In a bid to offer more jobs to Saudi-born workers, new rules are to be introduced in October this year. The Nitigat system, better known as the Saudi Nationalization Scheme, has been the brain-child of the Saudi Arabian Ministry of Labour. It aims to provide incentives to those companies that are meeting the required targets for Saudi employees while penalizing those who fail to meet the criterion.
The system rates companies on a ‘traffic-light’ scheme – classing them as either red, yellow or green depending on the ratio of Saudi workers to expats from abroad. There is also a ‘blue’ class of company also known as ‘VIPs’ which are essentially exempt from the scheme. How an individual business is categorized can greatly affect its ability to apply for visa and work permits for their employees, so being downgraded can have serious consequences.
The system has broadly been in place since June 2011, and requires companies to offer up to 30% of their vacancies to Saudi nationals. However a rift is now appearing between the Ministry of Labour and local business owners as further penalties are introduced for non-compliant companies.
While the government seems to believe that further incentives are needed to encourage companies to meet their exacting standards, many companies claim they are already doing all they can to increase their Saudi workforce and that the new penalties will simply make them struggle even further.
As of October, those companies rated as ‘yellow’ or below will only be able to apply for short term visas for their staff. While the goal is no doubt to clear the way for native workers, local business owners are resisting the policy change due to the potential fallout. Visas of just 4 months in length will see expat workers arrive on a short term contract before moving off soon afterwards – and taking all their precious skills and experience with them.
In many industries, skilled Saudi workers are tremendously difficult to come by, leading many businesses to have their rating downgraded despite their best efforts to recruit local talent. They claim their only option at present is to hire from overseas. Now that option may be drying up thanks to the new policy changes and many companies now claim that their very existence is in jeopardy.
With existing workers having to leave the country sooner, the money invested in recruiting and training them seems to make ever less financial sense. At the same time, HR departments around the Kingdom look on fearfully, wondering how they will make up the shortfall without relying on expat workers.