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Healthcare in the Kingdom of Saudi Arabia

Guiding Principle

This article is starting with a summary of the budget of the Saudi Ministry of Health (MoH) for 2010. The day to day healthcare practise is governed by a number of laws, e.g. the Labour Law, where certain employers are obliged to employ workers with disabilities. The Law also governs the maximum the working hours, the rest periods, leave as well as injuries & associated illness related to work. The Saudi Cooperative Health Insurance Law defines the categories of beneficiaries The Social Insurance Law waspromulgated in stages until it reached all citizens and residents working in the private sector in 2009. The Social Insurance Law differentiates between its vocational hazards branch and the pension branch and governs a scope of applications. New categories of citizens have been allowed to enjoy the benefits of the law. All enterprises in the Kingdom are now included and the contributions from both the employer and the worker were fixed. Incidents considered to be work injuries were defined and their compensation for the injured workers.

The demand for healthcare in the day to day life still exceeds the available services. An expansion of the capacity of the healthcare in the private and the public sector is required. Therefore the Saudi Ministry of Health has given healthcare top priority and got adequate financial means from the Saudi Government to reach ambitious targets.

I.    The Budget of the Saudi Ministry of Health for the Fiscal Year (FY) 2010[1]

1.   The General Saudi Budget for the Fiscal Year 2010

a)   The Basic Considerations for the General Saudi Budget for 2010

The 2010 national budget of Saudi Arabiawill continue to focus on enhancing economic development and improving investment environment that supports strong and balanced economic growth. The 2010 budget includes SR 260 billion for investment projects, a 16 percent increase over 2009 budget, an increase of about 16 percent over the last year’s budget, which was the largest historically, and about three times the level in 2005, the first year in the current 8th Development Plan.

b)   The Principal Data of the General Saudi Budget for the Fiscal Year 2010

The main data of the 2010 budget are:

1. Total revenues for fiscal year 2010 areprojected at SR 470 ($125.3) billion.

2. Government expenditures for fiscal year 2010 are budgeted at SR 540 ($144.0) billion.

3. Fiscal deficit for 2010 isprojected at SR 70 ($18.7) billion.

2.   The Budget of the Saudi Ministry of Health (MoH) for 2010

a)   The Basic Considerations for the Healthcare Budget 2010

Specifically, the focus of considerations for the Saudi budget continues to be on education, health, social and security services, municipal services, water and sewage services, and roads and highways. The strong support of the Ministry of Health and Social Affairs of the Saudi Medicare mid of April 2010 is underlining the Kingdom’s declared will to boost the Saudi healthcare market.

b)   The Principal Data of the Healthcare Budget for 2010

The principal data of the healthcare budget of the Saudi MoH for 2010 are:

1. The total expenditures amount to SR 61.2 ($16.3) billion, which is an increase by 17 % over fiscal year 2009’s appropriation.

2. Projects in the healthcare sector include new primary healthcare centers throughout the Kingdom, including 92 new hospitals with a capacity of 17150 beds.

II.  Rules and Regulations related to Healthcare

1.   Labour Law

a)   The Source of the Law

The labour market in the Kingdom is regulated by Royal Decree M/51, which was issued on 27/9/2005 replacing Royal Decree M/21 issued on 16/11/1969, which have been the applicable law in the Kingdom for about 36 years. The new decree aimed for compatibility with the radical changes in the Saudi labour market in all those years and in response to the international commitments and agreements ratified by the Kingdom by includingprovisions more consistent with the Arab and International labour standards and the principles of the World Trade Organization.

b)   Disabled Workers

The issuance of the new law resulted in many gains for the workers in general. For example in the field of vocational rehabilitation of the disabled workers, the new decree had increased the ratio of the disabled workers that every employer shall employ to be 4% of the total number of his workers, that is up by 2% in the old decree. This obligation only applies in the facilities where the nature of the work enables the employers to employ disabled workers who had been vocationally qualified. The decree had also decreased the number of workers required so that the employer shall be obligated to employ the disabled workers from 50 workers to 25 workers.

c)   Prevention of Work Hazards

We continue our overview on healthcare issues from a legal standpoint by the section of the prevention of work hazards, where the law had obligated the employer to always keep his facility in a healthy and clean condition. And toprovide sufficient lighting, clean water for drinking and bathing. The employer shall always follow the rules of vocationalprotection, safety and healthprocedures. He should announce the instructions for work and workers safety in a visible place at the facility in Arabic language and in any other language understood by workers when necessary.

