The seventh episode of our Saudi Market Entry Series covers Saudization in the Kingdom. The panel for the episode includes Alex Nicholls, Business Development Lead at AstroLabs, Faisal Algahtani, Client and Project Associate and Harry Bishop, Talent Consultant.
Here’s a quick recap of the episode.
The Nitaqat System
The Nitaqat program was introduced in 2011 in order to increase the employment of Saudi nationals in the private sector. Companies in Saudi Arabia are assigned a unique company-specific Nitaqat status based on the below three factors.
1. Saudization Percentage
Percentage of Saudi Nationals in your company.
2. Entity Size
The entity size of Saudi companies are categorized into seven types. Based on the entity size of your company determined by the following category list, your Saudization quota will vary.
3. Entity Classification
The Saudization quota for your Saudi entity will also depend on the activities that your company is licensed for in the Kingdom. To determine what your company activity will be, you can refer to the ISIC activity sheet that has over 4000+ activity codes.
Nitaqat Ranges and what they mean
The following is a classification of the colors of the Nitaqat Ranges and what they stand for. Each of these ranges correspond to a level of Saudization rate which determines the set of services offered by the Ministry of Labor (MoL) which your company will be eligible to benefit from. We’ll look at these services and benefits at length in a bit.
Your Saudi Arabian entity should always aspire to be in the Platinum range.
For the entity size category of Small Entities under Category (A), there are only two ranges—Red and Green. The difference between the two is having at least one Saudi national employed at your company. If your company’s General Manager is not a Saudi national, their Visa or Iqama will not be renewed unless you have one Saudi national in your books to change your Nitaqat status from Red to Green. It’s important to move into the Green range by the due date of Visa/Iqama renewal.
New Saudization Ratios for 2021
The rules and processes in the Kingdom are constantly changing. Here are the latest Saudization ratios for the year 2021 for three activities. You can view the complete ratio list of Saudization ratios uploaded as a PDF at the end.
MoL Services for Each Range
As we mentioned above, here are the different lists of services from the Ministry of Labor your company will be eligible for, based on the Nitaqat range it falls in.
* Transferring Expatriate Worker Service (Provided that the range after the transfer does not drop below the green low)
There are some services offered to companies in the Red range:
Service to Submission an Absence notice
Delegation Services Powers
Issuance of a work permit service for the purpose of final exit
Safeguarding of Wages
How MoL evaluates the Firms’ Saudization Quotas
The following is the process by which the Ministry of Labor in the Kingdom determines the Saudization quotas for your Saudi entity.
Step 1
Nitaqat Program obtains the Entity's Employee details to calculate the company’s Saudization Rate.
Step 2
After obtaining Employees' information, it is used to calculate the Weekly Saudization Rate and the range is determined.
Step 3
The newly established Entity’s Weekly Saudization Rates are curated for each week from the date of incorporation (Commercial Registration date) until the date of the calculation in question.
Step 4
The data recorded is updated into the system once every weekend. The Saudi Employee will be counted as (1) unit after they are registered with GOSI. This applies to all sizes of Entities, including Small Firms employing up to five employees.
The Firm may not remain without at least one Saudi Employee on its records for more than six weeks during the last 26 weeks, failing which the services will be automatically suspended. You can check your company’s weekly updated Saudization quota and current status on the MoL website.
Calculation rules for Saudization rates
The rules for calculation rules of the Saudization rates are as follows.
If the Saudi Employee’s monthly salary is a minimum of SAR 4000, they will be counted as 1 Saudi national
An employee with monthly salary between SAR 3000 - 4000 will be counted as 0.5 Saudi national
A part-time employee is calculated as 0.5 Saudi national
A student employee is calculated as 0.5 Saudi national, however they cannot exceed 10 % of the total number of Saudi Employees
The Saudi employee with a disability will be equal to 4 Saudi nationals, provided that their monthly salary is SAR 4,000
A Saudi national can only be counted toward one company’s Saudization quota i.e. if the Saudi national has two jobs, only the first company will count him/her toward their Saudization quota
Occupations reserved for Saudi nationals only
According to the Saudization policy, some occupations are reserved for Saudi nationals only. They are listed below.
Forward Career Accelerator Program
About 54% of the total population of Saudi Arabia is under the age of 24, and the majority of this segment is curious, tech-savvy, and come with a strong desire to learn and upskill themselves. They are keen on being a part of global organizations where they can make significant contributions.
Forward Career Accelerator is an AstroLabs initiative for digital skills capability development in Saudi Arabia to tap into this talent. The program is designed for early career KSA nationals with 0-4 years of work experience.
Our students are accepted on the basis of the following criteria:
An impressive academic track record
Fluency in written and spoken English - they will take an English and digital skills assessment
A passion for learning and self-improvement
Advantages of Forward Career Accelerator
Partnerships with top universities allowing us direct access to the top level of youth talent across the Kingdom
The accepted students of Forward Career Accelerator program will have free access to AstroLabs Open Academy where they are trained on professional courses ranging from Digital Marketing, E-commerce, Data Science, Coding, and more
Bridging the gap between college and corporates by training young graduates with the right technical as well as soft skills so companies don’t have to invest in training
AstroLabs Talent
As you know, AstroLabs helps businesses set-up and establish their operations in the Kingdom. In addition to getting you set-up, we also partner with businesses to help them hire local as well as international talent for their Saudi Arabian entity through AstroLabs Talent. You can read more about how this works in the episode recap of Practical tips for hiring top local talent in KSA or write to us at [email protected].
We hope this episode cleared your doubts around Saudization and gave you clear direction with respect to hiring and meeting the Saudization quota for your business.
As we promised above, here are additional documents/resources that’ll help you understand this better.
ISIC Sheet for Activity Code
Saudization Ratios for 2021
You can check the recaps of all the previous episodes of our Saudi Market Entry series here. Write to us at [email protected] if you have any questions. You can also share your thoughts and feedback in the comments section below.
We’ll see you in the next episode. Register for them now!
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