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Saudis told to 'resign or wait' as building giant struggles to pay wages

Binladin Group attempts to buy time with promise of bonuses as it waits on money from unpaid contracts
Workers at a construction site in the Saudi capital Riyadh (AFP)
By
Rori Donaghy

Thousands of Saudi employees at one of the kingdom’s largest employers have been told to be patient as they wait for four months' of unpaid wages, according to local reports.

The Saudi Gazette reported on Tuesday that the Binladin Group had asked its 17,000 Saudi employees “to resign or wait” as the construction company struggles to hang on while being owed more than $1.5bn in unpaid contracts.

The construction giant has hit the headlines in recent days after it sacked at least 77,000 of its estimated 200,000 foreign workers, sparking violent protests.

Binladen Group has promised its Saudi employees a bonus of two months' wages if they are patient.

The combined wage bill of Binladin’s Saudi employees, who are employed as engineers, inspectors, and administrators, amounts to approximately $110m a month.

That would mean the company faces a $660m payout - $440m for wages and $220m for the promised bonus.

The Saudi employees agreed to “wait and watch”, according to the Saudi Gazette.

On Tuesday, Labour Minister Mufrej al-Haqbani said the Binladin crisis would be solved: “God willing... some workers will receive this month, some others will receive another month."

When asked if the jobs of Saudis would be protected, following reports that 12,000 had been sacked, the minister replied that “a wage protection system safeguarded employees’ salaries,” according to Reuters.

However Binladen's large pool of foreign workers are not being offered back wages. They have been given permanent exit visas to leave the kingdom but are reportedly unwilling to do so until they receive their money, as they too have not been paid for at least four months.

The foreign workers have staged protests, including the torching of seven buses outside the company’s offices in Mecca province on Saturday.

Saudi authorities and company officials have both insisted that all laid off workers will receive their money.

Abdullah al-Olayan, the director of the Labour ministry in Mecca, said authorities would ensure that all foreign workers are paid before they leave the kingdom, according to the Saudi Gazette.

Olayan added that authorities were investigating the bus burning incident.

The Binladin Group responded to questions about the mass sackings by saying they were part of a “normal routine”.

“Adjusting the size of our manpower is a normal routine, especially whenever projects are completed or near completion,” the company said in an emailed response to Bloomberg on Monday.

“Most of the released jobs had initially been recruited for contracted projects with specific time frame and deliverables.”

The company said in the event of further sackings it would “honour its commitments” in terms of outstanding salary payments.

The Binladin Group, which was established in 1931 by the father of the late al-Qaeda leader Osama Bin Laden, is one of Saudi Arabia’s largest employers.

It has been responsible for large construction projects including building towers in the capital Riyadh, and universities and airports in the western port city of Jeddah.

But the company has reportedly been suffering debts of up to $30bn and it has been engaged in a series of pay disputes with workers, which in March led to protests outside their offices in Riyadh.

Binladin may also be feeling the pinch because of a catastrophe at one of its projects last year, when a crane in the holy city of Mecca collapsed and killed 107 people.

The incident prompted the government to suspend the company from future contracts, and led to an investigation by the finance ministry into its existing state projects.

While the crane collapse may have contributed to Binladin’s woes, a significant financial problem for the company is the delay in paying contractors in Saudi Arabia.

The $1.5bn owed to the company is expected to be paid by the end of 2018. The company hopes the vast majority will be paid next year.

While Labour Minister Haqbani would not confirm on Tuesday whether Binladen was owed any money from the government, Deputy Crown Prince Mohammed bin Salman told Bloomberg in April that the kingdom must resolve delayed payments to government contractors. 

“There’s no doubt this issue will be dealt with,” he said. “We tried to compile all decrees over the last few years and we found that ministries could commit to more than $1 trillion based on these decrees.

“We’ve started to restructure the process of handling them which is what caused this confusion in the past. But no doubt we are committed to any contractual agreements made by the Saudi government.”

Saudi Arabia has been forced to cut its government spending as oil prices, which account for the majority of the kingdom’s income, have plummeted by up to 70 percent in two years, and led to a budget deficit of more than $100bn.