New ‘fairer’ Saudization rules come into force

The Ministry of Labor has begun implementing its new Saudization monitoring rules that consider a citizen part of a company immediately and not after 13 weeks, which is aimed at protecting both parties.
The new regulations came into force on Feb. 22. In addition, Nitaqat calculations would now be made over 26-week periods, according to a report in a local publication recently.
Ahmed Al-Humaidan, undersecretary for employment policies at the ministry, said the regulations were modified by taking into account public input.
He said this would encourage companies to retain their employees and ensure greater fairness to those who have done so for an extended period. It would also provide the ministry with a realistic picture of Saudization in the country.
Al-Humaidan said the new development would act as an incentive for the private sector to retain citizens. He said the Saudization over 26-week periods would be based on the database of the General Organization for Social Insurance and the National Information Center.
Under the new regulations, Saudi workers would be counted as soon as they join a private company, and withdrawn the moment they leave. This would counter the practice of some companies to hire Saudis in the last week to avoid being removed from the safe zones of the Nitaqat system.
Al-Humaidan said the new regulations would also protect companies from Saudi workers leaving, which would then affect their Nitaqat status.
The new regulations came in response to a request made by the Council of Saudi Chambers. Under the old 13-week regulations, the Saudization percentage was calculated by counting a new Saudi employee as a one-third employee in the first month, two-thirds in the second month, and a full employee in the third month.
Under Nitaqat, there are varying Saudization percentages for various industries. For example, the quota at banks employing 500 people or more is a minimum of 49 percent.
For the media sector, it is 19 percent. Commercial establishments, insurance companies and public schools also have to stick to the 19 percent minimum. For some business activities, such as lingerie shops, 100 percent Saudization is required, specifically aimed at providing employment to Saudi women. Official figures put the level of unemployment at 10 percent, but among women the employment rate could be as high as 30 percent.