BRIDGING THE COST GAP: THREE LABOR POLICIES TO CLOSE THE WAGE GAP BETWEEN SAUDI AND

EDU ABOUT THE MIDDLE EAST INSTITUTE The Middle East Institute is a center of knowledge dedicated to narrowing divides between the peoples of the Middle East and the United States. [...] Proposed Labor Market Reforms Why the Bahrain Case Matters and its Relevance to Saudi Arabia The following sub-sections will explain in detail the rationale behind each of these three policy recommendations As mentioned in the introduction, Bahrain’s experience with eliminating certain labor restrictions on foreign workers between 2009 and 2011 offers an example of the economic 5 benefits such ref. [...] A high share of foreign labor holds only a high school The graph shows that the labor-cost gap narrowed immediately degree or less after the introduction of the first policy.29 The wage gap then 3. [...] Arabia’s private sector are guaranteed a minimum wage.34 The Ministry of Human Resources and Social Development Can Some Firms be Exempt from Minimum requires private firms to pay citizens a minimum of 4,000 Wage Regulations? riyals per month to count them for the purposes of the Nitaqat program, which imposes quotas for hiring nationals in the A reasonable concern with regards to a minimum wage i. [...] Currently 9 Policy Recommendations To create a level playing field for citizens in the private sector, the Ministry of Human Resources and Social Development should implement the three following policies: • Equalize foreign worker mobility by granting foreign workers the full ability to switch jobs without any restrictions, as is the case for Saudi workers.