What is Nitaqat? -1

What is Nitaqat?

The government in the Kingdom of Saudi Arabia

(“KSA”) has a renewed focus on the issue of

employment and opportunities for Saudi nationals.

It is clear that there is a real focus on Saudisation in

KSA and companies that do not comply will not be able

to secure or renew visas for expatriates. Last year the

Ministry of Labour (“MOL”) in KSA passed Ministerial

Resolution no. (4040) dated on 12/10/1432H and

announced a new Saudisation initiative known as the

Nitaqat Program, to encourage the employment of

Saudi nationals in the private sector.

The Nitaqat system in our opinion represents a real

departure from the imposed quota system that has to

date operated in some Gulf States. Nitaqat creates a

market for Saudisation where companies are judged

against their peers and challenged to lead the field in a

particular sector or to suffer disadvantages as

business. Whereas a quota system is hard to enforce

where no one can comply due to skill shortages in the

labour market, a system that creates a “race” to

Saudisation will drive the changes that are needed in

that labour market over the long run. A real economic

incentive has been created to become a market leader

in this area. The sanctions that can be imposed for

companies that are classified as non-compliant (red)

are severe and include an inability to apply for new

work visas or renew work permits (Iqamas) for

expatriate employees. Further any non-compliant

company will not be able to register any new branch or

activity with the MOL in KSA. There have been further

developments recently announced by the KSA

government in this area including a wages monitoring

systems and skills test for issuance of Iqamas.

Please note that some of the

information in this article is

derived from our discussions

with the MOL. The Nitaqat

programme may also be subject

to change. We would therefore

recommend that you seek legal

advice to ensure that you have

accurate information on the

Saudisation percentages

applicable and the implications

of this.

.