Saudi companies opt for subcontracting over direct hires, resulting in acute and unchecked exploitation

Lal Babu had no experience in a coffee shop. For about a year, he worked 12 hours a day under a demanding and rude supervisor. The supervisor kept on complaining to him of “poor performance” and warned him he would be fired.

Lal Babu’s tenacity saved him for less than a year. He says he got his last warning when a coffee carafe lid accidentally dropped on the floor, and someone trashed it into the bin. The supervisor yelled obscenities at him. Lal Babu took out the lid from the bin and cleaned it, but the supervisor still asked him to leave a few days later. “There is no job security for supply company workers. They can terminate workers anytime,” says Lal Babu. “If I was a direct employee, I could have spoken up for justice. But who cares about us?”

Given the complexity of recruiting transnationally, large corporations often depend on supply or contracting companies to meet their needs, especially for jobs that require only certain phases of a project. A multinational company bidding for tenders in Saudi previously told MR that direct recruitment is discouraged in the Kingdom, seemingly to ensure the contracting companies that are solely run by citizens receive enough business. But subcontracted labourers feel their jobs are more insecure, a contrast to the experience of direct hires.

After losing his job, Lal Babu became “asahaya,” a term used by the Nepali workers to describe their helpless situation. Lal Babu wanted to tell his story to his employer, Al Mutairi, he says, but it did not respond to his repeated calls. Meanwhile, the Kyan staff put him on a bus from Tabuk to Riyadh. In Riyadh, he met dozens of other Al Mutairi workers who had been languishing without jobs and income for months.

Workers from across Saudi report similar experiences.

A food delivery worker at Hunger Station in Al Qassim says he got a warning from the manpower supply company when he asked why his salary was delayed. “He threatened to kick us out of the job when we asked for our delayed salary,” he says. “Then we didn’t say anything. We don’t want to lose jobs.”

He has been working through Al Saeed General Contracting for about eight months. “It’s such a nasty thing when I work, but the company does not pay,” Hari says. “I’m not begging for money. I can work, but they should give me a fair salary.”

Difference and Discrimination

At their workplaces, supply company workers say direct hires were treated relatively better when it concerned wages, benefits, work and living conditions, and the treatment by supervisors. Bimal Khadka, who worked at the Carrefour warehouse and Barn’s coffee shop through a contractor company, says workers are pressured to work hard by supervisors. At the Saudi warehouse of the French retail giant, he says, workers were forced to meet difficult targets, with the warning that the repeated failure would result in job loss.

“Direct employees may be excused even when they make mistakes or don’t perform well. The managers and supervisors protect them,” Bimal says. “But they immediately take action against supply workers. Why do they treat workers unequally?” Scolding by supervisors is described as routine.

Some others say that they were forced to work overtime without pay.

As a contract worker of Carrefour, Bimal received monthly SAR 1,300 for his work. But he says this is a small chunk of the payment Carrefour gives to the supplier firm. He says supply company workers were also denied leave, bonuses, and end-of-service benefits.

A worker at Rust Burger, who works through NAS Manpower Solutions, also shared a similar story. Hari Gharti*, who works in the Al Bahah branch, receives 1200 riyals for his work in a month, but for the same work, he says, direct hires receive nearly three times more. “I sweat blood to make customers happy. But the company makes a profit out of me,” he says. “Supply companies suck. Don’t work for those.”

He says that because he is a contract labourer, Rust Burger forces him to work for more than eight hours without fair compensation for overtime. In one month, he worked 4 hours of overtime every work day and his company gave him 200 riyals,

he says, but he should have given 550 riyals. From then on, he refused to do overtime.

“It’s such a nasty thing when I work, but the company does not pay,” Hari says. “I’m not begging for money. I can work, but they should give me a fair salary.”

Hari is one of the 7.4 million foreign workers in the country - Opens in new tab in a private sector service job which is not a preferred area for Saudi nationals. The private sector jobs, which provide less job security, have historically relied on cheap migrant labour - Opens in new tab. In 2022, more than seven million foreign workers were employed in the private sector while the number of Saudis in private jobs exceeded two million, according to Saudi government data - Opens in new tab. Hari says, “We are the ones who do manual jobs with low salaries. But we don’t get fair treatment.”

“Bitten by Bugs”

Clean housing is a far-fetched dream for them, workers say. All the workers interviewed for this story say they live in small shared rooms.  A few reported that their toilets and bathrooms had dirty water and were without locks.

Some workers say that they were bitten by the bugs in their narrow beds, under the thin blankets provided by their companies. A worker who is employed by Al Mutairi but working at Carrefour says, “We have problems everywhere. There are bugs in beds. The water supply is not regular in the bathroom. We don’t have a kitchen, we cook in our bedroom. What more can I say?” He says that Al Mutairi did not address his complaints.

Another worker, Lal Babu, says he shared a grimy bedroom with three other workers in Tabuk for a year when he worked at Kyan Coffee. In a room just behind the coffee shop, which used to be noisy all night due to traffic, he could not sleep properly. Every morning, he says, he awoke tired. “This is what you get when you end up in the worst supply company. I say, nobody should go to the supply company,” he says.

But they stumble upon other obstacles.

Disappointed by the work at Rust Burger in Al Bahah, Hari Gharti asked the company to let him return home. But his employer, NAS Manpower Solutions, he says, asked for 5,200 riyals (US$1390) to approve his exit. Then, he felt forced to continue working. In response to our inquiry, NAS Manpower says the worker’s accusation is “incorrect” and claims that the company is “very cooperative” with all their workers.

A current worker at Barn’s Coffee says his supplier also asked him for a 5,000 riyals exit fee to go home. “How could I have that money with me?” he says.

As soon as workers arrive in Saudi Arabia, the labour supply companies exert control over workers. They hold them in company-provided accommodation, take their passports, and return them only when their iqamas (residency permits) are issued. After that, workers say, the company alerts them that they need approval from the company to leave their job or country.

“What could I do with my passport since we must have exit permission from the company to return home?” says Lal Babu.

Lal Babu waited a month and a half to return home, without wages or food, taking shelter in a friend’s room. When his savings ran out, he borrowed from friends to survive and fell into a spiral of debt.

Dangerous Decisions

Debt and job loss pushed many workers to make dangerous decisions. Anjan Mandal, after losing a packaging job at Carrefour, secretly fled the Al Mutairi accommodation. He sheltered in his brother’s room for months and worked as an off-the-grid sewer to make a living.

Another worker, Bimal Khadka says he was asked to change three different jobs in two years and was laid off for three months with no food or wages. He wanted to return home, but to make the situation worse, Al Mutairi asked him to pay the exit fees. At some point, he says, “I was even ready to be detained by the police so that they would deport me. I didn’t have money.”

Bimal managed to negotiate with the company in the end to return home. But workers say they have seen many workers in Saudi Arabia in limbo. They’re neither allowed to change jobs nor return home.

One of them is Ranjit Budha. He does not want to work at Al-Rashid Trading & Contracting (RTCC) with little pay. Some of his friends had already run away, despite the risk of being charged with absconding.

Looking at the weak financial situation back home, he sometimes feels like leaving the company and working without valid documents. But when he recalls the face of his two-year-old daughter and imagines getting detained by the police, he gets scared. Ranjit says, “Help me, I feel like a prisoner.”

*Names of some workers have been changed to protect their identity.