Viewing cable 08JEDDAH368
Title: SAUDI ARABIA MIGRANT LABOR UPDATE: INFLATION, THE

IdentifierCreatedReleasedClassificationOrigin
08JEDDAH3682008-08-31 16:40:00 2011-08-30 01:44:00 CONFIDENTIAL Consulate Jeddah
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DE RUEHJI #0368/01 2441640
ZNY CCCCC ZZH
P 311640Z AUG 08
FM AMCONSUL JEDDAH
TO RUEHC/SECSTATE WASHDC PRIORITY 0884
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUEHDS/AMEMBASSY ADDIS ABABA PRIORITY 1340
RUEHLM/AMEMBASSY COLOMBO PRIORITY 0268
RUEHKA/AMEMBASSY DHAKA PRIORITY 0072
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 2017
RUEHRH/AMEMBASSY RIYADH PRIORITY 8022
C O N F I D E N T I A L SECTION 01 OF 03 JEDDAH 000368 
 
SIPDIS 
 
RIYADH PLEASE PASS TO DHAHRAN; DEPARTMENT FOR NEA/ARP; 
DEPARTMENT FOR JLIEBERMAN IN DRL/NESCA; 
 
E.O. 12958: DECL: 08/31/2018 
TAGS: ECON OFDP PHUM PGOV SOCI SMIG ELAB PREL SA
SUBJECT: SAUDI ARABIA MIGRANT LABOR UPDATE: INFLATION, THE 
MIDDLE-MAN, AND THE POTENTIAL FOR PROTEST 
 
Classified By: Acting Consul General G Stoner for Reasons 1.4 (b) and ( 
d) 
 
¶1. (C) SUMMARY.  Recent labor strikes in Kuwait coupled with 
rising inflation across the Gulf raise the question of 
potential for worker protests and strikes in Saudi Arabia. 
Meetings with consular and labor officers of sending 
countries in Jeddah indicate that inflationary pressure is 
not likely to lead to the return of migrant workers or to 
strikes, in spite of increased workloads and decreased 
remittances. Comparatively high inflation and prices in home 
countries along with minimal work opportunities back home 
continue to create major incentives for labor to remain in 
Saudi Arabia. The "Middle Man" in the form of recruiting 
agencies in Saudi Arabia and sending countries allows for 
complicated contractual disputes and potential abuse(reftel) 
END SUMMARY. 
 
--------------------------------------------- ---- 
Staying Put: Inflation is Bad, But Worse at Home 
--------------------------------------------- ---- 
 
¶2. (C) According to the Sri Lanka Consulate of Jeddah Labor 
Attach Meeran Mohamed Jiffrey, inflation in Sri Lanka is 
higher than in Saudi Arabia and is therefore not a factor 
likely to encourage return among workers.  Jiffrey added that 
a new wage agreement entitles workers to a minimum wage of 
650 Saudi Riyals ($173) monthly instead of the rate of 450 
Saudi Riyals ($120) that they had been receiving before. 
Therefore, any angst over inflation is likely offset by these 
increases. 
 
¶3. (C) PolOff met with Ethiopian Consulate Consul Muktar 
Mohamed. He stated that inflation is much worse in Ethiopia 
and that prices there are so high that, "people can't afford 
to live there." In his opinion, rising prices are not likely 
to have much bearing at all on the 80-100,000 Ethiopians 
working in Saudi Arabia. The one impact might be a reduction 
in remittances by some of the workers to their families back 
in Ethiopia. 
 
¶4. (C) Bangladeshi Consulate Counselor Islam Kaisarul met 
with PolOff. Kaisarul admitted that the rising prices in 
Saudi Arabia are in fact a significant factor for migrant 
workers, but that ultimately they will stay in Saudi Arabia 
even if it means working more than 16 hours a day. According 
to Kaisarul, the monetary advantage of working in Saudi 
Arabia is still significantly greater than the poverty of 
home. The worker response to rising prices is simply taking 
on additional jobs or longer hours. 
 
¶5. (C) PolOff met with Ali Shaukat, the Community Welfare 
Attach at the Consulate of Pakistan. According to Shaukat 
the inflation in Pakistan is worse than in Jeddah so there is 
no incentive to return home. In fact, more Pakistanis are 
coming in recent years (80 thousand last year) in large part 
due to the real estate construction boom in Saudi Arabia, 
related largely to the development of several economic 
cities. Shaukat also felt that the attempts to Saudize the 
labor force is not likely to effect low-skilled workers. 
 
--------------------------------------------- ----------- 
Inflation has Limited Impact on Those With Few Expenses 
--------------------------------------------- ----------- 
 
¶6. (C) According to the Pakistani Attach, inflation and 
price increases are noticeable, but the effects depend on 
which socio-economic class of Pakistanis in Saudi Arabia are 
in question. He claims that the rich workers still have 
enough money for expenses and remittances. Meanwhile the 
poorer social class of less-skilled workers is affected but 
with prices for food as low as a few dollars a day, it is not 
a great impact. 
 
