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Saudi companies opt for subcontracting over direct hires, resulting in acute and unchecked exploitation

As the Kingdom steps up recruitment from Nepal, manpower supply and contracting companies have a free run

On March 3, 2024

Ranjit Budha* was looking for a steady job and a stable life. When recruitment agents in Kathmandu told him about a job opportunity at Saudi Aramco, Ranjit thought he had found a promising deal. The agents, known as dalals in Nepal, told him he would be directly employed by Aramco for SAR 1700 a month (US$450). Not to miss his chance to be employed by the well-known oil and gas giant, he says he paid 150,000 rupees (US$ 1,115) to the firm, bypassing Nepal’s ‘free visa, free ticket’ policy without argument.

But a few hours before his flight in December 2022, a closer look at his visa documents and consultation with other workers made him realise that Aramco would not be his employer. Ranjit felt tricked; still, he couldn’t decline the job, he says, because it would have been almost impossible to get fees back from manpower agents. Disappointed, he flew to the desert kingdom uncertain of what was to come.

Ten Nepali migrant workers interviewed for this story recounted to similar experiences of being tricked by recruitment firms in Nepal and their subsequent vulnerability to exploitation in Saudi Arabia.

The experiences of construction, hospitality, and retail sector workers shed light on how both agencies and employers mislead potential recruits about the terms of their employment and manipulate them into paying hefty fees. Their accounts provide insight into how Saudi contractors, known as ‘supply companies’ among Nepali migrant workers, take advantage of their helpless situation and gruelling work. With more than 176,000 companies, Saudi Arabia’s contracting sector is a significant contributor to the country’s non-oil economy. The contracting companies are involved in a range of businesses from construction to energy to transportation. Amid Saudi’s ambitious Vision 2030 initiative, the contracting companies have been involved in many infrastructure development and technology integration projects such as Neom, Riyadh Metro, The Red Sea Project, King Salman Park, and Jeddah Economic City. The Saudi government has supported the contracting companies, providing financial incentives and encouraging them to participate in the Vision 2030 project.

Deceptive Hiring

In Saudi Arabia, Ranjit’s employer turned out to be National Basics Company (NBC). Through NBC, he now works for Al-Rashid Trading & Contracting (RTCC), a contractor involved in oil, gas, and construction projects. RTCC, a joint stock company operating in the Gulf for more than six decades reportedly has employed more than 10,000 workers. Over the years, it has provided labour services to the various ministries of the Saudi government. Currently, it is partnering with Aramco to construct power plants in the kingdom. In Nepal, Ranjit says, the agency, Herald International Pvt Ltd, misled him by hiding the names of both NBC and RTCC. “Had I known it was not a direct job, I wouldn’t have come here,” says Ranjit.

The recruitment firms in Kathmandu advertise overseas job opportunities with the names of big companies and brands to entice potential recruits. They make no mention of the contracting companies, who are the actual employers.

Unaware of how the big companies operate and fulfil their labour requirement, the workers trust recruitment agencies. The agents make them believe that big companies mean a greater likelihood of getting fair wages and decent working conditions, Ranjit says.

Ranjit now works as a helper at the Berri gas plant in Jubail. He receives SAR 1,250 monthly, which is 450 less than what his agent promised him in Nepal. He works outdoors on his 10-hour shift, he says, though the recruitment agent told him it would be an indoor job and only for eight hours a day. “I’m not the only one deceived. We’re many,” he says from a cramped labour camp.

For decades, Nepal has been a key source of foreign labour for Saudi Arabia. However, the recent surge in ambitious mega-projects, from tourist attractions to tech hubs, aimed at diversifying the Saudi economy, has led to a significant increase in Nepali workers in the kingdom. In the Nepali fiscal year ending July 2023, over 110,000 Nepalis received work permits in Saudi Arabia, marking a nearly 2.5-fold jump in five years.

Nepalis work in various sectors across Saudi, spanning from construction and service industries to sales. Their number in the skilled job sectors is minimal, with the majority in elementary occupations such as cleaning, packaging, loading, delivery, and unspecified general labour work, according to the Nepal government’s latest labour migration report.

Overworked, Little Pay, Termination

Though corruption and exploitation in the construction subcontracting chain are more extensively documented, workers in the restaurant, food delivery, coffee shop, and warehouse sectors also suffer from similar exploitative practices.

