Saudization

Saudization or Saudisation of the workforce[1]—the replacement of foreign workers with Saudi nationals in the private sector—is the official national policy of the Kingdom of Saudi Arabia.[2] While many Saudis are employed by the government, there are not enough jobs for the growing number of youth. As of 2006 the private sector was largely dominated by expatriate workers from Southeast Asia and the Arab world.

The Saudi Government took the decision to reduce unemployment among native Saudis, under the slogan 'Let's Put the Saudi in Saudization'.[3][4] Companies which "fail to comply" with Saudization regulations have been warned that they "will not be awarded government contracts".[5] While the "Saudi political elite" is agreed on the importance of Saudization,[6] Saudi businesses have complained of its implementation and sought ways to avoid it.[7]

Since 2005, the target Saudization rate has been set at 75% for the private sector,[8] however in most sectors the actual rates are still much lower, because most Saudis are not interested in working jobs requiring manual labor.[9]

In 2014 the Saudi Gazette reported that one of the targets of the kingdom's Ninth Development Plan (2010-2015) -- to "bring down the unemployment rate to 5.5 percent and revive the Saudization strategy"—had not been realized.[10]

History

While many Saudi native men found employment with the government, there were not enough government jobs to employ all unemployed. "Saudization" the workforce has been a goal of the kingdom since at least the Fourth Development Plan (1985-1989) which called for replacing foreign workers with Saudi natives as one of its objectives. Immigration was tightened and many undocumented foreign workers were deported, but the program was only a marginal success.[11]

A Saudization goal for 2003 was that at least 30% of employees of companies with 20 or more workers should be Saudi natives, (although only 300,000 people were employed by companies of this size).[12]

In June 2006, negotiations between business executives and senior government leaders, including King Abdullah, led to reductions of Saudization targets in some work sectors from 30 percent to 10 percent, and full waivers from Saudization in the case of two Chinese companies, according to discussions between US ambassador James C. Oberwetter and Saudi executives.[13]

Currently the plan targets Saudi youths as well as the women workers for the growth of the kingdom's economy. The Shura council (a consultative body) dictated that as of 2007, 70 percent of the work force were Saudi. Between 2011 and 2013, the transportation and communication sectors recorded the highest improvement in Saudization rates from 9 percent to 20 percent. Manufacturing also underwent a notable improvement in Saudization rates (from 13 percent to 19.3 percent). Saudization rates in the retail and construction sectors also improved from 12.9 percent and 7.2 percent to 18.4 percent and 10.3 percent respectively, said the report. Taking average growth for the period between 2011 and 2013, improved Saudization rates in the transportation sector came mainly as a result of a significant 59 percent growth in employment of Saudis. Average Saudi employment growth in the manufacturing and wholesale and retail sectors was also high, at 25 percent each. Meanwhile, employment growth for non-Saudis averaged just 4 percent and 7 percent respectively. The construction sector — the most labor-intensive part of the private sector — recorded an impressive 34 percent average growth in employment of Saudis, while employment of non-Saudis in the sector grew by 14 percent. The higher growth in Saudi employment in the construction sector is impressive given the particularly high wage differential from non-Saudis. Saudis in the construction sector earned a monthly average of SR3,330 in 2013, while non-Saudis earned only SR1,029.[14]

Challenges

At least some observers (Harvey Tripp and Peter North) have called the Saudization efforts "desultory" and stated that Saudi businesses complain that native Saudis are unwilling to take service and manual labor jobs and unable to take skilled technical jobs for which they are not educated.[7][15][16] Most graduates were trained in religious subjects. As of 2009, only about 20 per cent of the kingdom's graduates were in technical and scientific fields.[17] One Saudi employer complained to a Western journalist (Max Rodenbeck) "I want to hire Saudis, but why would I hire someone who I know won't show up, won't care, and can't be fired."[18][19] When legislation reserved employment for Saudis in certain designated industries (taxi driving and selling gold) the laws "were fairly quickly rescinded" when the targeted industries "degenerated, almost immediately, into chaos" after guest workers were replaced by Saudis with "no job knowledge and little inclination to work."[20]

