Introduction: Nitaqat or Saudization
Delving on the fascinating journey of Saudization, uncovers a powerful policy reshaping the way people work in Saudi Arabia. This updated guide takes you through the ins and outs of Saudization, offering new insights into how it has changed recently and the challenges it brings for businesses and expatriates. As the Ministry of Human Resources and Social Development introduces new rules, This article serves as a guide, helping you understand the latest updates and exploring how Saudization is changing things.
What is Saudization or Nitaqat In Saudi Arabia?
Saudization, also called Nitaqat, is the Saudi Nationalization Program, requiring companies to hire Saudi nationals, primarily in the Private sector. Saudization rule made by the Ministry of Labor and Social Development in Saudi Arabia. This rule makes companies give more jobs to Saudi people, trying to help them find work and reduce unemployment. They started doing this in 1985 and, in the last five years, they’ve made some jobs only for Saudi people.
Saudization Objective and Evolution:
Saudization aims to solve the problem of unemployment by giving more jobs to Saudi people instead of foreigners. In 2023, new rules from the Ministry of Human Resources and Social Development say that certain businesses must have a certain percentage of Saudi workers. For example, companies in project management need to have 35% of their workers be Saudi by December 24, 2023, and increase it to 40% by December 12, 2024. Also, these workers should get at least SAR 6,000 every month.
What Obstacles Does Saudization Face in Navigating Local Job Placement?
Facing some tough hurdles, Saudization, a policy aiming to give more jobs to Saudi locals, is meeting resistance from businesses. This has led to businesses trying to find ways around following the policy’s rules. A big issue is hiring Saudis for jobs that involve services or manual labor, with companies finding it hard to get local people for these positions.
The Saudization Certificate and Nitaqat System:
The Saudization Certificate is like a report card for companies, showing how well they follow Saudization rules. At the same time, the Nitaqat system puts companies into categories, like Platinum or Red, based on how many Saudi workers they have. This classification affects the rewards or punishments companies get.
Nitaqat System Overview:
Launched in 2011, the Nitaqat system puts companies into groups depending on how many Saudi employees they have and the total number of workers they employ. This sorting has a big effect on the rewards or punishments these companies get.
Rewards and Consequences:
The new rules from the Ministry of Human Resources and Social Development really back up what Saudization aims to achieve. Companies in certain fields need to hire more Saudis, and they also have to pay them at least a certain amount each month. If they don’t follow these rules, there could be punishments, like stopping immigration and employment services for the company.
Saudization Challenges and the Path Forward:
Saudization Struggle: Improving Conditions vs Unemployment
Challenges continue to be a big deal, especially because Saudi workers want better working conditions compared to workers from other countries. Saudization is trying hard to find the right balance between making conditions better and its main goal of reducing unemployment.
Service and Manual Labor Jobs:
Encouraging Saudis to take up service and manual labor jobs is not easy. Businesses in Saudi Arabia are having a hard time convincing local people to work in these roles. Many Saudis are not interested in these jobs, which makes it a big challenge.
Automation and Working Conditions:
Encouraging better technology and making jobs more comfortable has been a bit tricky with Saudization. The policy unintentionally makes businesses unsure about using more machines because they used to pay lower wages and give less good working conditions to workers from other countries. So, businesses are not so quick to use new technology or make jobs better for everyone.
Effect of Saudization on Expatriates And Dependent Fee:
Saudization, including the introduction of the Expat Dependent fee in 2017, has caused a noticeable drop in the number of expatriates. This change shows how Saudization is significantly affecting the Saudi workforce. The policy is reducing job opportunities for expatriates, reserving certain jobs exclusively for Saudi nationals. More expatriates are losing their jobs to local candidates, leading to concerns about job security. In specific fields like dentistry, only Saudis have been hired since March 2020. Saudi Aramco is aiming for 90% Saudization by 2020, highlighting the broader government effort. The impact on expatriates is evident, highlighting the big changes brought about by Saudization policies in 2023.
Saudization Progress and Future Prospects:
Sector-wise Improvements:
Despite challenges, Saudization has shown improvements, particularly in sectors like transportation, communication, manufacturing, retail, and construction. Growth in Saudi employment has outpaced that of non-Saudis, indicating positive strides.
2023 Saudization Initiatives:
Recent decisions by the Ministry of Human Resources and Social Development set Saudization ratios for select businesses over the next two years. Specific professions in project management, procurement, and sales face increased Saudization ratios, along with mandatory minimum salaries.
Nitaqat Misuse and Remedial Measures:
Concerns regarding the misuse of Nitaqat, particularly in exploiting people with disabilities to boost Saudization rates, have prompted the Ministry of Labor to monitor practices closely. Amendments are under consideration to prevent such misuse.
Saudization: Final Thought
In conclusion, Saudization remains a multifaceted policy with commendable objectives and ongoing challenges. As it evolves with the latest updates from the Ministry of Human Resources and Social Development, balancing nationalization goals with practical industry needs becomes paramount for its long-term success. Expats, businesses, and policymakers collectively shape the narrative of Saudization, influencing its impact on Saudi Arabia’s economic landscape.
