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SAUDI ARABIA – Stricter Saudization Targets

Effective 3 September 2017, the Ministry of Labour and Social Development will implement a new version of its Nitaqat grading programme for companies, meaning stricter Saudization requirements for businesses.

What is Changing?

Under the new version of the Nitaqat system, which grants firms with higher ratios of Saudi workers preferential treatment, much higher percentages will be needed to qualify for the higher categories.

A list of the industries and percentages can be found here.

The new Saudization matrix is complex, with companies ranked into six bands from Premium, High Green, Medium Green, Low Green, Yellow, and Red, and grouped by industry sector and company sizes of Giant, Big, Medium (A, B, or C), and Small. Saudization levels – the percentage of the company’s workforce consisting of local workers – are then set at various levels based on the industry and size of the company.

Nitaqat will apply to businesses with more than six employees (previously it was more than ten).

Currently, all companies in any of the Green bands – High, Medium, or Low – are given access to the block visa scheme. Under the new rules, only companies ranked in the Platinum and High Green bands will be eligible to apply for “block visas.”

Companies that fall below these two highest Nitiqat bands will be limited to filling positions with foreign workers already in the country with valid work authorization. The company needing the foreign worker will have no other option but to recruit the foreign worker away from another company and submit a transfer of sponsorship application to have their work authorization transferred.

As the block visa is the principle route for companies to bring needed foreign labor to Saudi Arabia, this will place tremendous pressure on companies to ensure that they maintain the applicable Saudization levels so as to qualify for the Platinum and High Green bands.

What is Nitaqat?

Nitaqat is a program of Saudization, to increase employment of Saudi nationals in the private sector, which was first introduced in 2011, giving companies privileges, requirements, or limitations in the visa process for their foreign workers based on the percentage of their workforce made up of Saudi nationals.

The Saudization drive is part of the ambitious Vision 2030 plan of broad-based reforms designed to develop new business sectors, diversify the economy away from oil dependence, and create more local private sector jobs. Ninety percent of the private sector jobs in Saudi Arabia are held by foreign nationals, and the local unemployment rate has now risen above 12 percent. Vision 2030 aims to reduce of local unemployment to under seven percent by 2030.

In the summer of 2016, it was proposed that a new ‘balanced Nitaqat’ would be introduced where organisations would effectively be given more credit for employing Saudi nationals into senior and well-paid positions and for employing female Saudi nationals. However, implementation of “balanced Nitaqat” has been postponed.

Action Items

  • Employers in Saudi Arabia should check their compliance with the forthcoming new requirements.
  • Employers should consult an immigration specialist for advice on compliance with Nitaqat requirements.

This news alert was prepared using information provided by Proven.

Peregrine, a CIBT company, builds software and provides consultancy and training for global immigration management.

Newland Chase, also a CIBT company, provides specialist immigration services worldwide.

CIBT is a world leader in short-term outbound visa requirements for expats and businesses.

DISCLAIMER: The information contained in this immigration alert has been abridged from laws, court decisions, and administrative rulings and should not be construed or relied upon as legal advice. If you have specific questions regarding the applicability of this information, please contact Peregrine © 2017 Peregrine Immigration Management Ltd.