Foreign governments are pressing both government authorities and company executives in Saudi Arabia “to ensure that local construction firms make delayed salary payments to thousands of workers, a sign of pressure on the kingdom’s economy due to low oil prices,” according to a Reuters report.
Construction firms in Saudi Arabia are have been squeezed as government payments have slowed as a result of efforts to curb spending in the face of low revenues from oil prices. That has frustrated the business community both domestically in Saudi Arabia and abroad.
Last month, Saudi businessman and Chairman of the powerful Council of Saudi Chambers of Commerce (CSC), Dr. Abdulrahman al-Zamil, wrote a letter to Saudi Arabia’s King Salman requesting that he intervene to ensure that the government makes delayed payments to construction companies.
Some construction firms have seen scheduled payments from the government delayed by over six months, according to the letter obtained by Reuters. “If the delay in payments continues, these companies will be at risk of default, or go completely out of business,” Al-Zamil said in the letter to King Salman.
The finance ministry has cut advance payments to firms doing state construction work from 20% to 5%, the government has awarded fewer contracts, and its payments to companies for work already done have slowed.
Reuters also cites a diplomatic source as saying the French ambassador to Saudi Arabia has weighed in on behalf of French citizens working for Saudi Oger, who have not been paid in 4 months.
With regard to the Saudi Oger complaint, the Saudi Ministry of Labor has reportedly applied a number of passport and visa restrictions on the large construction firm as a result of its non-payment of employees.
“In absolute terms, the state does not lack money to pay its debts; it still has nearly $600 billion in overseas assets. But austerity controls imposed on government departments have slowed approvals for payments and their disbursement,” according to a report in VenturesOnsite.com.
