Officials say Saudisation push is working

Statistics centre says figures show a steady decline in the number of unemployed Saudi nationals since the Nitaqat programme was introduced

Saudi labour minister HE Adel Fakeih. It appears the country's Saudisation push is working. Image: Getty.
Saudi labour minister HE Adel Fakeih. It appears the country's Saudisation push is working. Image: Getty.

Unemployment among Saudi nationals has shown a steady decline since the introduction of the Nitaqat or Saudisation programme, according to figures released by the Central Department of Statistics and Information (CDSI).

The Saudi government introduced the programme in 2012 in an effort to get more nationals into private sector employment. The system requires companies to employ a quota of nationals, with numbers varying depending on the size of the company and the sector in which it operates.

Figures show that the unemployment rate for men and women in the country has dropped from 12.2% in early 2012 to 11.6% by the close of 2014. Based on CDSI’s estimates on the country’s population of Saudis, the department put the total number of unemployed Saudis now at 650,000, including 258,000 men and 392,000 women.

The Ministry of Labour is due to introduce the third phase of its Nitaqat programme in April – but business leaders have asked authorities to delay the move. 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. Some firms are facing a considerable jump. In the wholesale trade sector, percentages will more than double, from 29% to 66% in larger firms.

Saudisation in the construction sector has jumped 34% over the past 12 months, official figures state

Ibrahim Batterjee, chairman of the industrial committee at the Jeddah Chamber of Commerce and Industry (JCCI) last month said: “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 in January senior Saudi business leaders asked the Ministry to delay the introduction of the third phase by at least three years. In a letter to the Ministry, the Council of Saudi Chambers 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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