Sunday, September 25, 2022

Understanding Saudization and the Impact on Foreign Workers

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The term ‘Saudization’ is used to describe the national policy of Saudi Arabia to increase employment of Natives. Even though Saudi Arabia is a rich country, the percentage of unemployed native Saudi Arabians is high.

Some people think that the problem is the level of education and the willingness of Natives to improve their skills and find suitable jobs. The government, however, tries to fight unemployment with their policy of Saudization. The idea is to give companies some benefits for employing local, Native workers instead of foreigner workers and expats. In 2005, the government set the rate at 75% for the private sector. The government has several policies through which Saudization is implemented, but the most important is Nitiqat.

What is Nitaqat?
In its essence, the program divides the country in zones and types of companies. The program classifies companies in four major categories: premium (vip), green, yellow and red. The first two have high percentage of Saudi Arabians employees, while the latter two are faced with penalties due to low employment. The law doesn?t apply for companies with less than 10 workers, but they must employ at least one Saudi citizen.

The companies are divided according to the number of employees: small (10-49 workers), medium (50-499 workers), large (500-2999) and corporations (3000+). For every company, a certain percentage of Native employees is required. Therefore, small companies need to have to employ at least 4% Saudi citizens for red zone, 5-9% for yellow zone, 10-39% for green zone and over 40% for premium. For other companies, the percentages are as following:

  • Medium: 5% (red), 6-11 (yellow), 12-39 (green), 40+ (premium)
  • Large: 6% (red), 7-11 (yellow), 12-39 (green), 40+ (premium)
  • Corporations: 6% (red), 7-11 (yellow), 12-39 (green), 40+ (premium)
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Saudization Implications and Awards
Depending of the category they fall in, companies can get benefits or penalties. Premium category companies can recruit foreign workers from anywhere in the world, and they can get visas easier. They can also recruit employees from red and yellow companies, and transfer their visas. Another benefit is the one-year grace period before licenses and registrations expire.

Meanwhile, companies in the green zone can apply for foreigner?s visas once every two months, change the professions of their employees, renew work permits, and recruit workers from red and yellow zones. Yellow category companies are forbidden to apply for new visas and change professions of their employees. However, they can still receive replacement visa if two of their foreign workers have left the country, and renew work permits of employees. Red category companies basically are forbidden to do anything, as they cannot apply for visas or change the profession of their employees.

Impact on Foreign Workersconstruction_workers
Since the implementation of Nitaqat and other Saudization legislatives, foreign workers and embassies in the Saudi Arabia are concerned about the effect of the laws. However, the labor minister of Saudi Arabia has repeated several times that Saudi Arabia is open for millions of foreign workers. The effect should be minimal, as there are lots of open positions for workers. One area where the Saudization law has no effect is the household services. Workers particularly domestic helpers are not included in the program.

Response of Philippine Government
Since the implementation of Saudization legislatives, the Philippine government has taken several measures to minimize the effect and help its overseas workers and expats. Measures include:

  • Implementation of an online registration system. The purpose is to capture accurate data and information on OFW
  • Assistance to Filipinos working in red and yellow category companies, helping them to secure a job in green and premium companies
  • Process of reintegration to Filipinos who are forced to come back to the Philippines. The government provides assistance for OFWs willing to work in other foreign markets. Another measure is the process of self employment.
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