After coming to the kingdom under the false promise of a job at Amazon, Lal Babu Mehara ended up at Abdullah Fahad Al-Mutairi Co (AFMCO), a labour supply firm that has more than 6,000 workers. It provides workers to numerous international companies for their logistics, packaging, shipping, and delivery requirements. These contracting workers work in warehouses, factories, health facilities, hotels, and coffee shops.

Al Mutairi sent him to work as a barista at a Kyan coffee shop in Tabuk, a northwestern city bordering Jordan, where Lal Babu knew no one. The first-time overseas traveller felt cheated. But he had no option but to follow commands from the Al Mutairi staff.

Lal Babu had no experience in a coffee shop. For about a year, he worked 12 hours a day under a demanding and rude supervisor. The supervisor kept on complaining to him of “poor performance” and warned him he would be fired.

Lal Babu’s tenacity saved him for less than a year. He says he got his last warning when a coffee carafe lid accidentally dropped on the floor, and someone trashed it into the bin. The supervisor yelled obscenities at him. Lal Babu took out the lid from the bin and cleaned it, but the supervisor still asked him to leave a few days later. “There is no job security for supply company workers. They can terminate workers anytime,” says Lal Babu. “If I was a direct employee, I could have spoken up for justice. But who cares about us?”

Given the complexity of recruiting transnationally, large corporations often depend on supply or contracting companies to meet their needs, especially for jobs that require only certain phases of a project. A multinational company bidding for tenders in Saudi previously told MR that direct recruitment is discouraged in the Kingdom, seemingly to ensure the contracting companies that are solely run by citizens receive enough business. But subcontracted labourers feel their jobs are more insecure, a contrast to the experience of direct hires.

After losing his job, Lal Babu became “asahaya,” a term used by the Nepali workers to describe their helpless situation. Lal Babu wanted to tell his story to his employer, Al Mutairi, he says, but it did not respond to his repeated calls. Meanwhile, the Kyan staff put him on a bus from Tabuk to Riyadh. In Riyadh, he met dozens of other Al Mutairi workers who had been languishing without jobs and income for months.

Workers from across Saudi report similar experiences.

A food delivery worker at Hunger Station in Al Qassim says he got a warning from the manpower supply company when he asked why his salary was delayed. “He threatened to kick us out of the job when we asked for our delayed salary,” he says. “Then we didn’t say anything. We don’t want to lose jobs.”

He has been working through Al Saeed General Contracting for about eight months. “It’s such a nasty thing when I work, but the company does not pay,” Hari says. “I’m not begging for money. I can work, but they should give me a fair salary.”

Difference and Discrimination

At their workplaces, supply company workers say direct hires were treated relatively better when it concerned wages, benefits, work and living conditions, and the treatment by supervisors. Bimal Khadka, who worked at the Carrefour warehouse and Barn’s coffee shop through a contractor company, says workers are pressured to work hard by supervisors. At the Saudi warehouse of the French retail giant, he says, workers were forced to meet difficult targets, with the warning that the repeated failure would result in job loss.

“Direct employees may be excused even when they make mistakes or don’t perform well. The managers and supervisors protect them,” Bimal says. “But they immediately take action against supply workers. Why do they treat workers unequally?” Scolding by supervisors is described as routine.

Some others say that they were forced to work overtime without pay.

As a contract worker of Carrefour, Bimal received monthly SAR 1,300 for his work. But he says this is a small chunk of the payment Carrefour gives to the supplier firm. He says supply company workers were also denied leave, bonuses, and end-of-service benefits.

A worker at Rust Burger, who works through NAS Manpower Solutions, also shared a similar story. Hari Gharti*, who works in the Al Bahah branch, receives 1200 riyals for his work in a month, but for the same work, he says, direct hires receive nearly three times more. “I sweat blood to make customers happy. But the company makes a profit out of me,” he says. “Supply companies suck. Don’t work for those.”

He says that because he is a contract labourer, Rust Burger forces him to work for more than eight hours without fair compensation for overtime. In one month, he worked 4 hours of overtime every work day and his company gave him 200 riyals, he says, but he should have given 550 riyals. From then on, he refused to do overtime.

“It’s such a nasty thing when I work, but the company does not pay,” Hari says. “I’m not begging for money. I can work, but they should give me a fair salary.”

Hari is one of the 7.4 million foreign workers in the country in a private sector service job which is not a preferred area for Saudi nationals. The private sector jobs, which provide less job security, have historically relied on cheap migrant labour. In 2022, more than seven million foreign workers were employed in the private sector while the number of Saudis in private jobs exceeded two million, according to Saudi government data. Hari says, “We are the ones who do manual jobs with low salaries. But we don’t get fair treatment.”

