The Saudi Arabia Ministry of Labour and Social Development (MLSD) has recently announced a new Saudisation percentage in relation to the nationalisation or Nitaqat Programme. This indicates that the 'Balanced Nitaqat' that was announced last year remains suspended, if not cancelled. The new percentages for the existing scheme will be implemented in August 2017.
The current changes are aimed at reducing the Saudi unemployment rate and increasing Saudi female employment. The new percentages show a rapid increase in respect of the minimums required from the private sector. For example, the Saudisation percentage for the IT sector has increased to 27% from 16% for entities with less than 49 employees categorized as low green. The increases in Saudisation percentages vary between sectors and depend on the entity's activities and the number of employees.
As well as targeting the percentages themselves aggressively with new minimums in each band that businesses are required to maintain, the classifications in respect of the size of entities by the number of its employees have also been overhauled. The small entities have been split into two categories and medium entities have been divided into three categories. This will apply additional pressure on private sector businesses as they expand in the Kingdom. Nitaqat will now apply to entities with six employees or more whereas it previously applied only to entities with ten employees or more. We are expecting more details on the system to be released in the coming weeks. If you have any queries or would like further information, please contact one of the team below.