Saudi Labor Reform Initiative Goes Into Effect

On Sunday, March 14, 2021, the new Labor Reform Initiative (LRI), which seeks to “improve the contractual relationship” for workers in the Kingdom’s private sector, will come into force | Asharq Al-Awsat
On Sunday, March 14, 2021, the new Labor Reform Initiative (LRI), which seeks to “improve the contractual relationship” for workers in the Kingdom’s private sector, will come into force | Asharq Al-Awsat
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Saudi Labor Reform Initiative Goes Into Effect

On Sunday, March 14, 2021, the new Labor Reform Initiative (LRI), which seeks to “improve the contractual relationship” for workers in the Kingdom’s private sector, will come into force | Asharq Al-Awsat
On Sunday, March 14, 2021, the new Labor Reform Initiative (LRI), which seeks to “improve the contractual relationship” for workers in the Kingdom’s private sector, will come into force | Asharq Al-Awsat

Saudi Arabia’s Labor Reform Initiative (LRI), which was announced last November, has gone into effect as of Sunday, bringing the kingdom a step closer to its goal of developing human capital and empowering people by fostering a competitive but fair working environment.

Experts have confirmed that the initiative is a fundamental shift in the Saudi labor market and the relationship between the employer and expatriate workers.

They stressed the importance of improving the local labor market to match the kingdom’s aspirations and attract skilled workers.

The job mobility service offered by LRI helps eliminate unfair control and weak management of employment and forces employers to abide by the contractual relationship.

The vision of the LRI is to create an attractive labor market in the Kingdom that offers flexible working conditions for the contractual workers and helps to empower and improve human resources.

Prior to the reforms, sponsored foreign workers needed to take permission from their current employer to change their job. They also required approval before traveling outside the country or undertaking their administrative tasks.

Implementing contractual relationships will enable raising the efficiency of human capital operating in the Saudi labor market, said Mercer’s CEO in Saudi Arabia Mahmoud Ghazi.

Ghazi noted that the move standardizes work mobility according to fresh procedures and conditions that stem out of competency, merit, and professionalism.

The change brought about by the LRI to labor mobility will produce a qualitative leap in improving both employer and employee rights, Ghazi told Asharq Al-Awsat, adding that this will reflect positively on attracting investors to Saudi Arabia.

Economic analyst Abdulrahman al-Jubeiri has reaffirmed that the initiative brings about a number of advantages to the Saudi labor market.

“Implementing the LRI entails a list of pros that include increasing the competitiveness of the Saudi worker, improving the local work environment, advancing Saudi Arabia’s ranking in the international competitiveness index, and reducing employment costs,” Jubeiri told Asharq Al-Awsat.

He added that the LRI also supports greater opportunities for localizing jobs, technology, and experience in the kingdom.



S&P Upgrades Italy in Surprise Boost for PM Meloni

 Italian Prime Minister Giorgia Meloni waits for the arrival of Queen Rania of Jordan at Villa Doria Pamphili in Rome, Italy, 09 April 2025. (EPA)
Italian Prime Minister Giorgia Meloni waits for the arrival of Queen Rania of Jordan at Villa Doria Pamphili in Rome, Italy, 09 April 2025. (EPA)
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S&P Upgrades Italy in Surprise Boost for PM Meloni

 Italian Prime Minister Giorgia Meloni waits for the arrival of Queen Rania of Jordan at Villa Doria Pamphili in Rome, Italy, 09 April 2025. (EPA)
Italian Prime Minister Giorgia Meloni waits for the arrival of Queen Rania of Jordan at Villa Doria Pamphili in Rome, Italy, 09 April 2025. (EPA)

Credit ratings agency S&P Global upgraded Italy on Friday in a surprise move just days after Rome halved its economic growth forecast amid global market turmoil and said its huge public debt would rise this year and next.

S&P Global raised Italy's sovereign debt rating to BBB+ from BBB, citing its falling budget deficit, resilient exports and high domestic savings rate, and confidence that the European Central Bank will keep any inflationary pressures in check.

It said the new rating carried a stable outlook.

"The upgrade reflects Italy's improved economic, external, and monetary buffers amid rising global headwinds, and the gradual progress it has made in stabilizing public finances since the (COVID-19) pandemic's onset," S&P Global said.

Earlier this month Fitch affirmed its BBB rating with a positive outlook, while Moody's rates Italy Baa3 with a stable outlook.

S&P's upgrade is a boost for Italian Prime Minister Giorgia Meloni ahead of a meeting with US President Donald Trump in Washington on Thursday expected to focus on US trade tariffs which have hit financial markets worldwide and clouded economic prospects.

S&P Global noted that Italy's net external creditor position had strengthened over the last five years to around 15% of gross domestic product, compared with close to balance just before the pandemic.

"S&P's judgment rewards the seriousness of the Italian government's approach to budget policy," said Economy Minister Giancarlo Giorgetti. "In the general uncertain climate, prudence and responsibility will continue to be our course of action."

The agency had made no change to Italy's rating or outlook since July 2022, when it revised the outlook to stable from positive following the collapse of the government of former Prime Minister Mario Draghi.

STAGNANT ECONOMY

On Wednesday, Italy committed to keeping its budget deficit in check even as it slashed its economic growth forecasts against a backdrop of mounting uncertainty connected to the US trade tariffs.

Yet even before Trump's tariff announcements, the euro zone's third largest economy has posted virtually no growth since mid-2024.

Italian GDP edged up by 0.1% in the fourth quarter of last year from the previous three months after stagnating in the third quarter. No pick-up is expected in the near term.

In its multi-year economic framework issued on Wednesday, the government cut its forecast for 2025 GDP growth to 0.6% from a projection of 1.2% made in September, and lowered its 2026 forecast to 0.8% from 1.1%.

The Treasury confirmed its previous 2025 budget deficit estimate at 3.3% of national output and also confirmed its goal of bringing the fiscal gap below the European Union's 3% of GDP ceiling in 2026, maintaining a 2.8% target.

However, it said the public debt - the second highest in the euro zone after Greece's - would climb from 135.3% of GDP last year to 137.6% by 2026, before edging down marginally the following year.

S&P also forecast Italy's GDP growth at 0.6% this year, in line with Meloni's government, and said the country's rising debt would not stabilize until 2028.

Nonetheless, it said Trump's latest decision to suspend previously announced 20% tariffs on European Union goods for three months, and to impose a milder 10%, meant the hit to Italy's economy would be "manageable".