One effect of the program has been to create a black market for visas for foreigner workers estimated at $1500 or more (as of 2008), as Saudization enforcers attempt to limit the issue of work visas and private businesses seek to circumvent that limit.[16]

In 2014, Arab News reported that the failure to meet the Saudization target had led to thousands of businesses being shut down, and to others meeting the goals by "cooking the books" by hiring Saudis who do no actual work.[21]

Nitaqat initiative (2011)

Nitaqat

Nitaqat ("ranges" or "zones") is a Saudization program introduced by the Saudi Ministry of Labour.[22] The initiative was announced in June 2011, when the Ministry of Labour passed Ministerial Resolution no. (4040). The implementation deadline for the program was in 2013. Nearly 90,000 Indians left Saudi by the end of October 2013. About 4,66,689 Indian workers have renewed their iqamas (resident permit) over the last five months of the grace period, 359,997 workers have transferred their sponsorship and 355,035 workers changed their job titles to legalize their status (e.g.: profession change, sponsorship change etc.) reports the Financial Express.[23] More than 200,000 private firms have been closed down in 2014 for failing to meet the conditions set within the Nitaqat nationalization program aimed at reducing unemployment among Saudis.[24]

The program classifies the country's private firms into four categories: Premium, Green, Yellow and Red. Premium and Green categories include the companies with high Saudization rates, while Yellow and Red include the ones with low rates. The classification of other companies is based on the Saudization percentage (% of Saudi employees) and the total number of employees. The companies with less than 10 employees are exempt from the program, but still need to employ at least one Saudi citizen.[25] Rapid visa services are available only to businesses that are in the platinum category of the Nitaqat system to improve employment for Saudis.[26]

Total no. of employees Saudization percentage
Red Yellow Green Platinum
10 – 49 0 – 4% 5 – 9% 10 – 39% ≥ 40%
50 – 499 0 – 5% 6 – 11% 12 – 39% ≥ 40%
500 – 2,999 0 – 6% 7 – 11% 12 – 39% ≥ 40%
3,000+ 0 – 6% 7 – 11% 12 – 39% ≥ 40%

The companies receive incentives or penalties depending on the category they belong to:[27] By visiting the ministry's website , the companies would able to understand their position[28]

There are modification made in Nitaqat program [29] and there are nine new sections added in the rules.[30] Commercial establishments, media organizations, banks, public schools and Insurance companies are the "quotas" that must be employed by Saudi laborers under this system [31] Nitaqat is being run alongside another initiative of the Ministry of Labour called Hafiz, an unemployment benefit national program which grants a fixed amount to unemployed Saudi citizens. Unsuccessful implementation of Saudization program, the large presence of foreign employees and high rate of unemployment among Saudis, a rise in youth population, unrest in the region are the factors prompting the Saudi Arabian Government to launch the Nitaqat program.[32] The Labor Ministry, which intends to tighten its grip on private firms that are reluctant to Saudize jobs, said newly employed Saudis should stay with a company for at least 6 months to be counted as a full Saudi worker under the Nitaqat program.[33]

New phase of Nitaqat announced. The third phase of Nitaqat Saudization program will be implemented on Rajab 1 (April 20) with advanced systems to create more jobs for citizens in the private sector.[34] The Council of Saudi Chambers has reportedly asked the Labor Ministry to delay by three years the implementation of the Nitaqat program’s third phase that aims to further increasing the percentage of Saudis working in private firms.[35]

The higher growth in Saudi employment in the construction sector is impressive given the particularly high wage differential from non-Saudis. Saudis in the construction sector earned a monthly average of SR3,330 in 2013, while non-Saudis earned only SR1,029.[36] At least 86% of contracting companies have fulfilled the Nitaqat program’s minimum Saudization requirement.[37] The new system is applicable to all Nitaqat categories as well as small firms having nine workers or less, a Labor Ministry statement said adding that the new decision would be applicable from February Last. It cancels all the previous decisions that contradict with it.[38] Central Department of Statistics and Information (CDSI) said that the Nitaqat nationalization program was successful in bringing down the Kingdom’s unemployment rate to 11.7% — 5.9% among men and 32.5% among women.[39]

