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29 March 2024

Saudi companies warned over job nationalisation

Published
By Nadim Kawach
Saudi Arabia has issued a fresh warning to its private sector to adhere to new rules just announced by the government to find jobs for its growing citizens, saying those who fail to do so could be forced out of the market.
 
The ministry of labour also warned the more than 300,000 companies covered in the Gulf Kingdom’s most aggressive job 'Saudisation' programme 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.
 
Addressing local businessmen in Riyadh late Tuesday, the ministry’s undersecretary Ahmed Humeidan said companies which have the lowest Saudi labour ratio have three months to adjust their position while other firms which have relatively low ratio will be given six months.
 
“The ministry will not accept attempts by any company which could give low level jobs to Saudis in a bid to circumvent the rules and discourage them from taking the job,” he said. “We will not accept any negative abidance by the programme and those who fail to comply could find themselves out of the market.”
 
Saudi Arabia, the largest Arab economy and world’s top oil exporter, launched the job nationalization programme, dubbed Nitaqat (ranges) on June 11 after the failure of previous initiatives to force the private sector to hire more Saudis.
 
The government said it would give four different classifications to firms operating in the Kingdom according to their compliance with regulations to hire more Saudis. Compliant firms will be rated as “excellent and green” and those failing to abide by the rules will be classified as “red and yellow”.
 
According to Saudi minister of labour Adel Faqih, nearly 20 per cent of those companies could find themselves in the red zone.
Humeidan 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.”
 
Humeidan said the ministry would regularly verify the private sector’s compliance with the job initiative through its own labour records as well as those in the minister of interior and the social security department.
 
He said the ministry would also consider a request by construction, cleaning and transport firms to deal with them separately on the grounds Saudis are reluctant to take up jobs in such sectors.
 
Analysts described Nitaqat as the most radical measure taken by the Saudi government to force its massive private sector to employ more Saudis following the failure of previous procedures and expansion in local unemployment.
 
The programme comes amidst reports that unemployment in Saudi Arabia is widening because of the private sector’s preference of the cheaper expatriate labour and the fact that the population is growing faster than the economy.
 
Faqih put the official unemployment rate in Saudi Arabia, the largest Arab economy, at around 10.5 per cent at the end of 2010, nearly 450,000. But he noted female joblessness largely exceeds that rate, standing at 26.6 per cent. Unemployment among high school graduates is also as high as 40 per cent.
 
He said nearly six million foreigners work in the Saudi private sector, accounting for around 90 per cent of the sector’s total work force.
 
“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.”