Nitaqat opens chance to develop local resources

Saudi Arabia is currently witnessing a dramatic change in its labor landscape in the wake of its Nitaqat program with the exodus of illegal foreign workers taking advantage of the second amnesty, which ends on Nov. 3.
While this has created a challenge in the short term, the long-term impact presents an excellent opportunity for the Kingdom to develop its own human capital.
So far, 600,000 jobs have been nationalized, Labor Minister Adel Fakeih told a dialogue workshop in Jeddah recently.
However, despite Saudi Arabia’s initiatives to ensure better employment rates among its nationals, there’s still a deficiency in the local market which affects the Kingdom’s “competitiveness” in the global arena.
The latest World Economic Forum report shows Saudi Arabia ranks 70th, out of the 148 countries analyzed in terms of labor efficiency in the Global Competitiveness Report release in Sept. 3.
“This rather disappointing status comes despite the Kingdom’s Saudization program, Nitaqat, which aims to offer job opportunities to nationals and demands that companies operating in the Kingdom hire certain number of Saudi employees to be determined in accordance with the company’s size,” Al-Arabia English said in a report.
Since its introduction in 2011, Nitaqat has increased the number of nationals employed in the private sector, said Khaled Al-Reesh, a Saudi economist.
He, however, said that the private sector was not accepting as many Saudi nationals as the government had hoped.
According to Al-Reesh, companies in the private sector “were not given enough time” to adopt and implement the Saudization regulations and are using several means to “manipulate the program and get out of the red zone and into the green zone.”
The Nitaqat program categorizes companies into two zones based on their compliance with the program.
When a company falls into the red zone, it is barred from obtaining licenses and completing other procedures vital to the operations while companies in the green zone are considered compliant and can run as usual.
“Some private sector companies are manipulating the system by registering Saudi family members and relatives — not real employees — to reach the minimal percentage of national employees set by the Ministry of Labor,” Al-Reesh added.
Saudi Arabia has dropped two positions on the Global Economic Competitiveness ranking over the past year. It currently ranks 20th in the 2013-2014 report, falling from the 18th position in the 2012-2013 report.
Competitiveness is defined in the report as the set of institutions, policies and factors that determine the level of productivity in a country.
It goes on to state that the labor market inefficiency continues to impact negatively on the Kingdom’s overall economic competitiveness.
On a regional level, Saudi Arabia ranks third in economic competitiveness, after Qatar and the UAE. Saudi Arabia continues to be “rather stable” despite the slight drop, according to the report.
The inefficiency in the Saudi labor market is allegedly a symptom of the country’s “inadequate” education system, Al-Arabia quoted an official as saying recently.
“A fair knowledge of the English language and computer skills have become one of the minimal requirements to produce work, but varound 80 percent of Saudi job seekers cannot efficiently communicate in English,” said the official who requested anonymity.
He also said that there is an “inherited methodology,” leading many Saudis to prefer employment in the public sector over the private sector.
Al-Reesh said: “Many believe that there is more job stability and long-term guarantee of work in the public sector than in the private sector.”
He added that there is a very low turnover rate for employees in the public sector, “except if the employee has stolen from the organization, or committed a major scandalous mistake.”
According to the report, labor market efficiency is one of the 12 pillars on which an economy’s competitiveness is measured.
Other pillars include efficiency of institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, financial market development, technological readiness, market size, innovation, and business sophistication.
Giving additional information, the report said Saudi Arabia ranked 48th globally in terms of higher education and training institutes, with numerous universities conducting research on a regular basis.
The Kingdom also came 41st in terms of ability to adopt new technological advancements.
The report said Saudi Arabia is among the 20 economies currently in a transitional phase between factor driven economies in which growth is driven by the infrastructure, health and education sectors.