“Bitten by Bugs”

Clean housing is a far-fetched dream for them, workers say. All the workers interviewed for this story say they live in small shared rooms.  A few reported that their toilets and bathrooms had dirty water and were without locks.

Some workers say that they were bitten by the bugs in their narrow beds, under the thin blankets provided by their companies. A worker who is employed by Al Mutairi but working at Carrefour says, “We have problems everywhere. There are bugs in beds. The water supply is not regular in the bathroom. We don’t have a kitchen, we cook in our bedroom. What more can I say?” He says that Al Mutairi did not address his complaints.

Another worker, Lal Babu, says he shared a grimy bedroom with three other workers in Tabuk for a year when he worked at Kyan Coffee. In a room just behind the coffee shop, which used to be noisy all night due to traffic, he could not sleep properly. Every morning, he says, he awoke tired. “This is what you get when you end up in the worst supply company. I say, nobody should go to the supply company,” he says.


"I came here to earn money. I paid a lot of money to come. I haven’t paid off the loans yet; how can I return empty-handed?"

- current worker subcontracted by Carrefour

Difficult to Keep Up and Unable to Escape

Workers try to work diligently so as not to lose their jobs. But as contract workers, they always fear losing placements at the contracting firms. If they lose their position, they either have to wait for another job or try to return home. Neither option is easy.

“I came here to earn money. I paid a lot of money to come,” says a current Carrefour worker. “I haven’t paid off the loans yet; how can I return empty-handed?”

Workers feel compelled to endure the suffering instead of getting trapped in another unscrupulous hiring process back home. But after waiting for weeks and months without wages and food and with no certainty of getting another job, some workers eventually feel it’s worth returning.

But they stumble upon other obstacles.

Disappointed by the work at Rust Burger in Al Bahah, Hari Gharti asked the company to let him return home. But his employer, NAS Manpower Solutions, he says, asked for 5,200 riyals (US$1390) to approve his exit. Then, he felt forced to continue working. In response to our inquiry, NAS Manpower says the worker’s accusation is “incorrect” and claims that the company is “very cooperative” with all their workers.

A current worker at Barn’s Coffee says his supplier also asked him for a 5,000 riyals exit fee to go home. “How could I have that money with me?” he says.

As soon as workers arrive in Saudi Arabia, the labour supply companies exert control over workers. They hold them in company-provided accommodation, take their passports, and return them only when their iqamas (residency permits) are issued. After that, workers say, the company alerts them that they need approval from the company to leave their job or country.

“What could I do with my passport since we must have exit permission from the company to return home?” says Lal Babu.

Lal Babu waited a month and a half to return home, without wages or food, taking shelter in a friend’s room. When his savings ran out, he borrowed from friends to survive and fell into a spiral of debt.

Dangerous Decisions

Debt and job loss pushed many workers to make dangerous decisions. Anjan Mandal, after losing a packaging job at Carrefour, secretly fled the Al Mutairi accommodation. He sheltered in his brother’s room for months and worked as an off-the-grid sewer to make a living.

Another worker, Bimal Khadka says he was asked to change three different jobs in two years and was laid off for three months with no food or wages. He wanted to return home, but to make the situation worse, Al Mutairi asked him to pay the exit fees. At some point, he says, “I was even ready to be detained by the police so that they would deport me. I didn’t have money.”

Bimal managed to negotiate with the company in the end to return home. But workers say they have seen many workers in Saudi Arabia in limbo. They’re neither allowed to change jobs nor return home.

One of them is Ranjit Budha. He does not want to work at Al-Rashid Trading & Contracting (RTCC) with little pay. Some of his friends had already run away, despite the risk of being charged with absconding.

Looking at the weak financial situation back home, he sometimes feels like leaving the company and working without valid documents. But when he recalls the face of his two-year-old daughter and imagines getting detained by the police, he gets scared. Ranjit says, “Help me, I feel like a prisoner.”

*Names of some workers have been changed to protect their identity.

Corrigendum: An earlier version of this article incorrectly identified the Nepalese recruitment firm International Manpower Recruitment as involved in one of the cases. The name was misidentified, as they had provided services to the worker for job placement to another country earlier, and not relevant to this specific case. We regret the error (Corrected on March 7).