Aramco joins Saudi companies boosting pay after royal orders

Bloomberg

Saudi Arabian Oil Co. and some of the kingdom’s biggest companies said they’ll pay Saudi staff more money, matching a royal order that extended handouts to government workers to ease public discontent over
rising prices.
Aramco, preparing for what could be the world’s largest initial public offering, will pay “eligible employees” an extra 1,000 riyals ($267) a month for one year beginning in January, it
said in response to questions from Bloomberg. The payments will be for workers inside
the kingdom who make 20,000 riyals a month or less, according to two people familiar with
the decision.
People who belong to the apprenticeship and college degree program will get an extra 10 percent of their monthly stipe-
nd over the same period, the company said.
Aramco joins some of the kingdom’s largest companies in the decision to temporarily boost wages after King Salman decided to pay Saudi civil servants an extra 1,000 riyals a month to ease the burden of austerity. Saudi Basic Industries Co., Al Rajhi Bank and National Commercial Bank announced similar measures, according to Saudi-owned Al-Arabiya television. Samba Financial Group, Saudi Research and Marketing Group, Saudi Electricity Co. and the local stock exchange are among other companies giving
allowances to employees.
“There is a financial impact on the company for sure but this won’t be significant because Aramco’s profit margin is one of the highest in the industry due to the low cost base it has,” said Mazen al-Sudairi, head of
research at Al Rajhi Capital Co.”
The allowances follow complaints from Saudis on social media and television about rising prices after the government introduced a 5 percent value-added tax and a substantial increase to gasoline prices and electricity tariffs, all on January 1. The measures were part of Prince Mohammed’s plan to raise non-oil revenue and repair public finances strained by
low oil prices.
In response, royal decrees restored an annual pay raise for Saudi civil servants and ordered a 5,000-riyal bonus for soldiers fighting in the kingdom’s war in Yemen. On his Twitter account, royal court adviser Saud Al Qahtani said the measures will cost the government more than 50 billion riyals and called for
private sector companies to
respond in turn.
Mohamed Abu Basha, an economist at Cairo-based investment bank EFG-Hermes, estimates that the measures could add as much as 0.5 percentage point to non-oil gross domestic product growth.