2 measures ease Saudization rules for some employers

IMPACT – MEDIUM

What is the change? The Saudi Ministry of Labor and Social Development has announced measures that ease Saudization rules for private-sector employers whose Nitaqat rating is High Green or Platinum.

What does the change mean? A new calculation tool allows employers who have been in the High Green ranking for 13 weeks or longer to obtain recalibration of their Saudization percentages within one week of a Saudi employee being hired (or terminated). The ministry has also announced that companies rated High Green or Platinum that need to apply for a compensatory visa to replace a departing foreign worker within six months of departure in certain designated shortage occupations are able to do so by applying directly through the ministry’s online platform.

• Implementation date: The Saudization calculation system was rolled out on Feb. 2.
• Who is affected: Companies rated as High Green for 13 or more weeks may benefit from the Saudization calculation system. Companies rated as High Green or Platinum may benefit from the streamlined compensatory visa process.
• Business impact: Eligible employers will have a more up-to-date system for calculating their Saudization rating and will be able to replace foreign workers in designated shortage occupations more quickly.

Background: Over the past two years, Saudi authorities have tightened Saudization rules and hiring quotas for Nitaqat levels. Only companies in the two highest tiers, High Green and Platinum, are eligible to apply for block visas and receive government contracts. Previously, all employers’ Saudi-to-foreign worker ratios were calculated on a weekly prorated basis over six months following the hiring or loss of a Saudi employee.

Analysis & Comments: The two measures signal an easing of Saudization rules, at least for companies with high Nitaqat compliance rankings and for designated occupations deemed by the government to be in shortage of local talent. The industries designated by the ministry include engineering, medicine, nursing, IT, pharmacy, medical technology, accounting and financing, although the list is subject to change. Consistent with this trend, Saudi authorities recently eliminated labor market testing and lengthened the validity period of block visas from one year to two years.

Source: Deloitte LLP. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 1 New Street Square, London EC4A 3HQ, United Kingdom.