Saudi Arabia has introduced the “Golden Handshake” program to offer financial incentives for government employees to voluntarily resign.
The goal is to reduce costs related to salaries and benefits for long-serving workers, creating space for others with lower salaries and skills suited to the country’s digital transformation.
The government has allocated SAR 12.7 billion ($3.38 billion) for the first three years of the program, inspired by similar global initiatives.
As of the fourth quarter of 2024, Saudi Arabia’s public sector employs 1.2 million people, excluding the military. The kingdom spends about 40% of its budget on salaries and employee compensation, with SAR 544 billion ($145 billion) set aside for this in 2024.
Experts, who spoke to Asharq Al-Awsat, have differing opinions on the financial compensation under Saudi Arabia’s “Golden Handshake” program for government employees. One expects the severance package to range from 12 to 24 months of salary, while another estimates it could be from 24 to 60 months of salary.
While the “Golden Handshake” is not new in Saudi Arabia, where large companies offer early retirement packages, it is a new approach for the public sector, which is traditionally seen as offering job security.
The Saudi program is similar to global initiatives encouraging voluntary resignations when employees’ skills are no longer needed. For example, the US offers up to $25,000 for employees who leave voluntarily, while the UK offers up to £149,800 for retiring police officers.
Dr. Mohammed Dulaim Al-Qahtani of King Faisal University expects compensation to range from 12 to 24 months of salary. For example, with a monthly salary of SAR 15,000, the package could range from SAR 180,000 to SAR 360,000.
Badr Al-Anzi, board member of the Saudi Human Resources Association, believes the compensation could range from 24 to 60 months of salary. For example, with a monthly salary of 15,000 riyals, the minimum compensation would be SAR360,000, and the maximum could reach SAR900,000.
Priority for the program will be given to employees with lower qualifications, and it will be available only after other options, such as transfers and skill development, have been explored. Employees close to retirement are excluded.
The government has also allowed agencies to announce vacant positions internally for five days before following regular procedures, to fill positions through transfers between government departments.
The program is expected to provide financial liquidity, encourage private-sector innovation, improve government efficiency, and reduce the financial burden on the state budget. The Ministry of Human Resources and Social Development is coordinating with relevant authorities to set the program’s guidelines.
Ultimately, the “Golden Handshake” is a significant initiative aimed at improving the efficiency of the public sector, with attractive financial compensation expected for those who participate.
