Understanding Saudization

Omer Zakaria, Manager

Currently working in or planning to work in Saudi Arabia? Then you need to know how Saudization may affect your chances and learn what it means for foreigners in Saudi Arabia.

Omer Zakaria, Manager of Saudi Arabian recruitment at Robert Walters, explains the impact of Saudization on expats.


 

What is Saudization?

Saudization is officially known as the Saudi Nationalisation Scheme or Nitaqat, a policy implemented by the Ministry of Labour, whereby Saudi companies are required to hire Saudi Nationals on a quota basis.

Saudization is not a recent policy. The campaign has been ongoing since 1985. However, over the last 5 years the Saudi government has made certain roles exclusively for Saudi Nationals. Saudi nationals make up 63% of the 32 million people who live in Saudi Arabia, the 2017 figures released by the General Authority for Statistics (GaStat) show that the total population increased by 2.52 per cent over 2016 when the kingdom was home to almost 32 million Saudis and foreigners.

How is the government facilitating the transfer of skills to locals and investing in upskilling locals?

Whilst the authorities have reserved a total of 72 professions exclusively for Saudi Nationals many of these are junior roles.  However, the list does include human resources roles, jobs associated with labour affairs, certain sales specialists and some finance roles.

The shortage of skills is seen to be in the more technical roles reserved for engineers, architects, IT specialists and healthcare practitioners. This has led to the Saudi Arabian government implementing new eligibility requirements on its multibillion-dollar scholarship program for young Saudis who want to study for university degrees abroad.

If you are approached for a role you feel maybe reserved for a Saudi National the best course of action is to ask the employer if they have a visa (Iqama) for a non-Saudi.

Are all industries affected by this change? If no, what are the key industries and why?

The ministry has nationalized 4 out of 12 activities in retail and wholesale sectors. The four activities that were nationalized includes car and motorbike showrooms, shops selling ready-made garments for men and children, home and office furniture shops and shops dealing in home appliances for example.  They are very specific, so it is best to visit http://saudigazette.com.sa/article/542169 to get a comprehensive list in English.

What impact does this legislation have on business owners?

The new rules laid down in the governmental strategy have given companies fresh challenges to tackle, with organisations finding themselves barred from hiring more expatriates but unable to find the required local talent, a war on talent is seeing well qualified able Saudis moving jobs regularly increasing salaries, especially in the government sector.

The number of Saudi women holding government jobs increased by about 0.4% in 2017 to reach 476,347 while the number of men working in the public sector reduced slightly by 0.95% year on year to reach 697,000 in 2017. Businesses need to maintain a Saudi quota of 70% in their workforce and female Saudis are being encouraged to work and we expect to see a significant increase when the 2018 figures come out.

Meanwhile, the Human Resources Development Fund (HADAF) has transformed its branches across the Kingdom into employment centres to support Saudi jobseekers.

Khaled Abalkhail, spokesman of the fund, said that as many as 22 branches of HADAF in various cities and regions of the Kingdom have been transformed into specialized centres to support job seekers take up jobs in the private sector.

How will this affect an expat currently living and working in Saudi?

The Saudi government has implemented the Expat Dependent fee.  This was imposed in 2017, the fee obliges working expats to pay additional fees for each dependent or companion they have.  Currently the fee is 100 SAR per month for yourself and each dependant in country.  This will rise each year until 2020 when it will be 400 SAR each per month.

This has had an effect with more than 800,000 expats leaving in the last two years have left.  The current expat population stands 7.7 million, down from 8.5 million in Q1 2016.

So is it all bad news for Expats in Saudi?

Certainly not.  While the number of roles for expats in the Kingdom has reduced. There are iqama’s (https://www.moi.gov.sa/wps/portal/Home/registeredservices) being issued in many professional services companies, private family groups and government roles where it has been agreed that a skill set shortage is evident.

Many expats enjoy working in an environment where they bring their experience and are shadowed by Saudi professionals to learn best practice.

We hear many good new stories of expats enjoying the warm, friendly Saudi culture and although Saudization is a policy to reduce the reliance on expat workers, there will be many rewarding roles in the coming years as the country works toward the 2030 goals.

Get in touch with Omer Zakaria to discuss further.

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