What is Saudization?
Saudization is an important element of business to get right in Saudi Arabia writes Osman Qureshi, Director of Business Support Solutions at Proven SA
Previously Saudi Arabia relied heavily on expatriates to fill the workforce, however, with currently over half the Saudi population below the age of 35, the Saudi government are looking to increase the number of nationals in the workforce. The Saudization program aims to lower the current employment rate of 12% to 7%.
Saudization is an essential part of managing your business in Saudi Arabia, however many companies can struggle to understand and remain compliant so they can maximise on the advantages that come with successful Sadization.
What is Saudization?
Saudization is the Saudi nationalization scheme to increase the employment of Saudi nationals in the private sector. Saudization aims to give Saudi nationals a fair opportunity in the private market and reduce the reliance on foreign workers.
What is Nitaqat?
Nitaqat is a program of Saudization, to increase employment of Saudi nationals in the private sector. Nitaqat uses a rating system, by classifying companies into four zones; platinum, green, yellow and red. Compliant zones are; platinum and green and non-compliant zones are yellow and red.
How does the colour zoning system work?
The compliant zones, platinum and green, obtain certain benefits, that the other zones do not. These benefits include; being able to obtain and renew work permits for foreign employees through an expedited online process, they are able to change the profession of a foreign employee and are allowed to hire employees from red and yellow zoned companies without approval from the current employer.
Yellow and red zoned companies have limitations to their business operations as a result of non-compliance. Yellow zoned companies are only allowed to renew visas for employees that have stayed in Saudi Arabia for less than 2 years. Companies that fall under the yellow zone are also not permitted to apply for new work visas, as well as issue new work permits.
Companies in the red zone have the most restrictions; they are unable to hire new expatriate employees, renew work permits, or open a new business or branch in Saudi Arabia until they have improved their Nitaqat rating. Yellow and red zoned companies also forfeit their authority to give permission to their employees to change employers in Saudi.
How to remain compliant with Saudization?
Knowing the requirements for your company industry and size are essential to remaining compliant as each have different requirements. A list of industries, sizes and their respective Saudization requirements can be found here.
Other methods to remain compliant include:
- Forecast Employees and Company Requirements
Companies can forecast their recruitment requirements for the next 1-3 years to allow for business growth, whilst remaining compliant with Saudization levels.
- Saudi workforce gap analysis
Performing a gap analysis allows you to analyse the current Saudi workforce and the current job openings in your company and then implement a strategy to achieve your Saudization goals. Throughout the analysis, consider the skills, knowledge and experience that the organization requires, and those in the Saudi workforce that possess these skills.
- Developing Saudi workforce retention initiatives
Companies also need to have a strategy to retain their Saudi employees and the best way to do this is by providing an engaging work environment, job performance appraisals, professional development opportunities, a competitive salary, employee benefits and reward management.
Operating effectively in Saudi requires companies to be informed and up-to-date with current regulations. Saudization is an important factor for businesses in Saudi and when compliance is achieved, the incentives that come alongside are beneficial and advantageous. Your Saudization strategy should be tailored to your company and position yourself for current and future success in the Saudi market.
For support in creating a bespoke Saudization plan for your company or in remaining compliant, contact Proven on +966 411 1127 or info@proven-sa.com.