Saudi Arabia has again reassured its large expatriate community that it has no plans to expel any foreign workers under a new aggressive initiative it launched last month to create jobs for Saudis and avert social turmoil.
Officials said the initiative, dubbed Nitaqat (ranges) could create more than 400,000 jobs for Saudis every year, adding that the private sector’s preference of less expensive expatriate labour has left more than one million Saudis jobless.
Besides creating a persistent unemployment problem among Saudis, the private sector’s heavy reliance on foreign workers has put pressure on the country’s balance of payments given the massive funds transferred by foreigners to their homes, estimated at SR98 billion ($26 billion) in 2010.
Under Nitaqat programme, which was launched on June 11, private sector establishments were given four classifications excellent and green with high Saudi labour percentage, and red and yellow, with low Saudi labour ratio.
Foreign workers in the first two categories can stay as long as they want while the stay of expatriate workers in the two negative categories will be limited to six years in case the company fails to adjust to Saudization rules.
“We are not saying foreign workers who are given six years must leave the Kingdom….they will have three options,” said Abdullah al Hakkani, Saudi labour ministry undersecretary for planning and development.
“They could either leave the Kingdom or move to another company in the excellent or the green classification…a third option is that they can stay with their company for a longer period if it adjusts itself to the new job rules,” he told local businessmen in Riyadh, according to Saudi newspapers.
In a stern warning last week, the government told the more than 300,000 private sector institutions to abide by new job regulations or they could be forced out.
The labour ministry also warned firms that it would not tolerate any attempts to maneuver or circumvent the rules by offering Saudis low-paid jobs in a bid to dissuade them from accepting work.
Hakkani said the government is planning to announce a set of incentives for “excellent and green” companies to encourage them to employ more Saudis so they will maintain their classification. He said the incentives are also intended to encourage negative firms to take measures to adjust to new rules.
“The incentives involve visa facilities, transfer of sponsorship, amendment of job titles and fewer procedures for new visas and work licences,” he said.
But Hakkani acknowledged that while it would partly tackle unemployment among Saudis, Nitaqat will not provide a magic solution to all labour problems.
“It will open a new chapter in our efforts to create jobs for Saudis and organize the labour market but it is not a magic wand that will resolve all market problems and obstacles…it is however a major initiative for reforming the market.”
According to Saudi minister of labour Adel Faqih, nearly 20 per cent of the private sector firms could find themselves in the red zone unless they take what he described as drastic measures to get in line within three months.
He said companies in the red zone have until September 11 to adjust to the new job regulations while firms classified as yellow will be given until December.
He said the ministry is working on 21 initiatives intended to encourage the private sector to recruit more Saudis and at the same time tempt newly-employed Saudis to stick to their jobs.
“These involve a wage protection system for Saudis, job security and the opening of 18 labour offices across the Kingdom to help both parties round the clock.”
Analysts described Nitaqat as the most radical measure taken by Saudi Arabia, the largest Arab economy, to force its private sector to employ more Saudis following the failure of previous procedures and expansion in local unemployment, estimated at over 10 per cent at the end of 2010.
“Within Nitaqat programme, there will be no room for cheating the system and all companies are advised to adhere to the rules,” Faqih warned.
In a separate statement, the ministry of labour sought to assuage fears by expatriates that their stay in the Kingdom could be limited. On the contrary, the programme will benefit the foreign labour, it said.
“Nitaqat does not pose any threat to the expatriate workers in the Kingdom…on the contrary, in case the private sector managed to absorb Saudi job-seekers, there will be a continuous need to support this sector with more expatriate labour,” said the statement carried in the official media.
“This scheme is mainly intended to absorb Saudi job-seekers in the private sector, re-organize the labour market and correct imbalances in the job distribution ratios in this market, considering that Saudis do not exceed 10 per cent of the private sector’s total work force.”