The employer shall make the worker familiar with the dangers of hisprofession before practicing his job, and to obligate the worker to use the safety means, which are available for hisprofession. The employer shouldprovide personalprotective equipments for his workers and train them how to use the equipments.

On the other hand, the worker shall use the preventive methods and implement the instructions obtained to maintain his health and help to prevent injuries and diseases. He shall refrain from any act against the safety instructions and may not abuse the means designed toprotect the workplace and worker’s health and safety.

The employer is responsible for shortcomings and accidents that afflict persons other than the workers, who have admission to enter the workplace. The employer shall compensate them for injures and damages in accordance with the general regulations, if the incident was due to negligence to take technical precautions.

High-risk facilities are according to the definition of the decree “facilities, which permanently or temporarily are engaged in theproduction,processing, exclusion, handling, use or storage of quantities exceeding the permissible standards of one or more hazardous substances or categories of such material”. For these facilities the decree had granted the Minister of Labour the power to issue the regulations and decisions necessary for the arrangements of the prevention of major risks for each high-risk facility.

d)   Working Hours / Days

The new decree had set a maximum limit for actual working hours at 8 hours p/d, if the employer adopts the daily standard, or 48 hours per week for the weekly standard, except during the month of Ramadan where the actual working hours are reduced to 6 hours p/d or 36 hours per week. The hours maybe increased to 9 hours p/d or decreased to 7 hours p/d depending on the worker’s employment category as well as some industries andprofessions.

Regarding the rest periods, the decree had put a limit for the continuous working hours not to exceed 5 hours, this means that the worker doesn’t work more than 5 consecutive hours without a period of rest, prayer and meals of not less than half an hour per time during the total working hours, so that the worker doesn’t stay in the workplace more than 11 hours p/d. The periods for rest, prayer and food are not counted as a part of the actual working hours. During these periods the workers is not under the authority of the employer and the employer may not force the worker to stay in the workplace.

The decree has granted the Minister of Labour the right to determine the situations and jobs where the continuation of the work is imperative for technical reasons or for the operating conditions. In these cases, it is mandatory to give the workers periods for prayer, food and rest in a manner organized by the management of the facility during the work.

Friday is the weekly day of rest for all the workers. The employer may replace this day for some workers by any other day of the week, but under the condition that they can perform their religious obligations (Muslims are religiously obligated to go to Mosques for Friday Prayer), and the weekly day of rest may not be replaced by a monetary compensation. The competent labour office needs to be informed of this day-off change prior to the change.

For those who work at remote places, the weekly days of rest due to the worker may be collected for a period not exceeding eight weeks, if the employer and the employees agreed on that,provided that the consent of the Ministry of Labour has been obtained, where the continuation of the work is imperative for technical reasons or for operating conditions.

e)   Annual Leave / Sick Leave

The annual leave is an advanced paid leave and its period is for 21 days, increased to 30 days if the worker is employed by the same employer for five consecutive years. The annual leave may not be waived, or replaced with a cash allowance during the workers’ service. The employer may organize the timing of such leave in accordance with the requirements of the work.

With the consent of the employer, the worker may postpone his annual leave or any amount of days from deferring to use it for the following year. The employer has the right to postpone the annual leave of the worker after the end of the year, if the circumstances of the work require the postponement for a period not exceeding 90 days. If the work circumstances require the continuation of the postponement, the consent of the worker must be obtained in writing but not later than the end of the year following the year the leave is due.

The worker have the right to get paid for accrued leave days, if he left work before using them with respect to the period did not get clearance for him and deserves payment for part of the year spent by them in work.

Every worker has the right to leave with full pay on the following Public Holidays:

1. 4 days on the occasion of Eid al-Fitr (Lesser Bairam) starting from the day following 29th day of the month of Ramadan.

2. 4 days on the occasion of Eid Al-Adha (Greater Bairam) starting from the day of standing at Arafat.

3. 1 day on the occasion of the national day of the Kingdom on September 23 of each year.

If the weekly day of rest comes within the days of the vacation, the vacation shall be extended for one more day.

Workers are also entitled to a paid leave for one day on the occasion of the birth of his baby, 3 days on the occasion of his marriage or the death of his spouse or one of his ascendants or descendants. The employer may request supporting documentation of the cases referred to.

The worker has the right in a paid leave not less than 10 days and not more than 15 days, including Eid Al-Adha (Greater Bairam) vacation; and that to perform Hajj once for the duration of his services, if he had not performed it before. It is required for the entitlement of such leave that the worker had spent working for the employer for at least two continuous years. The employer shall determine the number of workers who are granted such leave annually in accordance with the requirements of work.

