Nitaqat (Ranges) is a program designed by the Ministry of Labor to boost the nationalization of private sector jobs. This direct intervention initiative aims to deliver quick results and give Saudi nationals a better standing in the labor market. The program evaluates private sector establishments based on the percentage of its Saudi work force and subsequently gives them codes: Red, Yellow, Green and Premium. Depending on the code such entities will either receive incentives — in the form of new services and facilities — or be deprived from ministry services and face punitive measures. Previous nationalization programs — dubbed “Saudization” — required all sectors to have a blanket quota of 30 percent Saudis, although only a third was achieved after many years of implementation. The new Nitaqat system, in contrast, is more dynamic and derives its nationalization quotas from the actual performance of private businesses that varies according to their line of business as well as the size of work force.
To make such quotas realistic as well as practical the ministry segmented the labor market into 41 commercial activities and further categorized companies into five sizes — according to work-force size from very small (0-9 employees) to giant (3,000+ employees). It is worth noting that very small businesses (0-9 employees) are exempted from the Nitaqat program so this leaves us with a new 164 different nationalization quotas for business entities (41 activity x 4 sizes). The program was designed so that 50 percent of the companies in any of the 164 classifications — i.e. entities that share similar size and similar type of economic activity — are in the Green and Premium zones.
Green and Premium companies will be able to hire from any part of the world, get new visas with open professions, and change professions of workers even to restricted categories, except jobs such as employment officials, receptionists, government liaison officials, treasury staff, and security officers. Premium and Green companies will be also allowed to recruit employees of Red and Yellow zones; and to transfer their visas without their employers’ consent. Yellow companies will not be able to apply for new visas, visa transfers or change of workers professions starting Sept. 10. However, Yellow companies will be allowed to renew their workers’ work permits provided they haven’t completed more than six years in the Kingdom.
Red companies will be deprived from basic ministry services such as renewal of employees’ working permits, change of profession, transfer of visas, issuance of new visas and opening files for new business branches. However, Red zone companies will be allowed to renew the work permits of their workers until Nov. 27, 2011, when the Nitaqat program will be fully implemented. Both Yellow and Red companies will in time lose control over their workers who will be allowed to seek employment at companies in the higher Green and Premium categories.
Starting from June until September all private companies were asked to update their employees’ information both at the General Organization for Social Insurance (GOSI) and the Ministry of Interior for the calculation of their national and foreign workers respectively. The period could also be utilized by Red and Yellow entities to hire more Saudis and increase their nationalization levels. The Ministry of Labor has also allowed all private sector entities to rectify their workers’ professions. The ministry provides periodic information and counseling to companies on the Nitaqat website (www.emol.gov.sa) to assist companies in conforming to the program’s guidelines.
Yes, someone is working on making an English version and hopefully in less than three months it will be up and running.
The drive to nationalize private sector jobs is not a new measure in the labor market. The ministry launched its nationalization programs in the mid 1990s. Saudi Arabia has a young population and this exerts pressure on the labor market due to the increased numbers of young Saudis coming into working age. Unemployment is a serious issue with diverse negative implications that could affect the country’s socioeconomic stability.
The Ministry of Labor recognizes and appreciates the role of guest workers in the development of the Kingdom. We understand that the new program will have direct and indirect effects not only on the guest workers inside the Kingdom but also on labor markets of all countries that send workers to Saudi Arabia.
Nitaqat is not designed to threaten the livelihood of guest workers; however, the ministry understands the cautionary perception, which many guest workers might have of the program. We believe the program is fair to all stakeholders, including guest workers. Furthermore, foreign workers can play an important role in making their current companies more stable if they start encouraging their employers in recruiting more Saudis. There will be certain change of employment preferences following the implementation of Nitaqat and some sectors will be affected by the program more than others, but even if we provide jobs for all unemployed Saudis, the private sector will still be in need of millions of guest workers.
Nitaqat’s noncompliant businesses, i.e. Red or Yellow private enterprises, are subject to restrictions including the inability to renew work permits for their workers. This does not mean that their employees will necessarily have to leave the Kingdom; on the contrary Nitaqat offers workers at Red and Yellow zone companies’ greater job mobility by allowing them to seek employment with other businesses provided that these potential employers fall within the Green or Premium zones. In addition job switching will take place without the consent of their initial “noncompliant” employer and through a regulated mechanism to safeguard the rights of workers and owners.
