Nitakat, another name for Saudiization, is a nationalization initiative by Saudi Arabia that obliges employers to hire more Saudi nationals in order to increase employment growth and reduce unemployment. The Ministry of Labor and Economic Development of Saudi Arabia started doing this in 1985, and during the last five years the process has become more active.
The Reason for and Development of Saudization
By giving Saudis greater work opportunities rather than foreigners, Saudization seeks to address the issue of unemployment. The Ministry of Human Resources and Social Development will introduce new legislation in 2023 mandating a minimum percentage of Saudi workers for specific industries.
For instance, by December 24, 2023, project management firms must employ 35% Saudi Arabians, and by December 12, 2024, this percentage must rise to 40%. These laborers must also receive a minimum of SR6,000 per month in compensation.
What challenges does Saudization have while applying for jobs in the area?
Businesses are opposing Saudization, a concept intended to increase employment opportunities for Saudi citizens, due to a number of significant challenges. As a result, companies are now looking for methods to get around the policy’s restrictions. Employing Saudis for physical labor or service-related occupations is a major issue; local candidates are hard to come by for these roles. Therefore, if you want to find a job in this country while staying abroad, there are still chances. Try using job search websites like Layboard.
The Nitaqat System and the Saudization Cert
A sort of report card for businesses, the Saudization certificate indicates how effectively they are adhering to the regulations. In the meanwhile, the Nitaqat system assigns a company’s number of Saudi Arabian employees to one of several classifications, such as “red” or “platinum.” The benefits or penalties that businesses receive are impacted by this classification.
Overview of the Nitaqat System
Launched in 2011, the Nitaqat system puts companies into groups depending on how many Saudi employees they have and the total number of workers they employ. This sorting has a big effect on the rewards or punishments these companies get.
Rewards and Consequences
The goals of Saudization are in fact confirmed by the Ministry of Human Resources and Social Development’s new laws. Employers in specific industries are mandated to increase their Saudi workforce and to provide them with a minimum monthly salary. They may face penalties, such as the employer terminating their job and immigration services, if they break these regulations.
Saudization Challenges and Way Forward
The challenges are still a big issue, especially because Saudi workers want better working conditions compared to workers from other countries. Saudization is struggling to find the right balance between improving living conditions and its main goal of reducing unemployment.
But it is difficult to get Saudis to agree to manual labor and service jobs, as many locals are not interested in this. Therefore, expats can still count on these types of jobs: https://layboard.in/vacancies/jobs-in-saudi-arabia/speciality/waiter
Automation and working conditions
Since Saudization, it has been more challenging to promote improved technology and make work more comfortable. Because of this legislation, companies that previously paid foreign workers cheaper wages and less favorable working conditions are unintentionally discouraged from utilizing more machines. Consequently, companies are taking longer to implement new technology and make workplaces better for all employees.
Effects of Saudization on Expatriates and Dependents
Since 2017, when a tax on dependents of expatriates was introduced, there has been a discernible decline in the number of expatriates. This shift demonstrates how the Saudi labor force is being significantly impacted by saudization. This regulation limits the number of jobs available to foreign workers by limiting some positions to Saudi natives only.
Concerns regarding job security are growing as more foreign workers are losing their positions to local contenders. Since March 2020, some industries—like dentistry—have only employed Saudis. Saudi Aramco’s 2020 goal of 90% Saudization demonstrates the government’s larger initiatives. The effect on foreigners is evident and emphasizes the significant adjustments that the Saudization strategy in 2023 brought about.
Progress of Saudization and Prospects for the Future
In spite of the difficulties, Saudization has shown signs of development, especially in industries like manufacturing, retail, transportation, and construction. Positive advancements are evident as Saudi Arabia’s employment growth is surpassing that of other nations.
2023 Saudization Initiatives
The Ministry of Social Development and Human Resources recently decided to set the Saudization rates for each enterprise for the following two years. Project management, procurement, and sales professionals are subject to required minimum pay and higher Saudization rates.
Misuse of Nitaqat and Corrective Actions
The Ministry of Labor is keeping a careful eye on this practice due to concerns about its overuse, especially when it comes to abusing individuals with disabilities to raise the amount of Saudization.
Saudization: A Last Word
To sum up, saudization is still a complex strategy with noble objectives and continuous difficulties. Its long-term viability depends on striking a balance between the objectives of nationalization and the real-world requirements of the industry as it changes in accordance with the most recent updates from the Ministry of Human Resources and Social Development. Together, politicians, businesspeople, and expatriates mold the story of Saudization and determine how it affects the Saudi economy.