In case the worker is affiliated with an educational institution he has the right to a paid leave for exam taking for the duration of the actual days of testing. The employer may request the worker to submit supporting documentation for the leave request, as well as evidence that he had actually performed the exams. 

The worker may with the consent of the employer take unpaid leave. The employment contract shall be suspended during the leave period, if the period exceeds 20 days, unless the parties agree otherwise. 

Sick leave is a paid leave for the first 30 days, and three-quarters pay for the 60 following days, and without pay for the 30 days following that during one year, whether these leaves were continuous or intermittent.

No employer may terminate the service of the worker due to illness until the vacation periods specified in the Royal Decree has finished, and the worker has the right to request to merge his annual leave with his sick leave.

The worker is not permitted to work for another employer during his leave. The employer may deprive him of his wage for the duration of leave or recover what has been an automated tool of that wage, if heproves that the worker had violated his leave by means of working.

f)    Work Injury or Work Associated Illness

In case of a work injury or work associated illness or disease, the employer is committed for the treatment of the worker, and shall bear all expenses necessary to do so.

If the injury caused a temporary incapacity to work, the patient has the right to financial aid equal to full wage for a period of 30 days, after which 75% of his wages for the full duration of the treatment. If the treatment duration exceeds a year or it was medically decided that the worker is not likely to recover and his health condition does not enable him to continue his work, the injury shall be considered a total deficit, which will result in the termination of the contract and must compensate for the injury. The employer does not have the right to recover the payment to the patient during that year.

If the injury resulted in permanent total incapacity, or led to the death of the injured, the injured or his beneficiaries have the right to a compensation estimated by the equivalent of his wage for a period of 3 years with a minimum of 54,000 Saudi Riyals.

If the injury resulted in permanent-partial disability, the patient is entitled to compensation equivalent to theproportion of the estimated deficit, according to the adopted schedule of the user rates of disability, multiplied by the value of compensation for permanent total disability.

The employer shall not be committed with any of the previous compensations, if any of the following wasproven:

1. If the worker deliberately injured himself.

2. If the injury was caused by the workers’ intentional misconduct.

3. If the worker refused to go to the doctor, or declined to accept the treatment of the doctor in charge of treating him without a legitimate reason.

Every employer shallprovide one or more first-aid medical cabinet, equipped with medicines and supplies, which are required for first medical aid. The workmen regulations shall specify what the cabinet should contain as well as the organization and means of preservation and conditions of the task of first aid and level.

Every employer shall trust a doctor to examine the workers exposed to the risk of one of the vocational diseases specified in the schedules of vocational diseases -provided for under the social security law – at least once a year, a thorough examination must be done with the results kept in the employee’s files.

The age of retirement was specified to be 60 years for men and 55 for women, unless both parties agreed that the worker continue working after this age. In the cases of early retirement stipulated in the work regulations, the retirement age may be reduced.

2.   Healthcare Insurance Law

The applicable healthcare insurance law in Saudi Arabia is the Royal Decree M/10, which had been issued on 12/8/1999 to lay the foundation for the organization of the Cooperative Health Insurance in the Kingdom aiming toprovide the healthcare insurance for Non-Saudi residents in the Kingdom, with the possibility of applying it on the citizens with a decision from the Council of Ministries. And that is what actually happened on 2009 by the issuance of a decision to apply compulsory insurance for all citizens working in the private sector. The decisions had not covered the citizens working in the Government since they are already covered with free healthcare and treatment services in Governmental healthcare centres and public hospitals. However, despite that fact – the free healthcare and treatment service – they still have their ownproblems since the number of public hospitals and health centres and the maximum capacity is not at all commensurate with the population and the annual increase in population growth rates. In addition to what had been previously mentioned, not all public hospitalsprovide healthcare services to all citizens, there are a number of them who offer their services for a sector or a specific destination only, such as Security Forces Hospital or King Fahd Hospital for the National Guard.

In order to oversee the implementation of the system, the decree stipulates on the establishment of the Council of Cooperative Health Insurance to carry on this task.

According to the decree, the employer is obliged to participate for his non-Saudi employees and their families in the system of Cooperative Health Insurance with eligible Saudi cooperative insurance companies.

The health insurance system includes the following categories:

1. (C) Category: The average annual premium rates for this category arrive at approximately 850 Saudi Riyal. It is usually used by the foreign workers.

