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Saudi Arabia plans cash pay-offs to cut public sector jobs

The private sector employs 2.4m Saudis but the government would like that figure to increase Alamy via Reuters
The private sector employs 2.4m Saudis but the government would like that figure to increase
  • ‘Golden Handshake’ plan
  • Employees encouraged to quit
  • Wages eat 44% of budget

Saudi Arabia is to offer cash incentives to encourage unproductive employees in the public sector to resign in a bid to tackle inefficiency.

Saudi newspapers have reported that the government has earmarked nearly 12.7 billion riyals ($3.38 billion) for the three-year plan, which it dubs the ‘Golden Handshake’.

While Riyadh has not clarified why it chose that name, it is clear that it wants to tempt idle Saudi civil servants to leave their jobs in return for attractive cash incentives.

The Arabic language daily Aliqtisadiah and other publications said at the weekend that the plan aims to save funds, boost efficiency and encourage citizens to seek jobs in the private sector, which they have generally shunned.

“The plan has been approved by the cabinet and it will be launched shortly. It will be implemented over the next three years,” the paper said.

It did not specify the amount resigning employees will receive but according to the Saudi Alarabiya satellite TV channel, the plan includes “generous cash rewards” for quitting workers.

“Saudi Arabia no longer cares for how long the employees stay in office but how much they produce,” said Ihsan Buhlaiga, a former Shura (appointed parliament) member.

“This plan will no doubt encourage civil servants to take up jobs in the private sector… it will also ease the financial burden on the government,” he added.

In a report last month, Riyadh-based Jadwa Investments said salaries to civil servants consume a big chunk of the kingdom’s revenue and that this has stifled attempts to increase capital spending.

Wages of government employees accounted for nearly 44 percent of the 2025 budget of 1,285 billion riyals ($342.6 billion) while capital expenditure amounted to nearly 14 percent, it said, citing official data.

Saudis have generally preferred jobs in the public sector for higher wages, better incentives and end-of-service benefits, and fewer work hours.

But Saudi Arabia, the largest Arab economy, has sought to reverse that trend within its Vision 2030 economic diversification scheme by providing incentives to companies which employ Saudis for higher salaries and more financial benefits.

“The Golden Handshake programme has numerous goals but the two main targets are upgrading public sector performance and rationalising expenditure,” Alarabiya quoted Alaa Dibsi, a manpower consultant at a private company.

Experts said Vision 2030, which was launched in 2016, is targeting an unemployment rate of 5 percent by 2030 from around 7.5 percent at present with the help of the private sector, which employs 2.38 million Saudis.