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Saudi Arabia caps the cost of recruiting domestic workers of certain nationalities

On February 2, 2023

Saudi’s Ministry of Human Resources and Social Development (MHRSD) has announced a price ceiling on recruitment costs for Sri Lankan domestic workers. The MHRSD instructed recruitment agencies in Saudi Arabia to set the maximum cost for hiring a Sri Lankan domestic worker at SAR15,000 (US$3,996), excluding VAT.

In September last year, the MHRSD imposed a similar cap on domestic worker recruitment costs from the following countries:

Uganda: SAR 9,500 (US$ 2,530)

Thailand: SAR 10,000 (US$ 2,660)

Kenya: SAR 10,870 (US$ 2,890)

Bangladesh: SAR 13,000 (US$ 3,460)

Philippines: SAR 17,288 (US$ 4,600)

Additionally, the MHRSD recently launched a new initiative to recruit domestic workers from Indonesia, with recruitment costs fixed at SAR 19,900 (US$ 5,301), excluding VAT. Under this initiative, employers can pay the recruitment fee in monthly instalments of SAR 1750 (US$ 466).

These fees do not include workers’ actual wages, which vary based on nationality in accordance with the Memorandum of Understanding (MOUs) signed between Saudi Arabia and different sending countries. The minimum wage for domestic workers from the Philippines and Indonesia for example, is higher than that of other nationalities at SAR 1500 (US$ 400) per month.

The monthly costs for recruiting and employing a domestic worker can therefore reach nearly US$ 900. Yet, Saudi regulations do not require citizens to earn a minimum salary to recruit domestic workers, unless they are employing a second worker or more; they are only required to show a minimum bank balance of SR 40,000 (US$ 10,660) when issuing their first domestic work permit. In contrast, non-nationals must earn SAR 10,000 (US$2,660) monthly and hold a minimum bank balance of SAR 100,000 (US$ 26,640)

These initiatives were introduced to combat steep increases in the costs of recruiting domestic workers to the Kingdom. According to Okaz’s recent analysis of data from the Saudi government’s recruitment platform, Musaned, the cost of recruiting domestic workers exceeded SAR 32,000 (US$ 8,510) for some recruitment agencies and nationalities, with Sri Lanka and Indonesia among the highest.

In order to increase the domestic labour supply in the Kingdom and lower recruitment costs, the Saudi government recently signed or renewed bilateral agreements, including with the Philippines and Indonesia, and other labour-sending countries that have previously imposed deployment bans due to abuse. But while the government has succeeded in reversing these bans, it has done little to safeguard domestic workers' rights; instead, it has used its leverage as a country of employment to lead a race to the bottom with sending countries.   

Regulating recruitment costs is a welcome move; inflated costs can lend to a sense of “ownership” of the worker, justify wage theft, and exacerbate poor working conditions as, for example, large families will over-work one worker instead of hiring two. However, the Saudi initiative is problematic in several ways. Firstly, employers will still be paying large sums each month, which are in addition to workers’ actual wages. While the recruitment payment plan is likely to be heavily regulated, workers' wages are not. Domestic workers are not included in the WPS, and the above-mentioned benefits of regulated costs are likely to be lost. 

As MR reported earlier in the case of Qatar, nationality-based caps on recruitment fees are not inherently discriminatory, as recruitment costs do vary from country to country. However, our research indicates that the costs do not span such a broad range. If recruitment costs do differ so substantially, then it is important to break the fees down into transparent, itemised expenses to help ensure that recruitment fee differentials reflect material variances in local markets, rather than racial bias.