Saudi Arabia has shifted to the Gregorian or "Western" calendar as a basis for paying civil servants as part of an austerity package. The kingdom adopted the lunar Islamic calendar when it was founded in 1932.

The birthplace of Islam containing Mecca - Islam's holiest site - shifted to the Western Gregorian calendar on Sunday, bringing the oil-rich kingdom in line with many of its energy customers.
The Islamic lunar calendar is actually 11 days shorter than the 365-day solar year, which will actually save the kingdom money by cutting salary days for many public servants.
Introduction
The Kaʿba in the Great Mosque (al-Masjid al-Harām) in Mecca defines the latitude and longitude for which the Umm al-Qura calendar is calculated.
For several decades Saudi Arabia has employed a calculated lunar calendar which is commonly referred to as the “Umm al-Qura calendar”. It is also followed by several neighbouring states on the Arabian Peninsula such as Bahrain and Qatar.
Many Muslim communities in non-Islamic countries also tend to follow the Umm al-Qura calendar as its use in mosques funded by Saudi Arabia and in modern computer software (it is the default Islamic calendar in the Arabic setting of Microsoft software) becomes more and more prevalent. The Islamic Society of North America (ISNA), the Fiqh Council of North America (FCNA) and the European Council for Fatwa and Research (ECFR)have announced in the past that they will also follow the lunar calendar of Saudi Arabia.
Nevertheless, the Umm al-Qura calendar is often criticized by other Muslim organisations and communities who base their calendar on the actual sighting of the lunar crescent (hilāl). Especially around the month of fasting (Ramaḍān) and the month of pilgrimage (Dhu ʾl-Ḥijja) the Umm al-Qura calendar often causes confusion when the dates observed by different Muslim communities for these major Islamic festivals are found to differ by one, two or even three days.
In the past, details of how the Umm al-Qura calendar was actually regulated were difficult to obtain but the general consensus of most specialists was that it was not based on the actual sighting of the lunar crescent.
Only recently has more information become available which now makes it possible to reconstruct the calendar adopted on the Arabian Peninsula in the recent past and to predict its future course for many years in advance.