Saudization Scheme Restrictions Forthcoming

The Ministry of Labour and Social Development (MLSD) has announced significant changes to the Saudization scheme, known as Nitaqat Program. The new regulations are expected to go into effect on September 3, 2017. The most significant changes include the raised Saudization ratios and the requirement for an employer to be rated a higher tier ("high green" or "platinum") than is currently required to qualify for Block Visa approval.

Classification of Companies

The Nitaqat Program establishes the number of local employees an entity must employ prior to hiring foreign workers, depending on an entity’s industry and size.

Under the new scheme, company size thresholds will be expanded and Nitaqat criteria will apply to companies with six or more employees, as opposed to ten or more employees, as under the current scheme.

Saudization Ratios

The new scheme will change Saudization targets for the majority of industries and company categories. For example, to qualify for a Block Visa, a company will need a high tier rating ("high green" or "platinum"). This means a company will need to hire more Saudi employees than currently required. 

Immigration Restrictions and Benefits

Depending on the tier level, companies are subject to certain immigration restrictions or benefits. Under the new program, only employers in the "high green" (fifth tier out of six) and "platinum" (last tier) levels will be eligible for a Block Visa. Currently, employers rated within the "green" tier qualify for a Block Visa.

Entities rated "green" or above (the fourth tier out of six) may transfer an employee’s sponsorship to a different employer, while entities in the "low green" category (the third tier out of six) may do so with certain limitations.

What This Means for Employers and Foreign Nationals

The changes discussed above are in line with recent efforts by Saudi authorities to create more employment opportunities for Saudi nationals, e.g., the introduction of labor market testing and increased government fees for residence permits.

Employers in Saudi Arabia will have to hire more Saudis in order to remain eligible to employ foreign workers and to avoid restrictions on other services, including transferring sponsorship and obtaining and renewing work permits, to name a few.

Employers should contact their immigration professional to review the impact of the new regulations.

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 mideast@fragomen.com.