Legal challenge seen in rush to cut pay

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KUWAIT CITY, April 15: Among supporters and opponents of the idea of reducing salaries and benefits for senior officials in private sector as a result of the spread of the coronavirus pandemic and its repercussions on the activities of institutions and slowdown in economic sector in general, a legal debate has emerged, which does not allow this step, as some consider the proposed reduction of large salaries to be a move fraught with the risks of nullity in the future.

In banking sector, any person whose appointment requires obtaining prior regulatory approval is classified within leadership positions, which includes about 11 of the names of general managers other than the CEO and his deputies whose salaries differ from one institution to another – according to size but usually start from KD 5,000 as a minimum to 30,000 per month in some companies, along with annual benefits and bonuses calculated as a percentage of total profits.

The 11 leadership positions include general managers of risk and compliance, companies and individuals, as well as personnel, auditing, finance, treasury, legal, operations, and information technology.

The source indicated the occasion of this talk is due to the trend launched lately by many entities, foremost the Central Bank of Kuwait, which aims to reduce the salaries and benefits of top banking officials amid the worsening economic slowdown caused by the pandemic.

The source added the decision is within a broader banking move aimed at streamlining expenses in company budgets in the face of the crisis, which he considered a temporary remedy in the face of financial pressures caused by the market fluctuations that affect all companies.

In practice, the invitation did not stop at private sector institutions, as some did not hesitate to forward it to government employees who receive large salaries, considering “they benefited many years from budgets of prosperity, and it is their turn to reduce job dues in support of their institutions in times of stress”.

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