2. (B) Category: The average annual premium rates for this category arrive at approximately 990 Saudi Riyal.

3. (VIB) Category: The average annual premium rates for this category approximately 2000 Saudi Riyal.

The system was applied on the Non-Saudis residents in the Kingdom as from 7/4/2007 under a plan consisting of three stages, the first stage applies to the Saudi companies that employs 500 or more foreign worker, the second stage had started in 2008 including the Saudi companies employs between 100-500 foreign workers, finally the third stage, in which all the foreign workers in the Kingdom were included.

3.   Social Insurance Law

A new Social Insurance Law, Royal Decree No. M/33 waspromulgated on 29/11/2000, which became effective as from 1/4/2001. It is replacing the former Law M/22 issued in 1969 and is considered by the Saudi officials as a leading reforming step for the insurance system inSaudi Arabiawhether for the benefitsprovided to insured beneficiaries or those who enhance the efficiency of the Foundation Fund.

The insurance system differentiates between two branches: (1) One branch is in charge for the mandatory applications for the vocational hazards for all workers without distinctions because of sex, nationality or age. (2) The other branch is the pension branch, which is in charge for the mandatory applications for workers under 60 of Saudi nationality only.

In order that the work relation for the wage workers falls within the scope of the social insurance system, one of the following conditions must be met:

1. The worker is working under an employment contract for the benefit of one or more employers to perform the work mainly within the Kingdom; or

2. The worker is working outside the Kingdom for an employer whose head office is located in the Kingdom under an employment contract.

Aside from the workers in the private sector, which formed the only category in the former system, new categories of citizens have been created and allowed to enjoy the benefits of the Social Insurance Law. The new categories include the self-employed craftsmen and workers working for their own account or in partnership with others in various economic activities as well as those outside the Kingdom in addition to the workers who left work and stopped their participation.

The following categories are excluded from the insurancesprovided by the Social Insurance Law M/33:

1. 1Civil servants of the State and the members of the armed forces and the police, who have their own pension systems for civil and military employees;

2. The foreign employees working in foreign international, political or military missions;

3. Workers employed in agricultural work or grazing, independent of the institution.

4. Sailors including maritime fishermen working independently from any institution, unless they are subject to the Saudi Labour Law;

5. Domestic workers;

6. Foreign workers coming to the Kingdom for work, which usually does not take more than 3 months.

7. Workers who work at home.

8. The employer’s family members who work in family enterprises, which do not employ others workers.

The new system had extended its scope to include all enterprises employing one or more workers. Unlike the previous insurance system, which used to limit the scope of its application to the enterprises that employ 10 or more workers.

For the entitlement of retirement pension at the age of 60, it is required that the beneficiary has participated for at least 10 years.

The General Organization for Social Insurances (GOSI) is the competent authority for managing the insurances and the application of theprovisions set forth in the insurance system. The funds of GOSI are derived from the following sources:

1. Contributions of employers and participants and contributions imposed for the financing of other insurance branches.

2. State aid from the general budget when needed.

3. Income from delays in payment of contributions.

4. Donations and bequests donated to the organization.

5. Other resources that are allocated to the organization by the text of another system or another regulation.

The contributions to the vocational hazards branch are 2% of the worker’s monthly basic wage to be paid by the employer, with the possibility of doubling the contribution rate for the employers who refuse to comply with the instructions issued by the competent authorities on the safety and health of workers. As for the new categories those, who are engaged in self-employment, or who are engaged on behalf of themselves or in combination with other active commercial, industrial, agricultural, or services, shall pay the contributions themselves.

The contribution to the pension branch is based on the ratio of 18% of the monthly basic wage, of which the employer is paying 9% and the worker shall pay the other 9% of the contribution, while for the new categories the subscriber shall bear to pay 18% from the virtual monthly wage chosen by the subscriber. The maximum limit for the wage to be subject to the contribution is 45,000 Saudi Riyals p/m.

The employer has the sole responsibility in paying the full amount of the contributions due from him and from the worker to the organization. In return, the employer may deduct from wage of the worker’s the contribution. In case that the employer neglected to deduct this contribution, at the time of the payment of wages, he is not entitled to deduct this contribution later.

Every incident that happens to the subscriber during working hours, or caused by work, or while he is on his way from his residence to the workplace and vice versa, or on his way from the workplace to the place he usually eats in or to perform his prayers and vice versa, also the diseases, which are caused by work are considered as a work injury.

The compensation for a work injury victim comprises:

1. The medical care necessitated by the conditions of the injured.

2. Daily allowances for temporary disability from work, if the patient is unable to work temporarily due to the injuries.

