Talat Hafiz
Government initiative to support private sector payroll

King Salman bin Abdulaziz Al Saud, has issued his order to support 60% of the private sector wages registered in the General Organization for Social Insurance (GOSI) for a period of three months, up to a maximum of SAR. 9,000. 

Such initiative came at the right time in response to the Coronavirus (Coved-19) outbreak potential negative impact on businesses operating in KSA which might have an adverse effect on the businesses ability to pay the wages to its worker force.

Such support will be backed up by one of GOSI’s insurance schemes, called “SANED”  which is a scheme based on the patronage of the Saudi worker and his family during the period of unemployment for reasons out of his control. For this reason, the program is intended to bridge the transitional gap between the previous job and the opportunity to obtain a new job, by providing a minimum income to provide the unemployed worker and his family a decent living as well as to provide the necessary training and help him find another job.

The wisdom behind King Salman’s order is to elevate the pressure on the cashflow of different businesses operating in the Kingdom, due to the negative impact of the Coronavirus, especially on the Small and medium enterprises (SMEs) which might ultimately hinder their ability to meet its payroll obligations. Such difficulties might end up in losing Saudi employees their jobs due to the termination of their contracts.

The initiative will allow Saudi companies to apply for GOSI and request a monthly compensation payment for their labor force for 60% of the wage of who are registered in GOSI for three months, up to a maximum of SAR. 9000 per month, and up to a total value of SAR 9 billion. 

It is worth noting that the initiative will cover 100% of Saudis working in establishments with 5 Saudi labors or less and 70% of Saudis working in establishments with more than 5 Saudi labors and according to the royal order, the employer shall be waived from committing to pay the monthly wages for the beneficiaries, however, he must resume the payment of wages right way after the compensation ceases. Also, the employer must continue paying wages for Saudi and non-Saudi labors who are not included in this compensation

To conclude, I believe that such initiative will work for the benefits of the stakeholders (the employer and the employee) and also for the Saudi economy, since it will provide protection for the employees and help the employers to sustain their businesses and ensure its continuity which will ultimately will reflect in a positive way at the end of the day on the overall Saudi economy.

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