Saudization is a concept that is frequently used while discussing corporate growth into the Kingdom of Saudi Arabia (KSA). Although the policy is primarily intended to create jobs for Saudi citizens, new business owners seeking to establish in KSA are puzzled and concerned that the regulation may restrict their efficiency and competitiveness. The Saudi Ministry of Human Resources and Social Development (MHRSD) plans to “Saudize” 30 professions by the end of 2022.
In spite of this, more than 7000 new private enterprises joined the Saudi market last year. Although it may appear that the concept is more inclined with the country’s internal concerns, the plan is essentially aimed at creating a positive relation with the rest of the world. KSA is balancing the native and foreign entities in its business structure through Saudization and Vision 2030.
The three main pillars of KSA’s Vision 2030 are: an ambitious nation, a thriving economy, and a vibrant society. Saudization plays a crucial part in making the vision a reality. Vision 2030 also emphasizes boosting investments in long- term initiatives to enhance the development possibilities for international enterprises, in addition to local employment.
What Is Saudization, Then?
Saudization refers to Saudi Nationalization Scheme or ‘Nitaqat’, a policy launched by the MHRSD to decrease Saudi unemployment by encouraging the private sector to hire Saudi Nationals, thereby increasing the share of their participation in the labor market. The goal is to strengthen Saudi citizens by granting them access to improved education and job prospects, in line with the Vision 2030.
Saudization applies to all entities that have 9 employees and above. MHRSD would apply Saudization to place the entity into a zone based on the percentage of Saudization it occupies. Each range has its own advantage and limitations.
Currently, there are five Saudization Zones that classify the country’s private firms into six categories: Platinum, High Green, Mid Green, Low Green, Yellow and Red. An enterprise may be subject to regulations depending on their zone on a variety of rights, including block visas, faster processing, work permit renewals, sponsorship transfer etc.
What Are The Challenges?
Companies now face additional obstacles as a result of the new regulations outlined in the government policy. Young organizations discover that they are powerless to hire more expats and are unable to acquire the necessary local talent, or they face excessive wage demands from skilled Saudis.
Blue-collar sectors have a harder time attracting applicants than white-collar ones, which can present problems for businesses looking to boost their Saudization levels.
Finding individuals with the necessary training or experience is a significant problem for Saudi firms. Since the vast majority of Saudi workers are under 35, they typically lack the level of experience that employers typically want.
The presence of an efficient recruitment service provider is an absolute necessity for any business to overcome these hurdles and flourish within the Kingdom. From hiring entry-level employees to those in the C-suite, ERC supports businesses in need of Saudization at every point of the recruitment process.
Impact Of Saudization
- The General Authority of Statistics reports that Saudi unemployment dropped from 12.6 percent at the end of 2020 to 11.7 percent in the first quarter of
- According to a report released by the Human Resources Development Fund, the number of new Saudi employees joining the private sector totaled 121,000 in the first quarter of
- At around 77%, Saudi Arabia currently is the GCC country with the lowest reliance on foreign
Saudi Arabia is working intensively to fulfil the objectives of its Vision 2030 by fostering the hiring of citizens for positions in the private sector. Additionally,
the country is promoting sufficient investments in their future to guarantee both employee retention and their contribution to a thriving and multifaceted economy.
With a solid reputation of tactfully implementing Saudization in many organizations, ERC endorses the Kingdom’s Vision 2030 by hiring more Saudis and women in the workplace.
Benefits Of Saudization
Hiring local talent, as opposed to recruiting foreigners in Saudi Arabia, is really far more advantageous for businesses. Some of the benefits businesses can enjoy from having a dependable and skilled local staff are:
Better employee management:
Native employees can communicate effectively with the workforce and other individuals since they are proficient in the language. They are better able to manage the workforce since they are able to comprehend employee demands.
Improved decision making:
The KSA population is deeply ingrained in their culture. They are more knowledgeable about regional trends and tastes. Therefore, firms that employ skilled natives can make better decisions and operate more effectively in their community.
Local employees do not need considerable language and cultural training because they are familiar with the community. As a result, businesses can concentrate more on their core functions and establish training and onboarding in a quicker, more efficient manner.
Employers find it far more practical to hire locals. The organization can effortlessly outsource the hiring process, and the professionals can assist them in finding the ideal candidate within the necessary timeline. The recruiting service providers such as ERC function as an internal hiring team, allowing the business to manage hiring without requiring a dedicated system.
The benefits of Saudization exceed its direct outcome such as financial security. Being employed can have a positive impact on the individual, providing a sense of impetus, obligation towards the world, and a chance to experience life through diverse perspectives.
In a nation with around 65 percent of the residents under the age of 30 unemployed, ERC endorses Vision 2030 through providing a true local solution to the hiring needs of any organization by emphasizing on Saudization, finding and recruiting the right talents at all levels of the organization.
Through determining the roles where Saudization is the most fruitful for your company and then assisting you in developing the required infrastructure to attract them, ERC ensures you achieve your Saudization objective systematically and efficiently.