For the "deserving"? Saudi Arabia introduces new welfare program for select citizens

Published January 7th, 2014 - 10:48 GMT
Saudi Arabia has already deported 60,000 migrant workers as part of its Saudization movement (Courtesy of Zawya)
Saudi Arabia has already deported 60,000 migrant workers as part of its Saudization movement (Courtesy of Zawya)

Saudi Arabia on Monday announced a series of welfare programs for its citizens, including an unemployment insurance scheme and a housing loan support program for deserving applicants.


The insurance scheme comes in line with the government’s push to employ more citizens in the private sector to tackle long-term unemployment that officials see as unsustainable in light of high population growth.


The introduction of unemployment insurance is designed to make it more attractive for young Saudis to seek jobs in private companies, where the starting salary and other benefits are less generous than in government departments.


“The scheme will be applied on Saudis working in both public and private sectors and who lost their jobs for reasons beyond their control,” said Labor Minister Adel Fakeih, adding that it would be implemented after six months.


He said the scheme would provide job security to some 1.5 million Saudis working in the private sector. “It’s a quality scheme to ensure social security,” the minister said.


Suleiman Al-Quwaiz, governor of the General Organization for Social Insurance (GOSI), said the insurance scheme would be applicable to all Saudis who come under the pension scheme. It will be applied to all workers who have not surpassed the age of 59.


While the official unemployment rate is less than 12 percent, economists say only 30-40 percent of working age adults participate in the labor force. Most Saudis who do not have jobs are financially supported by relatives.


Most of those who work are employed by the state, but the government cannot support such a large wage bill in the long run, and the International Monetary Fund has warned that the private sector must meet future job demand.


“If there is a guarantee of income, particularly when that is connected to the level of previous earnings, it should make people more comfortable with taking up positions in the private sector,” Paul Gamble, director of the sovereign group, Fitch Earnings, told Reuters.
Under the new scheme, all Saudi workers will be charged one percent of their monthly salary as a subscription. Their employer will pay the same amount into the scheme.


Those who lose their jobs will be entitled to up to 12 months of compensation, set at 60 percent of the average salary they earned in the previous two years for the first three months and then 50 percent for the following nine months.


Benefits are capped at SR9,000 for the first three months and SR7,500 for the rest of the year. There is a minimum payment of SR2,000.


Workers who quit have an alternative source of employment or income from investments or have been paying into the scheme for less than a year are not eligible for compensation.


The Cabinet decided to pay SR100,000 compensation to families of students belonged to all levels of education and training when they die or become handicapped while going to or returning from their educational institutions.


Economy and Planning Minister Mohammed Al-Jasser said the new Cabinet decisions would enhance the progress and prosperity of citizens and ensure a decent life for them. “Helping the unemployed seek jobs without income disruption is a humanitarian scheme,” he said.


Al-Jasser said the new housing scheme would ensure transparent distribution of loans among deserving citizens such as widows and divorced. “It will also encourage more investment in the sector and reduce rents,” he added.


Housing Minister Shuwaish Al-Dhowaihi thanked Custodian of the Two Holy Mosques King Abdullah for endorsing the mechanism to select citizens deserving housing loans, adding that applications for such loans would be received through its “Iskan” portal after 60 days.


“We have opened a contact center to answer queries of citizens regarding the scheme.” Applicant should be married and aged not less than 25 and a member of the family should not have any decent house. The applicant should not have previously benefited from a government or private housing scheme. Women can also apply if they are responsible for their families.


Benefits are capped at SR9,000 for the first three months and SR7,500 for the rest of the year. There is a minimum payment of SR2,000.


Workers who quit have an alternative source of employment or income from investments or have been paying into the scheme for less than a year are not eligible for compensation.


The Cabinet decided to pay SR100,000 compensation to families of students belonged to all levels of education and training when they die or become handicapped while going to or returning from their educational institutions.


Economy and Planning Minister Mohammed Al-Jasser said the new Cabinet decisions would enhance the progress and prosperity of citizens and ensure a decent life for them. “Helping the unemployed seek jobs without income disruption is a humanitarian scheme,” he said.


Al-Jasser said the new housing scheme would ensure transparent distribution of loans among deserving citizens such as widows and divorced. “It will also encourage more investment in the sector and reduce rents,” he added.


Housing Minister Shuwaish Al-Dhowaihi thanked Custodian of the Two Holy Mosques King Abdullah for endorsing the mechanism to select citizens deserving housing loans, adding that applications for such loans would be received through its “Iskan” portal after 60 days.


“We have opened a contact center to answer queries of citizens regarding the scheme.” Applicant should be married and aged not less than 25 and a member of the family should not have any decent house. The applicant should not have previously benefited from a government or private housing scheme. Women can also apply if they are responsible for their families.


“We’ll consider the number of family members, age of the applicant and his/her social and health condition and the period an applicant waited for loans while looking into applications,” Al-Dhuwaihi said.


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