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Saudisation quotas 'difficult to meet' say experts

Official says lack of qualified Saudis will make meeting ambitious Nitaqat third phase targets almost impossible

The construction industry faces a challenge in recruiting enough qualified workers under KSA's employment laws.
The construction industry faces a challenge in recruiting enough qualified workers under KSA's employment laws.

Business leaders in Saudi Arabia say targets set by the Ministry of Labour under the third phase of its ambitious push to get more nationals into private sector employment are going to be tough to meet.

Under the next phase of the Nitaqat programme, due to come into play on April 20, the number of Saudi nationals companies are required by law to employ will rise steeply. While ratios vary from sector to sector, and are based on the number of people employed and the size of the company, some firms are facing a considerable jump. In the wholesale trade sector, percentages will more than double, from 29% to 66% in larger firms.

Ibrahim Batterjee, chairman of the industrial committee at the Jeddah Chamber of Commerce and Industry (JCCI) told Arab News: “The ministry’s announcement has caused deep concern among companies because of a lack of qualified Saudi workers to fulfil the Nitaqat conditions during the specified period.”

“We understand the ministry’s desire to increase the Saudisation rate to accommodate new Saudi graduates from universities and technical institutes,” Batterjee said. But, he said, the ministry must take into account the reality out in the market.

“The market does not have an adequate number of qualified Saudi hands to fill industrial jobs. Private companies do not attract enough Saudi workers when they advertise to fill vacancies, even after offering good salaries and benefits,” he said.

Earlier this month (January) senior Saudi business leaders have asked the country’s Labour Ministry to delay the introduction of the third phase 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 said. “The ministry is trying to increase the cost of employing expatriates. 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.”

Official figures show that over 85% of workforce in the labour market is non-Saudi. Unemployment rates among Saudis dropped from 12.1% in 2012 to 11.7% in 2013 while 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. Such companies had at least 10 employees, mandating them to hire at least one Saudi on a minimum salary of SAR 3,000 ($800). That move, for many, was simply a push too far.

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