Salaries delayed in 50% of contracting companies

Al-Maghlouth estimated investment in the sector at more than SR300 billion as of 2015. The average value of government projects approved during 2004-2010 was SR1,100 billion.

“Most of these companies depend on government projects for their existence. Small firms leave the market once such projects are canceled,” he added.

Osama Al-Afalik, president of the Contractors Authority, agreed that 50 percent of companies are unable to meet their financial obligations. “The delay in payment of salaries of workers has become a phenomenon in the contracting sector,” he explained.

He urged the authorities to pump money into major companies to stop the disruption of projects.

According to Al-Afalik, there are 120,000 contracting companies with 4 million workers. Saudis represent 12 percent of these workers, he said.

“Companies find it difficult to pay salaries and dues of workers despite partial payment of contract amounts by the government,” he pointed out.

Al-Afalik expressed his hope that the new contract agreement, which is being drafted by the government, would solve financial problems of contractors and end the disruption of projects. “It will be similar to the FIDIC Construction Contract Book,” he added.

“We have to find alternative solutions to meet our financial obligations when government payments are delayed,” he said. “Companies should also be allowed to convert public debt into financial tools to sell them as bonds,” he said, adding that many countries follow this system.