Saudi to launch radical job plan on June 11

Saudi Arabia intends to launch its most aggressive job nationalisation plan on June 11 and more than 300,000 companies in the world’s oil powerhouse are bracing for landmark classification that could cripple many of them.

The government said it would give four different classifications to firm operating in the Gulf 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”.

As the new programme, dubbed “Nitaqat” (limits), gets under way on June 11, nearly 20 per cent of those companies could find themselves in the red zone, according to Saudi minister of labour Adel Faqih.

“More than 300,000 companies in the kingdom will be classified when Nitaqat is enforced on  June 11,” Faqih told local company representatives this week.

“The classifications will be given in line with information provided to us by the General Social Security Corporation for Saudis and the ministry of interior for expatriates,” he said at a seminar held in the eastern port of Dammam on Wednesday to explain Nitaqat programme.

Faqih told the delegates that firms to be given the “excellent and green” rating include those which have achieved what he described as “acceptable” job Saudization levels. Companies rated “red and yellow” include those which have not achieved acceptable levels in violation of existing labour regulations.

“These companies will be given three months to redress their position and I think nearly 20 per cent of all the companies operating in Saudi Arabia will find themselves within the red rating when Nitaqat is launched.”

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 government has not yet published full details of the programme but Faqih said last week it includes “generous” incentives to compliant companies and punitive measures against non-abiding firms.

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 on Wednesday.

He said the ministry is in the process of forming a 1,000-strong inspection team to combat cheating by companies seeking to get round the new measures. “Companies classified as red and yellow will not be granted new licences or renewal of their licences…they will also not be permitted to get new labour while expatriate workers at these firms will not be allowed to stay more than six years,” he said. “We expect from these firms to work on improving their position to move to the safe rating by expanding their job nationalization programmes.”

Faqih said a job category confined to Saudis had been expanded from 13 to 41 jobs, adding that local companies will be exempted from Saudization measures in several other jobs, including pharmacies and jewellery shops.

“The new programme gives a chance to expatriates working at companies within the red and yellow rating to move to firms within the green rating without the need for a prior permission from their existing employer,” he said.

“We consider this as a sort of incentives for companies within the green rating as they can benefit from experienced expatriate labour in the kingdom.”

Saudi Arabia, which controls over 20 per cent of the world’s recoverable oil resources, has turned to its private sector to tackle festering unemployment as its public sector has become redundant due to its slow growth.

Officials said last year there is a plan to create nearly 160,000 jobs for Saudis in the private sector within a long-term strategy.

They said the strategy includes a two-year plan, a medium-term scheme for three years and a long-term plan stretching for 20 years.

The officials said the target of the first plan, staring in 2011, is to bring unemployment in the Gulf Kingdom under control while the second phase is to bring the joblessness rate to low levels.

“The third long-term stage is designed to upgrade the competitiveness of the Saudi economy by relying totally on the national human resources,” said Fahd bin Saleh Al Khuraisi, a ministry of labour spokesman.

“Our first target is to get nearly 160,000 jobs for Saudis in the private sector…we are currently conducting studies to improve wages for Saudis in the private sector to encourage them to take up jobs in this sector.”

Khuraisi’s comments followed reports last month that more than 147,000 Saudi workers in the private sector quit their jobs in 2009 because of low salaries.

The report by the labour ministry also showed that nearly 829,200 foreign workers were recruited in the same year.

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