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Very few private sector firms in Saudi Arabia have plans to follow a recent Royal initiative and pay Saudi nationals a special bonus, a new Mercer survey has found. The Mercer survey of 69 organizations with operations and employees in Saudi Arabia found that around 20% were planning to pay their Saudi nationals a bonus similar to the one recently announced for all Saudi nationals in the KSA public sector. Soon after his ascension to the Saudi Arabian throne, His Royal Highness King Salman bin Abdulaziz Al Saud, granted a two-month salary bonus to Saudi nationals employed in the public sector to mark the contribution that the Saudi people have made to the development of the Kingdom. A number of private-sector organizations in the financial services, transport and resources sectors indicated publicly that they would follow the King’s lead. The Royal Decree did not mandate the payment for employers to follow. Mahmoud Ghazi, who leads Mercer’s survey business across Saudi Arabia, says the survey results suggest many smaller entities are reluctant to make a similar payment without a clear directive from their owners or shareholders. “Some of the respondents who say they are preparing to make a payment are planning to vary the amount and the timing, so as to ease the financial impact,” Mr Ghazi said. The survey covered 69 organizations covering the broad Saudi economy, including life sciences (15% of respondents), high-tech (17%), financial services (6%), engineering & construction (15%), energy (10%), consumer good (20%) and others (17%). 24 companies surveyed that operate in the engineering and construction, and FMCG sectors, all indicated they would not pay a matching bonus to their Saudi nationals. Of the 14 companies who indicated they would be paying the bonus, 5 companies - roughly one-third -indicated they would pay all employees the salary bonus, and not just Saudi nationals. The remainder indicated they’d restrict the bonus payment to Saudi nationals only. Of this group of five companies, three responded that they would pay two months’ basic salary in line with the Royal initiative; one company said it would pay one month and one company more than two months. The survey results also revealed that some companies are varying the amount or the timing of the bonus. 14% of the firms who indicated they were paying a bonus to Saudi nationals were limiting the payment to one month’s basic salary or less. The bulk (79%) said they’d follow the public sector payout of two months’ basic salary, while 7% would pay more than two months. The vast majority (93%) indicated they’d pay it in one lump sum while one firm indicated it would stagger the payment over three months. Mr Ghazi said companies from the private sector who have a relatively small numbers of employees (ranging from 20-70 employees) can afford to pay this bonus to their Saudi and non-Saudi nationals, with the objective of differentiating themselves in the market. However, companies with a large number of employees see paying the bonus as likely to cause some financial risk, since most of the companies are about to review salaries and pay salary increases in April 2015. Mr Ghazi says Mercer will continue to monitor the situation in the dynamic KSA labour market and conduct spot polls and surveys where and when needed to help guide and shape their clients' decisions.
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