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Private companies who have not legalized the work status of their expatriate employees are planning to lay them off due to fears of expected raids by labor authorities.
Some 3 million expatriate workers are threatened with redundancy.
Many of these companies do not have the financial capability of transferring workers onto their sponsorships.
Medium and small-sized companies currently face the challenge of legalizing their expat staff since employers of such firms are already under pressure to increase salaries and improve employment terms.
Companies in the Red Zone of the nationalization system, "Nitaqat," will be the most affected, since most of their manpower is foreign.
Fadal Abu Ainain, a financial adviser for private companies, said medium and small-sized companies that have limited financial budgets will resort to letting their expat workers go.
"Employers who are found hiring illegal workers will be fined for allowing them to work without transferring their sponsorships since this is a clear violation of the labor laws of the Kingdom," Abu Ainain told Arab News.
"There are many companies that have caused disarray in the labor market and it is time to rectify this and to adhere to nationalization laws," Ihsan Buhulaiga, a former member of the Shoura Council and an economic expert, told Arab News.
The Passport Department, meanwhile, is set to conduct raids once again in cooperation with Labor Ministry officials against illegal expats after the July 3 deadline.
A senior official at the Passport Department has denied any plans to postpone raids until the end of Ramadan, confirming that raids will be conducted throughout the holy month around the clock.
"We will begin inspections directly following the end of the amnesty period to make sure private companies are committed to labor laws of the Kingdom. The raids will also continue during Ramadan and Eid Al-Fitr," Col. Badr Al-Malek, a spokesman at the Passport Department, told Arab News.
Sources had earlier told a local newspaper that the ministerial committee in charge of following up on procedures for legalization intend to demand a second phase of legalization following the deadline.
The expected extension will begin from the current deadline for several reasons, including the inadequacy of the first stage in correcting the status of huge numbers of applicants and the fact that mechanisms and procedures of this scale cannot be confined to a short period of time.
"The source pointed out that it is expected to approve a second phase of legalization in line with regulations and instructions to apply the labor laws successfully and to take into account human rights standards," according to a local newspaper.
Nearly 500,000 expats have so far legalized their work status since the Kingdom announced its amnesty for illegal workers, either through sponsorship transfer to companies where they currently work or to new employers, a Labor Ministry official said.