Saudi Building Bust Traps Thousands in Desert Nightmare

Stuck in the desert's searing summer sun with no work, no pay, and no way out.

Foreign Labor Stranded by Saudi Slowdown

First they had no pay, and then no work. For a time, there wasn’t even food in the squalid, concrete camps where they had been abandoned to live in the searing heat of the Saudi Arabian desert. Medical supplies dried up two months ago.

Owed weeks and weeks of back pay from construction companies squeezed by the kingdom’s economic slowdown, thousands of foreign laborers from South Asia face the grim uncertainty of how long their plight will continue.

“They don’t give us any answers about our salaries,” said Mohammed Salahaldeen, a duct fabricator from Bangladesh, as he stood in a labor camp in Riyadh set up by the Saudi Oger construction company in better days. “After they pay me my salary and benefits, I will go.”

Row of air conditioned trailers that house Saudi Oger workers in Riyadh.
Row of air conditioned trailers that house Saudi Oger workers in Riyadh.
Photographer: Glen Carey

As Saudi authorities slash spending and delay payments to contractors to cope with the plunge in oil prices, the austerity is exacerbating the woes of private businesses that have, for decades, relied on government spending for growth. Casualties include the thousands of foreign laborers who helped to keep the economy humming with low-paying jobs in construction.

Sponsorship System

Abandoned laborers, including nearly 16,000 from India and Pakistan alone, according to their governments, haven’t seen a paycheck in about eight months. Under a system of sponsorship known as kafala that leaves many workers at their employers’ mercy, they’re also not being given the exit visas they need to leave the world’s largest oil exporter. In Saudi Arabia, it’s up to employers to arrange such visas, but before doing so they’d have to pay back wages and end-of-service benefits.

Calls made to the Saudi Oger Ltd. and Saudi BinLadin Group construction companies weren’t returned. At King Salman’s order, stranded workers will be given food and medical services, and can receive exit visas directly from the state, the Labor Ministry said in a statement Monday, pledging to safeguard their rights and resolve their problems. Legal representation will be furnished pro bono, the ministry said. Workers have said they don’t want to leave without their money.

Inside a concrete room that sleeps eight men in a Saudi Oger labor camp in Riyadh
Inside a concrete room that sleeps eight men in a Saudi Oger labor camp in Riyadh
Photographer: Glen Carey

For a QuickTake on job permits and workers’ sponsorship in the Gulf, click here

The conditions in which the workers from Bangladesh, India, Sri Lanka, Pakistan and the Philippines wait are fetid and cramped. They sleep eight to a tiny concrete room and share dirty toilets with feral cats. Temperatures soar to 50 degrees Celsius (122 degrees Farenheit) in the summer, and the electricity powering air conditioners often goes off. Some of the laborers are so destitute that they only own one set of clothes.

No Medication

Mohammed Khan, an Indian nurse from Mumbai at the Saudi Oger camp, is left to treat patients suffering from diabetes, hypertension and high cholesterol without medication. 

“They can’t go to a hospital because they no longer have insurance,” said Khan, 45. “They have no money.” Workers said Saudi Oger stopped paying their medical insurance policies.

The kingdom has for decades provided millions of foreign laborers with jobs that have allowed them to improve the lives of families left behind. In 2014, it ranked second behind the U.S. as the biggest source of workers’ remittances, according to World Bank data.

Yet as oil prices plummeted, government efforts to repair public finances hit a construction industry already struggling amid a building slowdown. Companies such as Saudi Oger and the Saudi BinLadin Group have delayed wages and cut thousands of construction jobs, according to media reports.

Unrelated Problems

In March, Deputy Crown Prince Mohammed bin Salman told Bloomberg that Oger’s problems were unrelated to the Saudi economy. The government had also temporarily barred BinLadin Group from taking on new contracts last year after a crane operated by the company collapsed in Mecca, killing more than 100 people.

To read the full transcript of Prince Mohammed’s interview in March, click here

The Indian Foreign Ministry says more than 4,050 workers alone are stranded without pay at Saudi Oger camps.

A worker stands in an alley between small concrete rooms that house eight men, in a Saudi Oger labor camp in Riyadh.
A worker stands in an alley between small concrete rooms that house eight men, in a Saudi Oger labor camp in Riyadh.
Photographer: Glen Carey

For three days last week, at a camp near Diriyah, the original home of the Al Saud royal family, the company abruptly stopped providing free food at the canteen, according to workers interviewed there.

Nasser Abdul Manaf said he has been forced to take his children in Hyderabad, India, out of school because he can no longer afford their education. He is six months late on his family’s $90-a-month rental apartment and says the building owner wants to kick his family out.

‘Nowhere to Go’ 

“They have nowhere to go,” the 46-year-old said. “They will have to move onto the streets.’’

Prince Mohammed said in March that the government had started paying companies for work done. People briefed on government plans said later that authorities were considering using “I-owe-you” notes to pay outstanding bills to conserve cash.

Outside Riyadh, at a camp for Saudi Binladin Group employees, some haven’t been paid in 10 months, including Egyptian and Saudi security guards who were still working at the front gate. The company said in May that it has fully compensated dismissed workers after local media reported it fired thousands without paying back wages.

The shop on the camp throws them a lifeline by providing goods on credit, which the employees are expected to pay when they receive their salaries, said Carlos Nagac, a 38-year-old painter for the company.

“All I want is to get my benefits and to go home,’’ he said, fretting about his four children back in Cebu, the Philippines.

Bleak Prospects

As he and others wait for their money, prospects look bleak. Construction companies don’t have the money to meet their commitment to their employees, said John Sfakianakis, director of economic research at the Gulf Research Centre.

“They can’t get additional financing from the banking system because they are close to their limits,” he said by phone.

A worker sits on a bench in a Saudi Oger labor camp in Riyadh.
A worker sits on a bench in a Saudi Oger labor camp in Riyadh.
Photographer: Glen Carey

Construction contracts shrank by about 65 percent in the second quarter from the same period a year earlier, according to data published by Jeddah-based National Commercial Bank. The government didn’t award any contracts during the previous three quarters, the bank said.

The Tadawul All Share Building & Construction Index for stocks has dropped 37 percent over the past year, more than the kingdom's benchmark gauge.

Economic Slowdown

Spending cuts will slow economic growth this year to the lowest level since the global financial crisis, according to a Bloomberg survey of economists.

With no income, some of the workers have turned to relatives or friends for loans.

Shahid Iqbal, who’s worked at Saudi Oger for nearly half of his 39 years, had to borrow 3,000 riyals ($800) so his wife in Pakistan could give birth. He borrowed an additional 15,000 riyals to make ends meet over the eight months he hasn’t been paid.

“I already resigned from the company,” he said with tears in his eyes. “I am only waiting for my benefits. My end-of-service benefit is 45,000 riyals. If I don’t take that back to Pakistan, I will have nothing.”

—With assistance from Deema Almashabi.

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