The Real Cost of Employing Staff in Saudi Arabia, Line by Line

Every cost of an employee in Saudi Arabia beyond salary, for Saudi and expatriate staff, and what makes each line rise or fall.

The cost of an employee in the Kingdom is the salary plus allowances, social insurance contributions, health insurance, end-of-service accrual and, for expatriates, visa, residency and levy charges. Many of these are set by government bodies and revised over time, so this breakdown explains what drives each line rather than quoting amounts. Build your own model with current figures from GOSI, Qiwa, insurers and your payroll provider.

What this number does and does not include

The breakdown covers the cost to the employer of one employee over a year, split where it matters between Saudi nationals and expatriates. It excludes recruitment fees, office space and equipment, which depend on the business. It also excludes corporate tax effects, which belong in a tax analysis.

Basic salary and allowances

The wage agreed in the contract, usually split into basic salary and allowances such as housing and transport.

• Pushes it up: Scarce skills, senior roles and competition from employers offering higher packages.
• Brings it down: Clear pay bands and benchmarking against the actual market for each role.
• How to control it: Set pay bands before hiring rather than negotiating every offer from scratch.

Social insurance contributions

Employer contributions to GOSI, covering different branches for Saudi and non-Saudi employees and calculated on the registered contributory wage.

• Pushes it up: Higher contributory wages and the branches that apply to Saudi staff.
• Brings it down: Nothing legitimate beyond correct registration; understating wages is a compliance risk.
• How to control it: Register the correct wage and check current rates, which changed for new entrants under the 2024 social insurance law.

Health insurance

Mandatory health cover for employees and, for expatriates, their dependants, bought from licensed insurers.

• Pushes it up: Older workforce, higher network tiers and many dependants.
• Brings it down: Group policies and a sensible choice of network tier.
• How to control it: Compare policies each year at renewal on the same benefits.

Expatriate levy and work permit

Monthly levy and work permit charges for each foreign employee, collected through the labour platforms.

• Pushes it up: More expatriate staff and any future revision of the levy.
• Brings it down: Hiring Saudi nationals for roles where they are available.
• How to control it: Include the levy in every expatriate hiring decision, not as an afterthought in the budget.

Visa and iqama costs

Visa issuance, iqama issuance and renewal, medical checks and related government charges for foreign staff.

• Pushes it up: High turnover of foreign staff, which repeats first-issue costs.
• Brings it down: Retention and hiring from inside the Kingdom through transfer of services.
• How to control it: Track visa and renewal costs per employee and include them in turnover analysis.

End-of-service accrual

The liability that builds up each year for the gratuity due when employment ends.

• Pushes it up: Long service, pay rises and a wide definition of wage in the contract.
• Brings it down: Nothing sensible except correct definition and accrual.
• How to control it: Accrue monthly so the cost appears in the year it is earned.

Annual leave and flights

Paid leave and, for many expatriate packages, annual flights home.

• Pushes it up: Longer service and generous contract terms.
• Brings it down: Clear leave policy and planned leave rather than cashed-out balances.
• How to control it: Track leave balances and plan cover for absences.

Training and development

Onboarding, training and certification, particularly for Saudi graduates entering the workforce.

• Pushes it up: Regulated professions and fast-changing technical roles.
• Brings it down: HRDF programmes that support training for Saudi hires.
• How to control it: Check HRDF support before committing to training budgets.

Costs that never appear on the first page

• Government relations time to run platforms, renewals and transfers.
• Recruitment fees for expatriate hires through agencies.
• Dependant charges where the employer agreed to cover them.
• Overtime not budgeted because hours were not tracked.
• Fines for late renewals, late GOSI registration or wage protection breaches.
• Cost of vacancies and handovers when staff leave.

Keeping the budget honest

Build the cost model per employee per year for a Saudi and an expatriate version of each role, using current government figures and insurer quotes. Compare the two versions honestly: the expatriate version usually carries levy, visa and flight costs that the headline salary hides, while the Saudi version may benefit from HRDF support and improves your Nitaqat position.

• Does the model include levy, visa, insurance, GOSI and end-of-service for every role?
• Are Saudi and expatriate versions of key roles compared on total cost?
• Are HRDF programmes reflected where eligible?
• Is the end-of-service liability accrued monthly?
• Are government charges updated when they change?

Domira works with foreign investors on the property side of entering Saudi Arabia: finding land or premises, due diligence, design, construction and asset management. For licensing, tax and legal steps, work with a licensed adviser; we coordinate with yours so the property decision fits the structure you choose.