Saudi Arabia cuts ministers' salaries, scraps public sector bonuses

Saudi Arabia cuts ministers' salaries, scraps public sector bonuses
The kingdom is being hit hard by all-time low oil prices, prompting austerity action - despite the costly ongoing war in Yemen.
2 min read
27 September, 2016
In April the kingdom announced the wide-ranging 'Vision 2030' plan to diversify the economy [Anadolu]
Saudi Arabia has cut the salaries of cabinet ministers by 20 percent, a royal decree broadcast on state-run Ekhbariya TV announced on Monday.

The kingdom also froze the wages of lower-ranking civil servants in an intensified austerity drive to cope with lower oil revenues.

Riyadh's 160 Shura Council members will also see a 15-percent drop in their annual allowances for housing, furniture and cars, the royal decree said.

"The Cabinet has decided to stop and cancel some bonuses and financial benefits," read a line of text on Ekhbariya.

The decree did not say how much money would be saved.

Meanwhile, a separate cabinet decision on Monday hit other civil servants' bonuses.

Any "annual premiums or any financial increases" given when civil service contracts are renewed would be suspended from next week, the cabinet said.

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There would be curbs on the amount of overtime pay, while other allowances including for hazardous work would be cancelled, amended or suspended, it said.

Almost twice as many Saudis are employed in the public sector - where hours are shorter and leave longer - than in private firms.

Since 2014 global oil prices have collapsed by more than half, leaving Saudi Arabia with a record deficit last year.

The fall in the kingdom's main source of revenue led to unprecedented subsidy cuts and curbs on government spending - despite Riyadh taking a lead role in the war in Yemen, which has been reported to cost hundreds of millions of dollars a month.

In April, the king's son, Deputy Crown Prince Mohammed bin Salman, announced the wide-ranging Vision 2030 plan to diversify the economy. The effort also seeks a streamlined, more accountable administration.

Vision 2030 aims to boost private sector employment, cutting the government payroll to 40 percent of the budget from 45 percent by 2020.

But frontline soldiers on the southern border with Yemen will be exempt from a ruling not to grant the military an annual bonus.