Investors in various sectors have called on the Ministry of Labor to start implementing a Nitaqat system for Saudis working in the private sector.[40] Minister of Labor Adel Fakeih announced that Saudi jobseekers hired by the private sector will be counted under the Nitaqat Saudization program immediately after their registration with the General Organization for Social Insurance (GOSI) effective from 22 February. The minister’s decision will boost Saudization further by ending the long wait of Saudis to be counted for Nitaqat. With the new directive, the GOSI registration will come into effect immediately after making payment of the insurance premium fixed for all types and categories of companies and establishments.[41]

Nitaqat for women

Women working from home will be included in the Nitaqat system. For the platinum zone, those who work from home will be calculated as 30%of the total Saudi staff. For the Green zone, they will be calculated as 20%of the total Saudi staff while for the Red and Yellow zones they will be considered as 10%of the total Saudi staff. The decision will come into force on Feb last in 2015.[42] For nursing women, the decision tries to strike a balance between work and childcare. Women are allowed to take a rest for an hour or two everyday during work hours to nurse their children for 24 months after delivery. The rest hours will be included in work hours. If the business where a woman works does not have a nursery, she can nurse her child either at the beginning or at the end of work hours.[43] More than 682,000 Saudi women job seekers have refused to accept private sector employment offered to them by the Labor Ministry’s Hafiz unemployment assistance program. The number of women job seekers crossed the million barrier and now women account for about 77% of all unemployed citizens.[44] Each Saudi woman trainee in the private sector will be counted as one Saudi under the Nitaqat Saudization program, according to sources at the Ministry of Labor. This will be in coordination between the National Employment Program for Joint Training and the Human Resources Development Fund in order to create suitable jobs for Saudi women.[45]

Misuse of Nitaqat

An official at the Ministry of Labour said inspection teams from the ministry are closely monitoring companies who have been exploiting people with disabilities in order to encourage their Saudization rates. The officials check on employees with disabilities during inspection rounds to identify the nature of the work, their presence at the job, and the type of arrangements and services provided to them, noting that the number of people with disabilities employed at a facility cannot exceed 10 percent. If employees with disabilities in a firm exceed more than 10 percent of the total number of Saudi employees, then each disabled worker is calculated like any other Saudi. “It is unfortunate that there are some companies and individuals who exploit people with disabilities to pump up their Saudization rates,”and Saudi workers with disabilities who are able to work are counted as four employees in the Saudization ratio. They must be paid a minimum monthly wage of 3,000 riyals and should not be counted as part of the Saudization ratio of another establishment. To recent reports which reveal that companies have been hiring Saudis with disabilities in order to boost Saudization rates as these disabled employees count as 4 employees, thus saving the company from hiring able-bodied Saudi employees at higher salaries. An executive at a private company said there are some people with disabilities who present themselves to the companies for employment in return for salaries, bonuses, and benefits. Companies are thus paying less to a disabled employee who is equal to four Saudis than they would if they hired four Saudis with salaries of more than SR 20,000 each. They offer their services. Some companies accept, refuse, others added. The Ministry of Labour and other agencies work together regarding the issue of employees with disabilities, noting that the Ministry of Labor determines the nature of disability upon interviewing the employee. They currently posted a draft to the disability employment legislation on the “Together We Improve” portal for discussion before making a decision to amend the definition of disability work and conditions for employment stipulated in Article 13. Disabled employee to count as more than one employee in Nitaqat, the individual must hold a license or identification card from the Ministry of Social Affairs or Ministry of Labor indicating the type and degree of disability. Further, work conditions and systems must be acceptable and suitable for employees based on the type of disability, and establishments should ensure all services are in place before the employee begins work.[46]

