FAQ

FAQ on the NITAQAT System of the KSA

What is the NITAQAT?

Arabian for “ranges,” the Nitaqat is an incentive program designed by the Ministry of Labor of the Kingdom of Saudi Arabia (KSA) for the nationalization of the private sector workplace. This is to answer the growing youth unemployment among Saudi citizens, which is higher than every country in the Middle East and North Africa (MENA) except Iraq.  Ironically, KSA employment is dominated by foreigners in the ratio of nine in every ten employees.  Although the private sector has been creating jobs, they do not go to Saudis.

The government’s goal is to succeed in creating 1.12 million new jobs for Saudi nationals by 2014, or 92 per cent of all new jobs created, as set out in the current development plan.

 

How does the National Policy work?

Under the new Nitaqat system, companies will be labelled as “blue or premium”, “green”, “yellow”, or “red” depending on the level of Saudi workers in them to comply with established workers. It assigns different nationalization rates according to the size and activity of companies, so smaller companies have smaller overall quota requirements than larger ones do.

This scheme will also level severe penalties on violators and offer incentives and quotas to firms meeting the quotas.

 

What are these categories?

In the Blue or Premium Category, many companies have achieved more than 30 per cent nationalization. If classified under this, the companies will…

  • Can recruit foreign workers and do not apply for such visas more than once every two months
  • Can new visas with open professions through the electronic system
  • Can change professions of their workers even to those restricted to Saudis, except jobs such as employment officials, receptionists, government liaisons officials staff, and treasury workers
  • Can get the transfer of visas of employees from other companies, without fulfilling the condition of completing two years with the first employee
  • Can recruit employees in the red category and transfer their visas without the permission of their employer
  • Entitled to getting a one-year respite if their municipal and professional licenses or commercial registrations are expired

 

Majority of the companies fall under the Green Category, which are entitled to the following:

  • Can apply for new visas once every two months
  • Can change professions of foreign workers except to those restricted to Saudis
  • Entitled to one visa for every two expatriates gone on exit-only visas.
  • Allowed a six-month grace period after the expiry of their zakat and revenue certificates.
  • Allowed to renew work permits of their workers but their iqamas should have a validity of at least three months at the time of renewal
  • Allowed to recruit employees in red and yellow categories and transfer their visas without the permission of their employers

Under the Yellow Category, the following will be the punishments and incentives of the companies:

  • Given nine (9) months to improve the status by hiring more Saudis before facing punitive measures
  • Will be allowed to get only one visa after the departure of two expatriates
  • Will be allowed to renew work permits of their workers, on the condition that their workers should not have completed more than six years in the Kingdom
  • Will NOT be able to apply for new visas from September 10, 2011
  • Will NOT be able to  transfer visas and change professions
  • Will NOT have any control on their workers as they would be allowed to movie companies in higher positions

 

Red Category companies often have fewer than 10 per cent Saudi nationals working for them and in many cases less than 5 per cent. They would be…

  • Given nine (9) months to improve the status by hiring more Saudis before facing punitive measures
  • Will NOT  be able to hire new foreign labor
  • Will NOT be able to renew their foreign workers’ visas
  • Will NOT get new licenses or renew their licenses

 

What are the quotas of the various sectors under the system?

According to the Arab News (2011), some of the percentages of the Saudi nationals that must be employed according to the Saudization program in the different sectors are:

  • Banks that employ 500 or more people – 49%
  • Media, commercial establishments, insurance companies, public schools – 19%

Some job companies do not have quotas, while others are reserved exclusively for Saudis, such as the 100% Saudization of shops selling women’s clothing.

An examples of percentages under the Nitaqat Nitaqat for companies with workforces ranging from 50 t0 499 people can also be viewed here NITAQAT1

The classification of the employment sectors and criterion of colouring system for private companies working in the respective sectors and required Saudization percentages are given here. (link to http://advshiyas.blogspot.com/2011/06/nitaqat-percentage-of-new-saudization.html)

 

How will I know if the status of the company I’m working for?

It is said that companies would be able to know their position by visiting the ministry’s website at www.mol.gov.sa.

Why is it important to study the NITAQAT system?

Although the Ministry of Labor has stated that “the Nitaqat system is not designed nor intended to threaten the stability of guest workers in the Kingdom,” such nationalization policy will force a considerable impact to OFW families.

According to the POEA, Saudi Arabia had been the top one receiving country of OFWs from the year 1984 to present, with OFWs sending home almost $1.5 remittances last year. Primarily, with the Saudization policy, the jobs available for our OFWS will be curtailed, thus remittances are bound to fail and thousands of OFW families are left without an economic support system. On the other hand, for those who are already well-established in the country, the mobilization of those employed under “yellow” or “red” agencies will occur, which could possibly benefit the OFWS.

Although the Saudization is admittedly complex, it is important for our own government, the private and NGO sectors, as well as the OFW families, take a long, good look at the implications of this policy.

 

 

SOURCES

Arab News (2011, June 13). Labor Ministry outlines Saudization percentage. Arab News on the Web. Retrieved June 14, 2011, from http://arabnews.com/saudiarabia/article454198

Kunjibava, S. (2011, June 13). Saudization – “Nitaqat” – Percentage of New Saudization Program in Different Sectors – Saudi Labor Law. Expat Corner. Retrieved 1 July, 2011, from http://advshiyas.blogspot.com/2011/06/nitaqat-percentage-of-new-saudization.html

Sfakianakis, J. (2011, June 15). New Employment rules to shake up Saudi private sector. Arab News on the Web. Retrieved June 22, 2011, from http://arabnews.com/saudiarabia/article454902

Wahab, S. (2011, June 11). Labor Ministry outlines details of Nitaqat program. Arab News on the Web. Retrieved June 11, 2011, from http://arabnews.com/saudiarabia/article452690