Saudi Arabian minister Mohammed Al-Suwaiyel announced to privatise the state owned Saudi Postal Corp next year. This privatisation is the part of the NTP2020 program. The minister said that the privatisation of postal services is the beginning of the privatisation program envisaged in the Vision 2030. He said this privatisation will be a test case for the privatisation of the other public sector companies. Saudi Postal Corp has more than 10,000 workers and managerial staff.
According to Arab News, “it is not yet clear that how much stake will be offered to the private investors. The government also looking at a plan to create a postal holding company which would own subsidiaries operating services such as mail, courier delivery, e-commerce and financial remittances. Authorities are studying issues such as how much of Saudi Postal would be sold and whether the stake would be offered to the public in an initial public offer of shares or to local or foreign strategic investors”.
The Saudi government is providing annual subsidy of SR 2 billion ($533million) which will be completely abolished in 2020. The government also fix the revenue target for the Postal Corp at SR2.75 billion in 2020 up from SR1.02 billion at the moment. The government also want to increase the number of local employees in the telecom sector which means foreign workers will lose jobs. The government is also planning to privatise the municipal services and other public sector companies in next few years. The government is desperately looking for foreign investment in the Kingdom in wake of the low oil prices.
According to the local media reports, government wants to slash more than 50% subsidies till 2020. The government also making changes in the laws and policies to appease the foreign investors. The government also want to reduce the salaries of the public sector workers. The privatisation will further attack the working and living conditions of the workers. The workers will face the brunt of this austerity program. Saudi Arabia plans to reduce the public-sector wage bill as well as subsidies by 2020, scaling back the state largesse that helped ensure political loyalty in the largest Arab economy.
The reductions are a pillar of the National Transformation Program the Saudi cabinet approved on Monday. A major component of the Vision 2030 plan unveiled by Deputy Crown Prince Mohammed bin Salman in April, its targets include reducing public-sector wages to 40 percent of spending by 2020, from 45 percent today. Public debt is seen climbing to 30 percent of economic output from 7.7 percent currently.
“The plan provides targets, but generally does not tell us how they will be met,” said Mohammed Abu Basha, a Cairo-based economist at regional investment bank EFG-Hermes Holding Co. “The drop in the wage bill is a surprise, that there will be a nominal cut by 5 percent in the coming five years, especially when taking into consideration the expected elevated inflation.” Encouraging Saudis to seek private-sector jobs has been a long-term challenge in the kingdom, where even after decades of attempts to diversify, more than 70 percent of government revenue came from oil in 2015. The state still employs two-thirds of Saudi workers. The decision to reduce public sector wages will badly effect the earnings of the public sector workers.
Only the organised resistance from the public sector workers against the austerity and cuts will force the government to change its neoliberal economic policies. It is hard in the Kingdom to organise the workers but not impossible. Recent struggles of Bin Ladin group workers in Makkah and Jaddah clearly manifest that. Trade unions are not allowed in this conservative kingdom where dissent is not tolerated by the authorities. The austerity and cuts on the wages and living standards will provoke more struggles in the coming period.