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Mobility: immigration alert August 2017
Saudi Arabia
Executive summary As part of the Kingdom of Saudi Arabia’s (KSA) Vision 2030 strategy, the Ministry of Labour and Social Development (MLSD) is amending its existing Nitaqat system for organizations by increasing the mandatory employment ratio of Saudi nationals to expatriate employees in the organizations’ local workforce. The new Nitaqat grading program will be effective from September 2017 and is being implemented amidst reports that almost 60% of work visa (Iqama) applications for foreign nationals were rejected in 2016. In addition, the MLSD and Human Resources Development Fund (HRDF) have announced that all private entities with over 25 employees must offer an internship to Saudi national students as part of the “Saifi” training initiative promoting increased opportunities for Saudi youths in the private sector. Background The Nitaqat system was first introduced in 2011 to encourage the employment of Saudi nationals (Saudization) in the private sector of KSA. Currently, the Nitaqat system classifies organizations into 6 categories - Platinum, Green (High, Medium, Low), Yellow and Red depending on the size of the entity and percentage of Saudi nationals to expatriate employees in their workforce. KSA based employers in the Platinum and Green categories represent the highest ratios of Saudi nationals, where Yellow and Red indicate the lowest ratios of Saudi nationals employed. Organizations which are in the Platinum and Green categories can benefit from favorable immigration treatment such as shorter application processing timelines for on-boarding expatriate employees to their companies.
Changes to the Nitaqat system and the introduction of a mandatory Saifi program as part of the Saudization drive
The Saifi training initiative was introduced in 1997 to promote a better understanding of the needs and expectations of the local labor market within KSA companies and to promote the training and development of KSA nationals. Key developments Changes to the Nitaqat system The new proposed Nitaqat system will see an increase in the ratio of employed Saudi nationals required against expatriate workers in KSA. This will be measured based on a number of variables used to determine an organization’s Nitaqat category such as: ► The company activity. ► The size of the company. ► The percentage of Saudi nationals within the organization. ► The average salary of Saudi nationals. ► The retention rates of Saudi nationals within the
organization. ► The percentage of Saudi nationals with high salaries. Organizations within the private sector will be rated and incentivized based on the variables listed and for their efforts in employing Saudi nationals, then classified into the categories listed above. A significant change will see that only organizations within the Platinum and High green categories will be able to apply for new block visas while organizations within the remaining categories will only be able to obtain visas for expatriate employees through a transfer of sponsorship. This means that companies that fall in categories, Medium Green, Low Green, Yellow and Red may be limited to hiring expatriates who are already in the KSA and have work authorization with an existing employer.
Mobility: immigration alert
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The Saifi initiative is now mandatory In addition, the MLSD and the Human Resources Development Fund (HRDF) have recently made the “Saifi” training initiative a mandatory requirement for all private companies operating in the country with 25 or more employees. Saifi is the student training program for Saudi nationals, both male and female (aged 17 and above) who wish to train and gain work experience during the summer holiday. It is designed to help Saudi youth enter the labor market and create a local workforce. Private companies are required to select interns for a training program of four weeks and the trainee should be paid a minimum amount of SAR 1500 (approximately USD 400) per month as a stipend. There are options, however to outsource the training to an authorized training center. This is another effort by the MLSD and HRDF to support the Saudization drive. Next steps Effective from 3 September 2017, all companies who are considering expanding their operations or workforce in Saudi Arabia are advised to revisit their Nitaqat category and evaluate their workforce planning to align with the Saudization drive. With immediate effect companies should also note that the Saifi program is now mandatory. As such, all affected KSA based employers are advised to: ► Review internal HR processes, to ensure that their recruitment and immigration
application procedures allow a smooth implementation of this Nitaqat reformation. ► Design and implement internship and training programs for Saudi national students
to meet the mandatory Saifi initiative. ► Implement workforce planning procedures to ensure the workforce needs of the
organization are aligned with the KSA nationalization objectives. ► Review or design the organization’s strategy for attracting and retaining KSA
nationals. ► Implement health check processes to ensure entity readiness to meet corporate
labor market regulations. ► Review assignment structures and ensure resourcing plans are made in order to
meet the organization’s overall strategies. ► Review all critical positions to develop succession plans to train national
replacements in the medium to long term. ► Strengthen coaching and development processes to support KSA nationals. ► Develop partnerships and collaborations with universities and training academies to
facilitate internships and training.
Zaheed Alibhai Tel: +971 4 701 0866 Email: [email protected] Nicola Schofield Tel: +971 4 701 0179 Email: [email protected] Mohammed Haque Tel: +971 4 701 0776 Email: [email protected] Syed Mansoor Tel: +971 4 701 1837 Email: [email protected]