The ability of an employee to move from one organization to another will be effective only as of Muharram next year (December 2011) and we’re currently doing the final reviews of these detailed period and steps and relationships between when the visa expires, vs. when the work permit expires vs. when the residence permit expires, this aspect spans across the Labor Ministry and Interior Ministry. Details should be announced before the end of Ramadan. Additionally all employees will not be asked to leave the country as long as their work permit is still valid. Second, we will stop renewing work permits for expats in Red entities as of 1st of Muharram 1433. So expats working for Red entities will not be able to renew after this date, so they have to find another Green entity or Premium if they wish to renew their work permit by then. Last, for expats working in Yellow entities, they will not be able to renew after 1st of Rabie II (March 2012) so they have to find a Green entity or Premium by then if they wish to renew their work permits. Again, I am repeating, they will not be asked to leave after the above dates, so they can stay as long as their work permits are valid, but they will not be able to renew after above dates with their current noncompliant company.
Nitaqat is not designed to slam shut recruitment doors but rather to rationalize the issuance of recruitment visas which has soared in the past years due to robust public sector spending on infrastructure projects and the subsequent expansion of the private sector. The ministry believes that there is an oversupply of labor in the market and that what people have come to term as “loose labor” is living proof that such rationalization steps should be taken. Nitaqat program encourages internal recruitment as an alternative, especially since internal recruits usually have better work experience and more local knowledge compared to fresh recruits.
The ministry cares about, and protects the interest of, private sector workers whether they are local or foreign. While Nitaqat comes to cater for national labor, the ministry has new initiatives for guest workers in the pipeline. Before year’s end, the ministry will announce a number of new regulations, programs and services for guest workers. This will include a new framework for recruitment agencies, wage protection system, mandatory insurance policy for domestic labor, and emergency 24/7 multilingual hot lines for complaints.
The new recruitment agencies will handle the hiring of foreign workers and become responsible for providing a proper work environment, ensuring foreign workers’ financial well being, and rights. In parallel, the ministry is working to establish a direct hotline service in multiple languages to provide information, assistance and help to foreign labor. These two initiatives are of particular importance for domestic and low-skilled workers. A service offered to domestic labor in its first operational phase. The ministry is also developing an electronic system for wage protection. The new system will ensure that salaries and wages are duly paid, hence reducing potential labor disputes and disagreements.
Nitaqat has the potential to introduce much-needed market adjustments to enhance the efficiency of the private sector. The program aims to increase the share of national work force in the private sector and amend the imbalances of the labor market’s work force ratio where national labor constitute only 10 percent of the private sector’s eight million workers. These levels are unacceptable especially since unemployment is estimated at 12 percent and tends to exponentially rise due to a young population and the gradual increase in the number of job seekers. Apart from increasing the number of national workers to economically sustainable levels, Nitaqat will have other implications on the local labor market such as accelerate women’s employment, training for job seekers, establishing minimum wage and creating healthier work environments for employees.
The program is dynamic and can be further developed and enhanced. The ministry officials have met with, and listed the concerns of the labor market’s stakeholders from the program’s design stage. The program has also taken social and humanitarian factors into consideration, for example foreigners married to Saudi women as well as children of Saudi mother will be counted as a Saudi equivalent in the new job program. The ministry is currently reviewing other wider social considerations.
The objective of any program design is to offer creative and feasible solutions and to minimize glitches and problems and Nitaqat works according to these parameters. We are neither claiming that Nitaqat is the sole remedy for unemployment nor have we said that it is a rigid nonadjustable program. We hope to create a public consensus over the importance of job nationalization with job owners, workers, job seekers, media and other government and nongovernmental bodies. We have to understand that investing in the future of Saudi youth pays back. Providing nationals with decent job opportunities means more demand on products and services which in turn leads to a robust economy.