Nitaqat is aiming illegal expatriates only

Saudi Arabia’s Deputy Minister of Foreign Information, Abdulaziz Binsalamah said Nitaqat has been implemented to ensure that millions of foreign workers, including Indians who have valid documents can enjoy their entitlements. It is not affecting legal employees working in the Kingdom. The Nitaqat law makes it mandatory for local companies to hire one Saudi national for every 10 migrant workers. There has been widespread perception that the policy would lead to denial of job opportunities for a large number of Indians working there. [47]

Four million expatriates regularise their status

Saudi Arabia has completed regularisation of nearly four million foreign workers in the second quarter of 2013 as part of its `Nitaqat` programme, with 1.18 million expats choosing to change their profession.[48]

See also

References

  1. ↑ Tripp, Harvey; North, Peter (2009). CultureShock! A Survival Guide to Customs and Etiquette. Saudi Arabia (3rd ed.). Marshall Cavendish. p. 208.
  2. ↑ Maisel, Sebastian, ed. (2009). "Saudization". Saudi Arabia and the Gulf Arab States Today: An Encyclopedia of ..., Volume 1. Greenwood. p. 395. Retrieved 13 February 2015.
  3. ↑ Ahmed Al-Omran, Arab News, 22 August 2007
  4. ↑ Manal Soliman, Fakeeh (May 2009). "Saudization as a Solution for unemployment The Government Perspective" (PDF). Saudization as a Solution for unemployment The Case of Western Region: 77–78.
  5. ↑ http://www.arabnews.com/?page=1&section=0&article=58992&d=15&m=2&y=2005 Archived March 19, 2006, at the Wayback Machine.
  6. ↑ Hertog, Steffen (2010). Princes, Brokers, and Bureaucrats:Oil and the State in Saudi Arabia. Cornell University Press. p. 1. Retrieved 13 February 2015.
  7. 1 2 Hertog, Steffen (2010). Princes, Brokers, and Bureaucrats:Oil and the State in Saudi Arabia. Cornell University Press. pp. 91–4. Retrieved 13 February 2015.
  8. ↑ http://archive.arabnews.com/?page=1&section=0&article=70848&d=29&m=9&y=2005&pix=kingdom.jpg&category=Kingdom http://www.arabnews.com/news/466289/ Archived June 16, 2012, at the Wayback Machine.
  9. ↑ Ali, Abbas (Feb 2009). Business and Management Environment in Saudi Arabia. Routledge. pp. 157–160.
  10. ↑ Al-Amri, Tarad (August 29, 2014). "The Ministry of Labor has failed to meet its goals". Saudi Gazette. Retrieved 13 February 2015.
  11. ↑ Wynbrandt, James. A Brief History of Saudi Arabia. Infobase Publishing. p. 252. Retrieved 13 February 2015.
  12. ↑ Wynbrandt, James. A Brief History of Saudi Arabia. Infobase Publishing. p. 298. Retrieved 13 February 2015.
  13. ↑ Oberwetter, James C.; John Kincannon (2006-06-07). "A possible retreat on saudization?". WikiLeaks. WikiLeaks cable: 06RIYADH4543. Archived from the original on 2011-12-27. Retrieved 2011-12-27.
  14. ↑ "Saudi employment in construction sector impressive". Arab News. 11 January 2015.
  15. ↑ Tripp, Harvey; North, Peter (2009). CultureShock! A Survival Guide to Customs and Etiquette. Saudi Arabia (3rd ed.). Marshall Cavendish. pp. 208–11.
  16. 1 2 House, Karen Elliott. On Saudi Arabia: Its People, Past, Religion, Fault Lines--and Future. p. 166. Retrieved 13 February 2015.
  17. ↑ Tripp, Harvey; North, Peter (2009). CultureShock! A Survival Guide to Customs and Etiquette. Saudi Arabia (3rd ed.). Marshall Cavendish. p. 75.
