Everything You Need To Know About Nitaqat in Saudi Arabia

Nitaqat is a Saudization program that was introduced in 2011 for two reasons. First, to increase the percentage of Saudi citizens working in the private sector. Second, to reduce the vast gap in the rate of employment of Saudi citizens between the public and private sectors.

In this post, we'll take a look at everything you need to know about Nitaqat, from the basics of what it is to its impact on businesses in Saudi Arabia.

What Is The Nitaqat 'Labour Nationalization Domain'?

Nitaqat is a nationalization scheme implemented by the Saudi government to measure whether Saudi-based businesses are compliant by requiring them to fill certain levels of their workforce with Saudi nationals. The policy was implemented to address the challenges the Saudi labour market has been facing:

• High Saudi national unemployment
• Lack of female participation in the workforce
• Challenges related to the mismatch between qualifications obtained and job opportunities available

The Purpose Of The Nitaqat Initiative

The Nitaqat program comes as a standard to motivate businesses to localize jobs, as its basic idea depends on classifying entities with five or more workers into six bands (red, green low, medium green, high green, and platinum) based on the percentage of their localization of jobs.

Reduce Saudi Unemployment

One of the objectives of the Nitaqat program is to help reduce Saudi unemployment by incentivizing companies to hire more local citizens. By assigning each company a rating based on their percentage of Saudi employees, the program encourages businesses to prioritize hiring qualified Saudis over foreign workers. In 2021, the Nitaqat program introduced a standard monthly minimum wage for men and women of SAR 4,000.

Saudi Arabia's total unemployment rate in 2021 was 4.2% lower than in the same period of the previous year, below its pre-COVID level.

Increase Female Workforce Participation

The Nitaqat program aims to increase the number of Saudi women in the workforce by implementing quotas for female employment in certain industries. Companies that meet or exceed these quotas are rewarded, while those that do not comply face penalties.

With the help of HADAF (Human Resources Development Fund), which offers programs through the national labour portal to train Saudi graduates in association with Nitaqat - the number of women in the workforce in the last 5 years has increased to more than 35% of the total workforce as of 2022.

Close The Gap Between Qualifications & Job Opportunities Available

Additionally, the availability of training and development programs within Nitaqat helps to increase the skill level of Saudi job seekers, making them more attractive hires for companies. For instance, in 2022, the Kingdom launched a training program titled 'Tourism Pioneers'; that seeks to attract 100,000 Saudis in preparation for the upcoming booming tourism sector in Saudi Arabia.

This program aims to provide these individuals with the skills needed to become productive members of society while helping businesses close the gap between qualifications and the job opportunities available now and expected in the future.

What Do The Nitaqat Colours Mean?

Nitaqat employs a rating system that divides businesses into five coloured categories:

1. Platinum
2. High Green
3. Medium Green
4. Low Green
5. Red

The program evaluates the performance of businesses in each colour category status and gives top priority to the Excellent (White or Platinum Nitaqat status) and Green bands (high, medium and low green Nitaqat status) while giving the Red band the lowest priority.

Benefits Of Nitaqat To Businesses In Saudi Arabia

If your business is looking to achieve a higher Nitaqat status in Saudi Arabia, there are a few benefits you can expect:

Issuance of Saudization Certificate

Businesses with a green Nitaqat rating or higher can obtain the Saudization certificate in the country. The Saudization certificate is considered one of the main documents that must be obtained for the renewal or opening of any private sector business or for issuing work visas. The certificate also allows businesses to compete in tenders for projects with the government.

Eases Hiring & Visa Processes

Businesses with the highest Nitaqat status can hire employees from Red zones and transfer their visas without the permission of their current employers. The visas/ IQAMAs can easily be renewed in advance – up to three months before the IQAMA expiry date.

Increased Competitiveness

By enforcing quotas for employing Saudi nationals, Nitaqat encourages companies to train and develop their workforce, leading to a more skilled and productive workforce overall.

Promotes Diversity

Additionally, Nitaqat promotes diversity within the workforce, bringing different perspectives and ideas to the workplace. This can further drive innovation and success for businesses.

Struggling To Meet The Required Nitaqat Status?

We Can Help

Nitaqat is an important part of Vision 2030, and businesses in the Kingdom of Saudi Arabia need to know how it works and what category they fall under. Based on the category assigned, there are different actions businesses like yours may need to take to improve their Saudization levels.

Helping Saudi-based businesses improve their Nitaqat status is our strength. TASC is one of the leading recruitment and HR solutions specialists in Saudi Arabia. In line with the Saudi Vision for 2030, we are committed to boosting businesses by providing outstanding "people solutions," be it Saudi and non-Saudi talent across the Kingdom.

If you're a Saudi-based business seeking skilled local talent to attain a higher Nitaqat status, the team at TASC is here for you. Contact us today to learn more about our recruitment solutions.

If you're curious to know how your business can achieve or attain a higher Nitaqat status, check out the blog post here.

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