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Saudi Arabia – Calls to delay Saudisation as quotas too difficult to meet

30 January 2015

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

Under the next phase of the Nitaqat programme, due to start 20 April 2015, 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, for example, the ratio will more than double, from 29% to 66% for 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,” Mr Batterjee said. “[But] 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.”

Earlier this month senior Saudi business leaders 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 Council of Saudi Chambers (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 1,409 men and women attended interviews for 3,000 positions during a recent job fair organised by the Riyadh Chamber of Commerce and Industry.

“Some of the jobs offered a monthly salary of SAR 15,000 (USD 4,000), while many companies were giving two-day weekend,” the CSC statement 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 closed. 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.

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.

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.