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Saudi Arabia - Labor and Employment

Labor, or rather in-sufficient employment, is a significant problem in Saudi Arabia. The unemployment rate has risen to nearly 25 percent (estimates vary from 13 percent by the Saudi government to 25 percent by the U.S. government). Because of the significance of oil revenue, Saudi Arabia imposes only minimal income taxes onSaudis and does not have a capital gains or value-added tax, although a payroll tax supportssocial insurance programs, and the government collects the Islamic tithe of 2.5 percent of networth from both businesses and individuals. The Saudi Credit Bank was established in 1971 to make personal loans to low-income Saudi citizens formarriage expenses, vocational training, and building projects.

Among developing nations, as categorized by the United Nations in 2005, Saudi Arabia ranks thirty-second out of 103 countries on the Human Poverty Index (an assessment of standard of living), ahead of most of its Middle East neighbors, and seventy-seventh out of 177 nations on the Human Development Index (a comparative measure of well-being and child welfare). Through its series of five-year development plans, Saudi Arabia continues to try to transform oil wealth into broader economic prosperity. But despite high oil prices and rising oil production, the average Saudi's standard of living has fallen, and unemployment, especially among young adults, continues to rise. Moreover, the perception that oil revenues are not equitably distributed throughout the population continues to create some social discontent.

The country's economic situation had declined significantly in the 1990s, resulting in a general decline in the average Saudi standard of living. A rapidly expanding population, high unemployment, the presence of almost four million foreign workers in the country [as of 1998], and a general perception of Royal Family corruption and mismanagement all contributed to mounting tensions and opposition to the Monarchy. Saudi Arabia's social contract remains at the mercy of the volatile oil market. Thus, whenever oil prices drop (especially for an extended period of time), the House of Saud is forced to deplete its reserves, borrow money, or cut benefits to its citizens in order to fund its budget. In the oil era regime largesse and legitimacy are linked in a directly proportional manner. As the Saudi standard of living began to increase with rising oil prices, the voices of the malcontents, who accused the regime of being illegitimate, faded.

It was estimated that there were between 500,000 to 700,000 slaves in Saudi Arabia in 1950 [out of a total population of about 4 million]. Slavery among chieftains was a sign of power and wealth. In contrast to the treacherous currents and tempestuous weather of the Atlantic coast, the east coast of Africa is relatively benign. Arab commerce with this coast has been going on for 3,000 years. Slaves and ivory were always the trading attractions of the east coast, brought from Central and Eastern Africa. African slaves became so numerous in Arabia at the end of the 7th century AD, and so discontented with their lot, that they staged a series of revolts that lasted off and on for almost 200 years.

Between the Umayyad and the Abbasid Empires, many slaves were brought from Iberia, especially Cordoba and Andalusia. Later the slaves were brought from Africa across the Red Sea. Saudi Arabia formally abolished slavery by royal decree in 1962; however, and for many years there were no laws specifically related to Trafficking in Persons (TIP). Saudi Arabia has said it intended to adopt the 2000 UN Trafficking in Persons Protocol. The Government of Saudi Arabia does not fully comply with minimum standards for the elimination of trafficking and is not making significant efforts to do so. In a positive development, the government enacted antitrafficking legislation in July 2009, and published a National Plan for Combating Trafficking in Persons. However, the new law did not provide criminal sanctions for the prohibited but still common practice of withholding passports and denying exit visas.

Many employers subjected foreign workers to abusive conditions that constituted involuntary servitude, including nonpayment of wages for months and years, debt bondage, confinement, confiscation of travel and identity documents, 18-hour days without days off, contract switching, intimidation, and physical abuse. According to HRW, there were approximately 1.5 million foreign domestic workers in the country during the year, most of them women. Reported cases of abuse were numerous.

At particularly high risk for trafficking are men and women who voluntarily travel to the country to work as domestic employees or other low-skilled laborers. They run the risk of facing conditions indicative of involuntary servitude, including restrictions on movement, forced 18-hour workdays, withholding of passports, threats, physical abuse, sexual abuse, and nonpayment of wages. Countries from which victims are trafficked include Bangladesh, India, Sri Lanka, Egypt, Nepal, Pakistan, the Philippines, Indonesia, Sudan, Ethiopia, Nigeria, Yemen, Pakistan, Afghanistan, Chad, and Sudan. There were reports of Asian and African women trafficked for commercial sexual exploitation; some were reportedly kidnapped and forced into prostitution after running from abusive employers. Nigerian, Yemeni, Pakistani, Afghan, Chadian, and Sudanese children are at high risk for being trafficked into the country for involuntary servitude as forced beggars and street vendors.

Domestic workers were especially vulnerable to trafficking into forced labor, in part due to deceptive hiring practices, the widespread convention of the employer withholding passports, and the requirement for employer consent to obtain an exit visa. Labor recruitment agencies and their subcontractors, as well as companies, hire labor from low-income countries, often under false pretexts. The sponsorship system ties a foreign worker's residency permit to the sponsor for the duration of the worker's stay in the country. When the employment relationship breaks down and the worker escapes or leaves the job, he or she is unable to leave the country.

The economy remains dependent on the skills and expertise provided by the 6 million foreign nationals residing in the country [as of 2006]. Estimates placed the workforce in Saudi Arabia at 6.76 million, with foreign workers constituting nearly one-third of that total. Resolution No. 50, passed in 1995, required that the workforce of any company with more than 20 employees be at least 5 percent Saudi. This requirement wasraised to 10 percent in 1999. Additionally, in 2001 the Saudi government prohibited theawarding of contracts to companies not complying with Saudiization and stipulated that foreignworkers applying to change jobs would be charged a fee.

Foreign workers comprise approximately 88 percent of the private sector workforce, according to a 2010 US Government estimate. Their work, wages, living quarters, and working conditions were generally negotiated and agreed upon prior to their departure from the sending country. There is no national minimum wage. The unofficial private sector minimum wage for citizens was 1,500 riyals (approximately $400) per month, which appeared to provide a decent standard of living for a citizen worker and family (who also receive various government allowances).

Labor regulations provide for a 48-hour standard workweek at regular pay; a weekly 24-hour rest period, normally on Fridays, although the employer may grant it on another day; a limit on hours worked; premium pay for overtime at time-and-a-half pay with a maximum of 12 additional hours of overtime; and the minister's determination on the maximum number of hours of compulsory overtime.

Foreigners may reside or work in the country only under the sponsorship of a citizen or business. The law does not permit foreigners to change their workplace without their sponsor's permission, thus forcing the worker to remain with the sponsor or to seek the assistance of the embassy to return home. In terms of movement and travel, foreign workers were under the complete control of their employers or sponsors, who held their passports and were responsible for processing residence permits on their behalf. Sponsors involved in a commercial or labor dispute with foreign employees may ask authorities to prohibit the employees from departing the country until the dispute is resolved. In rare instances, the labor officer of the embassy of the sending country represented the rights of the laborers. In some contract disputes, a sponsor held the employee in country until the dispute was resolved to force the employee to accept a disadvantageous settlement or risk deportation without any settlement.



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Page last modified: 09-07-2011 02:40:21 ZULU