(MENAFN- Khaleej Times)

Saudi firms are scaling back generous salary premiums that once lured top foreign talent into sectors such as construction and manufacturing as the kingdom reins in spending and reorders economic priorities, four recruiters told Reuters.

Saudi Arabia, the world's top oil exporter, is more than halfway through its economic transformation blueprint, known as Vision 2030, aimed at reducing dependence on hydrocarbon income, creating jobs, and expanding industries such as tourism, real estate, mining and financial services.

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As part of the long-term plan, the kingdom has invested massively in multi-billion-dollar megaprojects, vastly increasing demand for high-skilled foreign workers, but has struggled with execution and delays.

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Foreign recruits should no longer expect to negotiate premiums of 40% or more, to sometimes even double their existing salaries, which were common earlier this decade, two of the sources said, with offers far more restrained now.

"On the one hand you have the region's biggest economy rationalising and on the other side, you have a huge supply of candidates who are very open to coming to the region," said Magdy Al Zein, managing director at recruiter Boyden.

"So what you get is employers rethinking packages. That definitely has happened."

Kingdom pivoting towards AI, logistics

The change reflects a broader pivot by Saudi Arabia's $925 billion Public Investment Fund, which took a sizeable hit on its infrastructure and real estate-heavy megaprojects, towards sectors such as AI, logistics and mining, seen as offering better returns. Examples include NEOM, a $500 billion planned futuristic city in the desert, and the mountain tourism hub Trojena, host to the 2029 Asian Winter Games.

The PIF and NEOM did not immediately respond to a request for comment.

Saudi Arabia hired heavily for the megaprojects, targeting international talent with skills scarce in the local workforce. Project managers in the neighbouring United Arab Emirates, for example, could get offers of around $100,000 in Saudi Arabia for roles that paid $60,000 in the UAE, said Hasan Babat, CEO of Dubai-based Tuscan Middle East, a recruitment consultancy. NEOM and other PIF-backed ventures now face delays as the kingdom pursues a rationalisation drive. Saudi project activity remained sluggish in 2025, with awards nearly halving in the first nine months, according to Kamco Invest.

Lower oil prices have weighed on public finances, widening the fiscal deficit, even as Saudi Arabia has curbed crude production to support the oil market. The kingdom needs oil prices at close to $100 to balance its budget, the IMF says.

"The pace of development has slowed and this has led to a slowdown in recruitment. Now employers are negotiating salaries more than before, when there was a shortage, and companies have implemented cost-conscious measures," Babat said.

Saudi companies may direct limited budgets towards "hot jobs" in sectors such as AI or digital, Tuscan's October salary report said.

The UAE, the Gulf's business and tourism hub, with a 90% expatriate population, has been a more attractive choice for many high-skilled workers, drawn not only by high, tax-free salaries but a more established network of international schools and healthcare provision.

It has also implemented social reforms to permit a more liberal lifestyle.

There is little difference now between average salaries in Saudi Arabia and the UAE, with only a 5 to 8% uptick on average, said Trefor Murphy, CEO of Dubai-based Cooper Fitch.

"Convincing people to move from the UAE is a challenge, they expect a high premium," Boyden's Al Zein said.

Growing competition for jobs in Saudi

But Saudi Arabia - estimated to grow 4.4% this year - remains attractive for those outside the region, where the job market is tighter and growth is slower.

The Saudi government has also accelerated labour market reforms and initiatives to boost the proportion of citizens in the private sector, increasing competition and the pool of applicants.

Unemployment among Saudi citizens is at a historic low and the number of Saudis in the private sector grew 31% between 2016 and the second quarter of this year.

"Packages are now far more measured, anchored to data, performance, and real market benchmarks. For some, that feels like contraction. For me, it signals maturity," said Louise Knutsson, CEO of Matches Talent in Dubai.

To attract the best talent to Saudi Arabia, companies would need to offer predictable packages reflective of living costs, a balanced lifestyle for families and a clear purpose connected to the scale of what is being built, Knutsson added.

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