KSA business leaders want Saudisation delayed
KSA Council of Saudi Chambers asks Labour ministry to push Nitaqat programme third phase back three years
Senior Saudi business leaders have asked the country’s Labour Ministry to delay the introduction of the third phase of its national Saudisation programme.
Nitaqat, or Saudisation, was introduced in 2012 to help drive up the percentage of Saudi nationals employed in the private sector. The third phase of the programme was due to be launched in April 2014 and would require companies to employ a greater number of Saudis.
Percentages vary depending on the type of business and size of the company. Under the programme’s third phase, The Labour Ministry wants downstream industries to raise the Saudization rate from 25 percent to 41 percent, big retail and wholesale firms from 29 percent to 44 percent and other big commercial establishments from 29 percent to 66 percent. It also wants SMEs to increase the number of Saudi workers gradually within a timeframe.
But the Council of Saudi Chambers has asked the Labour Ministry to delay Phase 3 by at least three years.
In a letter to the Ministry, the CSC said, “The raising of Saudisation percentage should be carried gradually within a timeframe of not less than two to three years.” The CSC said that despite a strong advertising campaign, only 1409 men and women attendedinterviews for 3000 positions during a recent job fair organised by the Riyadh Chamber of Commerce and Industry.
“Some of the jobs offered a monthly salary of SAR15,000 (USD4000) while many companies were giving two-day weekend,” it added.
The system has been hit with issues since its introduction, and in August last year it was reported that 200,000 firms in the Kingdom had shut up shop. While officials say many of those companies were illegal cover-up businesses, or companies flouting residency and labour laws, experts say that there is a reluctance by some Saudis to enter the private sector.
Last November Muamar Al-Atawi, the head of the contracting committee at the Jeddah Chamber of Commerce and Industry (JCCI), said the industry has been “shocked” by the programme, which demands at least 12% Saudisation in the sector.
Since the introduction of the Ministry of Labour regulations, the Saudi construction industry in particular has struggled with the demand to employ nationals, with many business leaders concerned that the targets are not achievable within the timescale demanded.
“Saudis will not work in lower level jobs in this sector even if we double the salaries,” Al-Atawi told Saudi Gazette on the sidelines of the Human Resources Forum in Jeddah on Sunday (16 November). Only computer related jobs can be Saudised, he added.
“The ministry is trying to increase the cost of employing expatriates,” Al-Atawi continued. “They believe this will result in employing more Saudis. This cannot be applied to this sector, at least in the short run. This will only add more cost on contracting companies, which will lead to increased prices.”
According to officials attending the forum, the Kingdom has over 269,000 contracting companies, a majority of which have only nine or less Saudi employees.
Speaking at the first session of the forum, Ali Al-Othaim, the head of the National Committee for Young Businessmen, said the Kingdom is the fourth country in the world in terms of recruiting from outside its borders. Over 85% of workforce in the labour market is non-Saudi, he said.
The forum heard that, while unemployment among Saudis dropped from 12.1% in 2012 to 11.7% in 2013, the number of private sector companies dropped from 1.98 million to 1.78 million in the same period.
Al-Othaim said the drop in the number of companies has sharply affected small businesses adding that over 190,000 small companies have left the market last year. Such companies had at least 10 employees, mandating them to hire at least one Saudi on a minimum salary of SAR 3,000 ($800).