Question

Saudi Government support for the private sector employees during COVID-19 pandemic has resulted in reduced layoffs”.  Discuss

Students are required to reply to at least two peer responses to this week’s discussion question. Your replies need to be substantial and constructive in nature.

Answer 1

Saudi Abrabia's coverage of a portion of Private Sector Employees' salaries has indeed helped in reduced layoffs during Pandemic of Corona Virus.

Layoffs are primarily due to companies not being able to bear the costs towards employees.

LayOffs occur then with company being not in a position to pay the salaries of employees due to financial constraints.

When the Saudia Arabia gave state assistance in bearing the cost of paying salaries partially with instructions to avert layoffs the private sector had reduced incidence of layoffs.

Covid has a wide impact all around the world. There are impacts on the economy, healthcare and generally lifestyles later on. Even Saudi Arabia is not immune to those kinds of impact, which most of the countries are facing. So because of that, there will be a likelihood of some retrenchment, some people losing their jobs

Corona Virus related toll and preventive measures that restrict movement and outdoor activities of people and employees has resulted in losses to private sector. Economies around the world will face an adverse impact due to the coronavirus-induced lockdown and Saudi Arabia will not be an exception.

To cover the toll on their economy from Corona Virus Impact company plans to layoff employees or that is discharge the employees from duties. This had been reduced by the efforts of Saudi Arabia's Ruler.

To prevent companies from laying off their staff, Saudi Arabia’s King Salman Bin Abdulaziz Al Saud announced on Apr 3, 2020 the government will cover a portion of private sector salaries in the industries most impacted by the novel coronavirus.

Salman unveiled an economic stimulus valued at over 9 billion riyals ($2.4 billion), according to the state-run Saudi Press Agency. Under his royal decree, companies needing to lay off employees can instead apply for the government to compensate 60% of those salaries for the next three months.

More than 1.2 million citizens are expected to be eligible for the stipends, which have a monthly limit of 9,000 riyals ($2400) per person. After the three-month period ends, the royal decree mandates that companies resume paying their employees.

The Saudi government will cover 60 per cent of the salaries of private-sector workers in industries hit by the coronavirus pandemic, King Salman announced on Friday.

The move was the latest major economic package in the kingdom to help cushion the financial impact of the virus as the number of cases hit 1,885 with 21 deaths then.

The state-run Saudi Press Agency announced that companies forced to consider lay-offs due to the virus could now apply to the government to cover 60 per cent of the salaries of workers for the next three months up to 9,000 Saudi riyal per month (Dh 8,787).

The total economic package is valued at over 9 billion riyal.

Finance Minister Mohammed Al Jadaan thanked King Salman and called on private sector companies to protect workers but also find ways to avoid firing people during the outbreak.

He said the new assistance package will be managed through Sanad, the national unemployment assistance system.

Mr Al Jadaan said that 1.2 million Saudis would be covered by the new measure and a committee under the financial authorities would assess the support and monitor the measure in case it needed to be extended beyond the three-month window.

The cover began in April with the first payments sent to companies on May 3, the minister said.

The government has already announced a package of measures to help companies hit by restrictions brought in to combat the spread of Covid-19.

The 70 billion riyal package exempted them from some taxes and fees and the SPA also highlighted a further 50 billion riyal support package to banks and financial institutions to aid small and medium enterprises.

Firms could request a monthly compensation for Saudi employees – equivalent to 60% of their wage – registered as social insurance at a maximum of $2,390 (SAR9,000) per month for a period of three months.

The move is part of a 9 billion riyal ($2.4bn) economic package, and allows companies forced to consider staff layoffs to apply for government aid.

In addition, private sector establishments have been directed to take measures that guarantee the safety of Saudi Arabia citizens and residents; reduce the economic repercussions on the labour market; localise jobs and develop opportunities by finding alternative solutions that contribute to sustained jobs.

The number of Saudi workers eligible to benefit from the compensation was planned to exceed 1.2 million. The applications for the monthly compensations began in April, to cover the April wages.

The help from Saudi Arbia King has thus to some extent reduced layoffs of employees of private sector.