The Kingdom of Saudi Arabia (KSA) is a huge player on the global economic stage. After a quick post-pandemic recovery and newly implemented 2022 pro-business reforms, Saudi Arabia has become one of the world’s fastest-growing economies. However, international companies must first learn how to navigate regulations and recruitment policies around Saudization.
Saudization (Nitaqat) is a policy implemented by the Ministry of Labor whereby companies doing business within Saudi borders are required to hire Saudi nationals on a quota basis. It a requirement for companies operating in Saudi Arabia to fulfil a quota of hiring Saudi Nationals. When operating in the Kingdom, recruiters must fill a certain number of roles with Saudi Nationals so as not to depend exclusively on the community of expats.
A Saudization talent-hiring quota means that all companies must have a percentage of their workforce composed of Saudi nationals. The general formula for calculating the Saudization percentage is as follows:
Saudization percentage = (number of Saudi employees / total workforce) x 100
In this formula, the “number of Saudi employees” refers to the total count of Saudi nationals employed by the company or within a specific sector. This includes both full-time and part-time Saudi employees. The “total workforce” represents the overall number of employees working in the company or sector, regardless of their nationality. This includes Saudi employees as well as foreign workers.
What is a Nitaqat System?
A Nitaqat System is a categorization system used to determine a company’s Saudization minimum rates and eligibility for benefits according to your company’s Nitaqat Status.
A Company’s Nitaqat Status is decided based on the following three factors:
- The current Saudization percentage
- Your company’s size (total employees)
- Your company’s classification (activity/industry)
The Saudization certificate, also known as the Nitaqat certificate, serves as an official document issued by the Saudi Arabian government to companies that demonstrate compliance with Saudization policies and meet the required Saudization percentage within their workforce. It is categorized into different color zones that indicate the level of compliance achieved by a company. These zones include red, low green, medium green, high green, and platinum. The red color zone represents the lowest level of compliance, while the platinum color zone represents the highest level of compliance.
The Saudi government has defined specific Saudization percentage ranges for each color zone as follows:
Red Zone: Companies with a Saudization percentage ranging from 0% to 16.21% fall within this zone.
Low Green Zone: Companies with a Saudization percentage ranging from 16.22% to 19.25% are classified in this zone.
Medium Green Zone: Companies with a Saudization percentage ranging from 19.26% to 23.11% are categorized in this zone.
High Green Zone: Companies with a Saudization percentage ranging from 23.12% up to 26.51% are placed in this zone.
Platinum Zone: Companies with a Saudization percentage ranging from 26.52% up to 100% are considered to be in the platinum zone.
Having a good level of Saudization compliance will make your company potentially eligible for the following benefits:
- Expedited visa processing and lower processing fees
- The ability to renew Iqamas (visas for non-Saudi employees) easily
- Eligibility to switch your employee’s profession
- Ability to hire new employees from red (lowest) category companies
Arnifi is digital first Corporate service provider helping companies enter the Middle East region, starting with UAE and Saudi Arabia markets. Founded and backed by professionals from Amazon, Souq and other large companies operating in KSA – the team understands what it takes to succeed as a startup in both UAE and Saudi Arabian markets, apart from going through the setup process multiple times.
Arnifi will provide a truly digital experience to entry and scale up of companies both UAE and Saudi Arabia. The Arnifi promise is simple, yet revolutionary, use technology and a great team to provide transparency, efficiency and great customer experience in the whole process.
Check out at – www.Arnifi.com for more details.
