Why Nitaqat is Needed? Saudi Arabia efforts to increase employment have focused on three areas.

June 15, 2013 - PRLog -- Introduction

Saudi Arabia is among the fastest growing nations in the world in terms of population growth (growth rate 2.21% as of 2012 with a total Saudi population of 19,838,448 as of 2012.

Saudi initiatives to tackle unemployment

Saudi Arabia efforts to increase employment have focused on three areas. One is Nitaqat based nationalization policies with the aim to increase the share of private sector jobs held by nationals. The other is diversification to gear up public spending toward boosting the non- oil GDP and creating new industries. The third area is investing in education programs in Saudi Arabia is a high priority.
Roughly 24% of total government expenditure in 2011, the level of public spending on education is among the highest in the world. However, more concentrated efforts are needed to increase competencies and
productivity levels through education & training initiatives.

Unemployment dilemma

Unemployment has become a serious issue with diverse negative implications that could affect the Country’s socio-economic stability. Reducing unemployment depends on increasing the employment of nationals in the
private sector. In accordance with the Central Department of Statistics and Information (Ministry of Economy and Planning) the unemployment rate for 2012 stood at 12.1% an increase of 1.6% since 2009. Figure 1 & 2 shows that
while total unemployment is 12.1% which translates to around 602,853 Saudi Nationals who are unemployed, female unemployment increased from 28% in 2009 to 35% in 2012. Unemployment rate for Saudi women with a college degree stood at 73.3%. The 25-29 age group had the highest unemployment rate
at 37.6%. However, the unemployment rate for Saudi males have slightly decreased from 6.9% in 2009 to 6.3% in 2012.

What is Nitagat?

Definition: The name Nitaqat means Ranges/Zones in Arabic.

Nitaqat is a new Saudi localization program, introduced by the Saudi Ministry of Labor in August 2011. The program evaluates private sector entities based on their nationalization performance, which is measured by calculating the percentage of Saudi employees out of the total employees working for an entity. The Ministry of Labor classifies entities into Nitaqat that reflects their nationalization performance relative to their business activity & company size.

Businesses are divided into 41 activities/sectors and companies are categorized into five (5) sizes according to workforce size. Companies are then classified into a range (Excellent, Green, Yellow and Red) based on the ratio of the Saudi Nationals working in the company. The excellent & green ranges are the highest localization ratios and yellow & red are the lowest localization ratios.

Depending on the range classified, a company will either receive incentives, in the form of services and facilities, or be subject to suspending some of the services provided by the Ministry of Labor and face corrective measures.