Saudi Arabia's expat salary premium shrinks as hiring slows and budgets tighten

Recruiters say the era of “double-digit expat premiums” is giving way to leaner, performance-linked packages that align more closely with local market rates. Industry experts analyse that the shift comes as the Kingdom’s megaproject momentum cools, financial discipline tightens, and a growing number of skilled Saudi nationals enter the private sector. 

“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,” commented Magdy Al Zein, managing director at recruiter Boyden in a Reuters report. “So what you get is employers rethinking packages. That definitely has happened.” 

For much of the past decade, highly skilled foreign workers could expect packages 40% higher, or even double, what they earned elsewhere to relocate to Saudi Arabia. Those days are fading fast. Recruiters say offers are now “far more restrained,” with salaries benchmarked against standard market rates instead of inflated premiums.

Two recruitment sources noted that foreign hires should no longer expect the 40%–100% salary jumps once common in the early Vision 2030 boom. Execution delays across multi-billion-dollar megaprojects have played a key role. 

Saudi Arabia expanded rapidly to support these developments but struggled with delivery timelines. Mega projects like NEOM, the $500 billion futuristic city, and Trojena, the planned mountain tourism hub hosting the 2029 Asian Winter Games, are among the projects experiencing slower progress. According to media reports, project activity remained subdued in 2025, with awards nearly halving in the first nine months, according to Kamco Invest. 

Additionally, lower oil prices have weighed on public finances, widening the fiscal deficit and adding urgency to cost-conscious hiring decisions. The IMF estimates Saudi Arabia needs oil close to $100 per barrel to balance its budget. 

“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,” said Hasan Babat, CEO of Dubai-based Tuscan Middle East. Tuscan’s October salary report found that Saudi companies are now funnelling limited budgets into “hot jobs” in fields such as artificial intelligence and digital roles.

On the other hand, the UAE, which is Gulf’s business and tourism hub with a 90% expatriate population, remains a strong magnet for global professionals due to its tax-free salaries, extensive international schooling options, and more liberal social environment. Yet the salary gap between the two countries has virtually disappeared. 

“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 Cooper Fitch. “Convincing people to move from the UAE is a challenge, they expect a high premium,” Al Zein added. Despite the slowdown, Saudi Arabia, forecast to grow 4.4% this year, remains attractive for candidates outside the region, where job markets are tighter and wage growth slower.

Interestingly, labour reforms and strong Saudization efforts have boosted national talent participation in the private sector. The number of Saudi nationals working in private companies has risen 31% since 2016, and unemployment among citizens is at a historic low. This expanding local talent pool is reshaping hiring dynamics.

“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 remain competitive, she added, Saudi employers must offer predictable, cost-aligned compensation along with family-friendly living conditions and a clear sense of purpose tied to the scale of national transformation.