Well, the labor law articles are being studied in depth. We’ve asked the chambers of commerce to give us all their concerns and to raise their points like the ones you’ve suggested i.e. the case of terminating Saudis and many other concerns that they had. We’ve asked the labor committees representing employees’ views to see what their concerns are. Also other government committees were formed, headed by HRH Prince Naif, which led to recommendations which were then issued as part of a royal decree that was directed to us to review some articles — for example working hours, minimum wages. All of these topics are being currently reviewed in detailed sessions. I hope we’ll be able to finish our reviews soon. And then as you know these are not internal regulations in the ministry, these are regulations at a country level so they would have to go through the proper due process.
I’d asked a Nitaqat committee to specifically look into it. International schools have been given very low Saudization requirements: 10 percent for small schools (49 employees and below), and 15 percent for bigger schools. These percentages do not necessarily mean teachers! Schools could choose to have 100 percent expats teachers while hiring Saudis in other jobs to achieve the required Saudization such as accountants, etc. The international schools that belong to embassies by definition would need to be treated differently. The dynamics keep on evolving and changing that’s the promise of Nitaqat.
The beauty of Nitaqat is that it promises to be realistic, practical and fair. One of the comments shared in all the presentations I’ve made to the different chambers of commerce that previously we had 13 economic activities for which there were only 4 or 5 regulations governing them. Now currently we’ve divided the job market into 41 economic activities, and each activity was divided into 5 categories based on size leading us to 205 sub segments and for each one of these sub segments we have now 4 levels of regulations. So we moved from 3-4 to about 750. But that’s not the end of it. Those of you who work in particular industries which let’s say have very special characteristic that makes it very difficult to employ Saudis, collect your views with other people working in the same category, organize it through the chambers of commerce and submit it to the Labor Ministry. And we’ll probably create a new sub category for you and make new regulations for you.
In Arab News’ Thursday print edition, a front page article “To Survive, Companies Hiring Unqualified Saudis” talks about Red and Yellow zoned companies rushing to modify their statuses by employing unqualified Saudis or by the ‘fictitious employment of Saudis.’ What’s your response to this?
The headline here talks about unqualified Saudis and this is the best thing I heard because I really believe that the best way for Saudis to become qualified is for them to work. I don’t believe you have to have qualified Saudis first and then you have to employ them. The best qualification is experience, it is getting a job and being mentored and helped by some experienced person who knows the job so I’m not worried about that. The thing that will minimize the so called fictitious Saudization is that now as of Muharram next year we will start paying ‘Hafiz’ support to job seekers, a welfare program approved by the king with an allowance of SR2,000 per month. So if you are a Saudi and the government will pay you SR2,000 until you get a job you will not ‘sell’ your name to an organization for a few hundred riyals just to fix their problem cause this will make you ineligible for ‘Hafiz.’ So this welfare program that will be running in parallel will work as a balancing act. It will make it more difficult to find those willing to sell their names. Most reasonable business people will not pay people SR2,500 or SR3,000 then have them stay at home. They will turn the unqualified person, he or she, to a qualified person through working. Well then, that’s good news.
Job seekers: My advice to them is don’t be too picky about your first job. What matters is that if you find a serious employer who is going to give you meaningful work, even if the salary level is not good if you stick it out and work hard, you’re going to be making good of your time and sooner or later you’re going to get your worth in the market. And we’re actually supporting this advice by the public service announcement (PSA) where we’ll be showing via news, press, TV real life role models of those who accepted to start working for SR1,000-2,000 and now they’re making five or six times as much only few years later.
To those currently working my advice is let’s do our best, continue working harder to prove we’re getting our jobs because we’re worth it and not because we’re Saudis. We’re adding value.
To employers: I’d say many of us have made it. Nitaqat is based on a realistic assessment of the market we have no excuse not to be able to reach the Green zone because it has been achieved by 50 percent of your category, of your size, of your sub economic activity. It is a very realistic expectation and you should deliver.
To our guest workers: This is not meant as a program against you but you should understand that our duty first is to our own nationals. It makes no sense that a country employs six million foreign workers and its own nationals are searching for jobs. You don’t find this anywhere in the world. You have a role in Saudization too because if you work well in training Saudis, in attracting and retaining Saudis you’ll help your company move to Green, therefore you maintain your ability to continue and renew your work permit. This strategy was designed so that all of us will work together, and synchronize ways to achieve a goal in which all of us become winners.