¶7. (C) Sri Lankan Labor Attach Jiffrey discussed that the 
impact of inflation on migrant workers largely depends on the 
type of labor. Domestic laborers, who account for 80% of the 
Sri Lankan labor force in Saudi Arabia, are less impacted 
than other groups by increases in prices since they have 
almost no living expenses. Domestic labor in Saudi Arabia are 
generally provided food by the family and required to live in 
the house. Most of these laborers remit the bulk of their 
wages back to their families. 
 
JEDDAH 00000368  002 OF 003 
 
 
 
--------------------------------------------- ---- 
The Middle Man Spells Trouble for Workers Rights 
--------------------------------------------- ---- 
 
¶8. (SBU) A new law in place as of August 1st requires that 
all labor contracts from foreign recruiters work directly 
through the Saudi National Recruitment Committee SANARCOM 
rather than with the employer. The decision is creating anger 
among Filipino recruiting agents with some believing that 
Saudi Arabian recruiters are simply trying to earn more money 
from recruitment (Source: Arab News August 29). 
 
¶9. (C) According to the Bangladeshi consul, there are over 
1000 recruitment companies in Bangladesh. Some of these 
companies have set up unofficial and illegal offices in Saudi 
Arabia in order to foster connections with SANARCOM. The 
system in place creates four elements to recruitment: the 
employer, SANARCOM, the sending country recruiting agency, 
and the employee. According to him, the middle man is getting 
a big cut of the salary. (Given the recent passing of the 
unified contract law, both SANARCOM and the sending country 
recruiting agencies can be seen as playing a role of middle 
man. 
 
¶10. (C)  The Bangladeshi Consul noted that while he does not 
see many abuse cases, most of the cases dealt with involve 
contract disputes. He cites the fact that the employee rarely 
has direct contact with the employer as one reason for this. 
The recruitment agency in Saudi serves as a middle man and 
this can make it hard to determine who is actually correct in 
a dispute. According to him, it is often the agency itself 
rather than the employer that has taken any disputed wages. 
 
¶11. (C) The Pakistani attach felt that disputes are 
increasing due to a lack of education. He stated that 
problems usually arise with less-educated individuals who 
might not have understood the terms of their employment. He 
seemed to attribute most of the culpability with the employee 
rather than the agency or employer. He mentioned that there 
are efforts in Pakistan to make sure that people understand 
the terms of their contract in Saudi Arabia and to promote 
fair recruitment. 
 
------------------------------------------- 
Kuwait Strikes, Round Two in Saudi Arabia? 
------------------------------------------- 
 
¶12. (C) The Sri Lankan Labor Attach Jiffry admitted that the 
conditions at some of the camps where construction workers 
and others live tend to be very overcrowded. He said that 
individual complaints are launched by workers over abuse 
issues including non-payment of wages and other 
contract-issues. However, the attach does not seem to see 
any organization among those with grievances and said that he 
does not expect a situation in Saudi Arabia similar to that 
which was seen in Kuwait. Jiffrey explained that the wages 
offered in Saudi are still considerably higher than anything 
that could be received in Sri Lanka leading many to favor 
staying within the Kingdom and to reject measures that might 
jeopardize this status. 
 
¶13. (C) COMMENT. While possible, it does not seem likely that 
a similar set of protests or strikes, along the lines of 
those seen in Kuwait, will occur in Saudi Arabia. Intense 
Saudi security at all levels makes it unlikely that 
significant organization among workers can occur. If it 
should, the incident is expected to be dealt with quickly and 
perhaps even harshly by the Saudi government. The 
disincentive of deportations and loss of remittance is a huge 
deterrent for labor to participate in any protest. Despite 
heavy inflation in the Kingdom, the opportunities there 
usually far outweigh the poverty found in the home country. 
Some of the conditions that might lead to a strike are 
however present in the Kingdom: long hours, harsh working 
conditions, cramped living situations, and instances of abuse 
by employers.  The most likely condition to lead to 
disturbances is significantly delayed payment of wages, 
non-payment, and pay below that which was contractually 
agreed upon. From an economic perspective, the reality is 
that Saudi Arabia has no shortage of potential laborers 
should it find itself deporting a small number of protesters 
or strikers. For this reason the political and economic 
 
JEDDAH 00000368  003 OF 003 
 
 
impacts of any strike are likely to be minimal to the Saudi 
economy. The Saudi Arabian government can avoid potential 
unrest among workers by ardently enforcing its own labor 
laws. Additional monitoring and regulation by the Ministry of 
Labor, the judicial system, and police is necessary to insure 
that Saudi Arabian and sending country recruitment agents are 
not maximizing their profits at the expense of laborers.  END 
COMMENT. 
STONER