  18. ↑ "People pressure". The Economist. March 21, 2002. Retrieved 14 February 2015.
  19. ↑ Tripp, Harvey; North, Peter (2003). Culture Shock, Saudi Arabia. A Guide to Customs and Etiquette. Singapore; Portland, Oregon: Times Media Private Limited. p. 122.
  20. ↑ Tripp, Harvey; North, Peter (2009). CultureShock! A Survival Guide to Customs and Etiquette. Saudi Arabia (3rd ed.). Marshall Cavendish. p. 208.
  21. ↑ "Saudization forces 212,000 businesses to close down". Arab News. 19 December 2014. Retrieved 13 February 2015.
  22. ↑ KPM Basheer (2013-03-27). "Saudi Malayalis jittery as Nitaqat deadline ends today". The Hindu. Retrieved 2013-05-08.
  23. ↑ http://www.oneindia.com/india/nitaqat-many-keralites-stranded-in-saudi-1335986.html.
  24. ↑ "200,000 firms closed down". Arab News. 2014-08-05. Retrieved 2015-02-12.
  25. ↑ Be Aware – Focus on Kingdom of Saudi Arabia. June 2012. DLA Piper.
  26. ↑ "Nitaqat system to improve employment for Saudis". Saudi Gazette. 2014-12-31.
  27. ↑ "A way-out for expats working in red and yellow category firms". Arab News. 2013-01-08. Retrieved 2013-05-08.
  28. ↑ "how will i know if the status of the company i am working for?". Retrieved 2011-07-01.
  29. ↑ "changes made in nitaqat percentage". Saudi Gazette. 2014-11-04. Retrieved 2014-11-28.
  30. ↑ "9 new activities added to Nitaqat". Saudi Gazette. 2014-11-02. Retrieved 2014-12-08.
  31. ↑ "what are the quotas of the various sectors under the system".
  32. ↑ "factors prompting the saudi Arabian government to launch the nitaqat program" (PDF).
  33. ↑ "Jobs for Saudis: Nitaqat rules tightened". Arab news. 2014-09-02. Retrieved 2015-02-12.
  34. ↑ "New phase of Nitaqat announced". Arab news. 2015-01-02.
  35. ↑ "CSC asks Labor Ministry to delay 3rd phase of Nitaqat by 3 years". Arabnews. 2015-01-07.
  36. ↑ "Saudi employment in construction sector impressive". Arab news. 2015-01-11.
  37. ↑ "86% of contracting firms have achieved Saudization quota". Saudi Gazette. 2015-01-20. Retrieved 2015-01-26.
  38. ↑ "Labor move gives firms Saudization relief". Arab News. 2015-02-11.
  39. ↑ "Saudi jobless rate down to 11.7%: Nitaqat pays off". Arab News. 2015-02-16.
  40. ↑ "Bring Saudis under Nitaqat: Investors". Saudi Gazette. 2015-02-13. Retrieved 2015-02-15.
  41. ↑ "New rule on Nitaqat calculation for Saudi workers". Saudi Gazette. 2015-02-21. Retrieved 2015-02-23.
  42. ↑ "Nitaqat status women working from home". Saudi Gazette. 2014-12-16. Retrieved 2014-12-17..regcon&contentid=20141216227636]
  43. ↑ "Saudi Nitaqat to create more jobs for women working from home". Thomson Reuters Zawya. 2014-12-16. Retrieved 2014-12-17.
  44. ↑ "More than 682,000 Saudi women say no to private sector jobs". Al arabiya. 2015-01-04.
  45. ↑ "Saudi women trainees to be counted as staff in Nitaqat". Saudi Gazette. 2015-01-15. Retrieved 2015-01-19.
  46. ↑ "Companies misuse nitaqat concession". Arabnews. 2014-12-01. Retrieved 2014-12-02.
  47. ↑ "Nitaqat is aiming illegal expatriates only". Indian express. 2014-02-27. Retrieved 2014-12-10.
  48. ↑ "Saudi Arabia regularises status of 40 lakh expatriate workers". Zee News. 2013-07-17. Retrieved 2014-12-10.
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