3. Monthly earnings and the compensation for permanent, total or partial disability caused by the injury.

4. Monthly earnings for the family members.

5. Grant for the family of the injured or the family of the income earner in case of his death.

The entitlement to a compensation starts only after the completion of the registrationprocedures with the competent insurance office, or within the time limit prescribed by the rules for the employer for the registration of the workers, or within the time limit prescribed by the rules for the worker to request to register himself, if the employer omits or forgets to register the worker.

In case of a temporary incapacity of a worker resulting from a work injury, the worker shall be entitled to an “injury daily allowance”, for each day of incapacity including holidays; the daily allowance is estimated at a 100% of the daily wage of the contribution of the injured in the monthproceeding the month, during which the injury occurred.

It will then be reduced to 75% of this wage while he is under treatment at the expense of the organization in one of the treatment centres.

In case of permanent or total disability, the revenue shall be 100% of the average monthly wage; the revenue shall not be less than Saudi Riyals 1,500 p/m.

III. Healthcare in the in Day to Day Life

Despite the reforms undertaken by the Saudi Government and the increased investments by the private sector, the market is still suffering from shortages as the demand at the time being (early 2010) exceeds the expansion capacity. The main reasons for this rapid increase in demand are:

1. Rapid population growth.

2. The passing of many laws, which are in favour of making healthcare service accessible to everyone (e.g. the Healthcare Insurance Law).

3. The shortage in qualified medical staff compared to the population growth.

4. The shortage of investments in the medical sector compared to the demand.

5.         The improvements undertaken by the Saudi Government take time to become efficient.

IV. Healthcare in the in Private Sector

The private healthcare sector covers about 20% of the healthcare treatment in the Kingdom with about 123 private hospitals, 217 private clinics, 171 clinics affiliated to companies and 5741 private pharmacies, which are not sufficient to meet the growing demand in the healthcare market in the Kingdom, this makes the Saudi Government seeking to liberate its healthcare sector and to increase the supporting and financing means, which requires a substantial additional investment in order to keep pace with the anticipated increase in the population of citizens and expatriates.

On the other hand some experts expect that the volume of healthcareprovided by the private sector will increase with the further implementation of the Saudi Healthcare Insurance Law.

The objective of most hospitals or clinics in the private sector isproviding primary or secondary healthcare since they do not have the means or the infrastructure to compete with the major governmental hospitals such asKingFaisalSpecialistHospitalor theNationalGuardHospital. When these hospitals try to expand their services, they face several obstacles; among these obstacles are the scarcity of Saudis doctors in various medical disciplines, which makes it necessary to rely on a non-Saudi medical staff. Usually the private sector does not primarily rely on a staff from advanced countries in the healthcare sector because of the high costs for such personnel. This is understandable as the private sector is subject to the rules of the market including considering itsprofit and lossaccounts. This ultimately affects the level of healthcare servicesprovided by these hospitals in general. Another obstacle is the enormous pressure exerted by insurance companies in the Kingdom to reduce costs through the public price policy ‘Bulk Rate’ and paying only a percentage of the invoice submitted by a private hospital, which ultimately leads to a sub-standard service from the medical staff and below par medicines.

V.  Healthcare in the Public Sector

The serviceprovided by the Ministry of Health focuses on primary and secondary care. This is almost the only serviceprovided in the areas outside major cities. Theproblem is a result of the reluctance of the private sector toprovide services in those remote areas due to – as describe above- the weakness of economic gains.

The governmental sector is facing significant challenges due to the increase in the population growth rates especially outside the major cities, which results in increasing waiting lists.

In addition, it is held that Saudis doctors prefer to work in hospitals such as the National Guard or the Armed Forces Hospitals because of its excellence, high salaries and allowances as well as their presence in major cities. Moreover these hospitalsprovide academicprograms for vocational and practical training for recent graduate physicians to prepare them to become a medical consultants or practitioners during a definite period of time. Such opportunities include the chance to be trained outside the Kingdom, in which enables the candidates to get access to specialty training courses in the best scientific centres worldwide.

The Ministry of Health has followed the lead of these hospitals by starting toprovide such physical and academic rewards throughKingFahdMedicalCity.

[1].    The budget considerations are based on a Press Release of the Ministry of Finance of theKingdom ofSaudi Arabia of December 21st 2009


January, 2010 Hany Kenawi
Meyer-Reumann & Partners – Saudi Arabia Office
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