Possible layoffs come amid uncertainty caused by oil price slump
Construction giant Saudi Binladin Group plans to lay off around 15,000 staff, as the impact of low oil prices continues to be felt, industry sources told Reuters.
The possible layoffs at the firm, which is among the Middle East’s largest builders, would represent a small fraction of the group’s total workforce, said to be about 200,000. Saudi Binladin has declined to comment on the matter, it was reported.
“The Saudi construction sector is definitely soft. There’s general uncertainty and it’s very difficult to plan where to focus on” because companies are not sure which projects will go ahead, said an industry source who declined to be named.
Some of the 15,000 staff will be laid off immediately, while others will be temporarily transferred to work on a multi-billion dollar airport project in Jeddah, said another source quoted by Reuters.
The Saudi Binladin Group was in September suspended from taking on new projects after a crane collapsed at Mecca’s Grand Mosque, killing 107 people. An initial government probe found that the crane was not properly secured and toppled as a result of the bad weather conditions.
The biggest challenge facing the firm and other construction companies in the kingdom, however, is government spending cuts due to low oil prices. According to the International Monetary Fund, Saudi Arabia is running an annual state budget deficit at over $100 billion, and the kingdom’s finance minister said in September that the government was delaying some projects to save money.
Bloomberg reported last month that Saudi Arabia was delaying payments to contractors after the oil slump pushed the GCC nation into a deficit.
Government bodies have also demanded cost cuts from some contractors, Reuters reported. Additional information on austerity measures is likely to come next month, when the Saudi government is expected to announce its budget plan for 2016.