia : 19 October 2010

A local Saudi businessman proposed that a set minimum wage of SR 5,000 should be part of the plan to combat unemployment.

Saudi residents employed in the private sector should be paid a minimum of SR 5,000 each month according to Dr. Abdullah Bin-Mahfouz.

The suggestion was put forward as a method of combating rising joblessness within Saudi nationals.

Over the past weekend at the RCCI (Riyadh Chamber of Commerce and Industry) Adel Fakieh, the Minister of Labor, urged the Saudi business community to work together to solve the issue of the Saudi Arabian unemployment rate.  Bin-Mahfouz put forth his proposal in response.

As 170 business leaders from across the country met together at the RCCI, Fakieh reported that the amount of Saudi nationals who are jobless represents 10 per cent of the foreign workforce in the nation.

Bin-Mahfouz stated that there are three main benefits of setting a minimum wage.  It was proposed that doing so would increase local productivity and abolish lower wages within the national workforce, as well as give Saudis a hand in affording the increased cost of living.

Bin-Mahfouz stated in a news report published after the RCCI event that difficulties due to a higher cost of living or lower wages are common complaints of Saudis working in the private sector.  He also stated that many Saudis leave their employer or are discouraged from seeking work due to these problems.

The businessman warned that lower wages in the workplace could give rise to other difficulties including a deficit of enthusiasm and a lack of loyalty.

Bin-Mahfouz noted that when a minimum wage was set at the company he owns there were only positive comments and responses from the workers and growth continued.

He also stated that results of a recent study on the economy found that those earning wages under SR 5,000 each month cannot keep up with the cost of living currently found in the Kingdom.

It was also noted that the minimum salary set by the Saudi Resource Development Fund back in July of last year was SR 3,000.  A stipend of 50 per cent was being added to those payments as well.

Bin-Mahfouz sees the SRDF program as a success, noting that more nationals have secured employment in Saudi Arabia within the private sector and more nationals are remaining with their employers.

The Central Department of Statistics’ current figures for unemployment in Saudi Arabia were released in April of this year and set the rate at 10.5 per cent.  Alternatively, the CIA World Factbook sets the jobless figure at 11.6 per cent of which 40 per cent are young Saudi Arabians.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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