JEDDAH — A number of investors and economists have opposed moves by some companies to arbitrarily terminate the services of their Saudi employees citing financial crises. They said instead they should have adopted options such as mergers and administrative restructuring in order to save jobs.
The economists say many companies exploit Article 77 of the Labor Law to fire workers, citing justifications such as poor financial performance, low revenue and a general economic slowdown. Instead, the companies should reorient their objectives in line with the Kingdom's Vision 2030 reform plan and encourage their employees to invest in the ventures, they say.
Rashid Bin Zouma, an investor in information technology, said some companies have retrenched staff due to a fall in sales or production and the subsequent drop in profits while others lay off workers when they do not receive their bills from government departments and contractors.
Zouma said such companies should look for alternatives instead of firing Saudi employees because of its negative impact on the economy and society in general. "The companies should have cut their allowances instead and some sections of their operations running to retain the workers," he said.
Mohammed Al-Mowalled, branch manager of a bank, said some companies have retrenched their workers exploiting Article 77 of the Labor Law.
"There are many other options for companies to overcome their financial crises," he told Al-Madina Arabic daily.
He said small companies can merge with bigger ones or big firms can take over small establishments, open new business ventures, encourage employees to invest in some projects, restructure salaries and replace expatriate workers with Saudis.
Dr. Khaled Al-Maimani, head of HR department at King Abdulaziz University in Jeddah, considered the retrenchment of staff in times of crises a big mistake. These companies also delay payment of salaries giving various justifications, he said.
"They should have followed creative methods to overcome crises such as merger, opening of new business ventures and temporarily renting their employees to other companies for specific periods," he added.
Economist Dr. Mohammed Bin Daleem said sudden retrenchment of workers in times of crises reflects distrust by employers in their workers.
Many companies terminate staff because of their weak administrative system and inflexibility. When facing crises, companies should adopt administrative and technical restructuring and rearrange their objectives in line with Vision 2030, he added.
Al-Madina contacted Khaled Abalkhail, spokesman of the Labor and Social Development Ministry, for comments on arbitrary retrenchment of Saudi employees by some companies but he did not respond.
