Saudi to punish firms with low local work force

Penalties are part of aggressive job Saudization drive launched in June

Saudi Arabia is set to carry out its threat next month and punish companies which failed to meet a deadline and raise the number of Saudi employees within an aggressive drive launched in mid 2011 to tackle festering unemployment.

The labour ministry said those companies would be deprived from new work visa and renewal of permits for their existing employees after they failed to meet a six-month deadline by mid December to come in line with official Saudi job limits.

The penalties will affect companies rated as “red” within the new job nationalization programme while those rated as “yellow” would be subject to punishment in February when their deadline expires.

“The ministry of labour will begin enforcing penalties against red companies from next month…they will include, among others, suspending new work visas for them and halting renewal of permits for their labourers,” the ministry’s spokesman Hattab Al Anzai said, quoted by local newspapers.

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 recruit 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”.

In July, officials warned private sector establishments to abide by the new initiative to find jobs for the country’s citizens and tackle unemployment, saying those who fail to meet the deadline could be forced out of the market.

The ministry of labour also warned the more than 300,000 firms covered in plan 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.

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.

Official data showed unemployment in Saudi Arabia, among the 20 largest economies, stood at 10.5 per cent at the end of 2010, nearly 450,000.

The figures showed the rate among women is sharply higher, at 26.6 per cent. Unemployment among high school graduates is also as high as 40 per cent.

“As for the excellent and green firms, the ministry is pursuing plans to introduce many incentives for them provided they maintain their high Saudi job percentage…we have already established eight incentives including hiring expatriate workers from the local market no mater what their jobs are except those which are restricted for Saudis under a cabinet decision,” Anzi said.