Nitaqat Rating to Impact Employers Immediately and Block Visa Eligibility Relaxed

The situation

The Ministry of Labor and Social Development (MLSD) announced changes that affect the Nitaqat and block visa approval systems, impacting employers with foreign workers.

A closer look – new Nitaqat calculation process

• What has changed? Starting February 2, 2019, companies’ Saudization levels will be calculated immediately when employers hire new Saudi and foreign employees and when other employees depart. This will instantly affect companies’ Nitaqat ratings, instead of the current system under which it takes 26 weeks for such changes to affect the Nitaqat rating.
• Employers affected. Only employers who have ratings of platinum, high-green, medium-green and low-green in the Nitaqat system over the last 13 or more weeks will be subject to the new rule.
• Current policy. The Saudization rate is currently calculated based on the average numbers of Saudi and foreign employees over a period of 26 weeks. This longer period allows employers more time to rectify issues that affect the Nitaqat rating.
• Impact. The change may make an employer eligible for filing a block visa application faster. However, the removal of the 26-week buffer may cause unexpected fluctuations in a company’s Saudization levels. This could result in a change in the employer’s rating which may have numerous effects, including preventing the employer from applying for a block visa approval or being able to renew work permits.

A closer look – block visa approval process change

• What has changed? Effective immediately, companies classified under medium-green rating in the Nitaqat system can apply for block visa approval, a prerequisite for the employment of foreign nationals.
• Previous rule. Previously, only employers with high-green and platinum ratings could benefit from the block visa process.
• Impact. More employers will be eligible to hire foreign workers.

Background

• Nitaqat system. Saudi Arabia’s Nitaqat system aims to encourage the employment of Saudi nationals in the private sector. Since its implementation in 2011, it has been subject to a number of modifications, including the ‘Balanced Nitaqat’ that was announced in 2016 but never enforced, when the MLSD amended the criteria for classification of companies and changed the Saudization ratios for most industries in September 2017 and the recently-relaxed labor market testing requirements.
• Block visa system. Block visas are quotas issued by the MLSD to control the number of foreign workers in Saudi Arabia. The MLSD has recently implemented number of regulatory changes with the goal of easing the hiring process, including reinstating the replacement block visa process and extending the block visa validity to two years.

Looking ahead

The continued easing of the processes for employers to hire foreign workers in Saudi Arabia signifies the government’s intentions to attract more investment into the country, while encouraging employment of local workers in consideration of the currently high unemployment rate.

Fragomen expects the relaxation of block visa regulations and the other initiatives mentioned above to positively impact the labor market in Saudi Arabia by creating more job opportunities for Saudi nationals.

According to media reports, the government is considering reducing costs related to relocating foreign workers. Fragomen will report on relevant developments.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].