Saudi SMEs in red zone of Nitaqat program release foreigners to accommodate locals
The Nitaqat programe undertaken by the Kingdom of Saudi Arabia has led to more than 70,000 foreign workers being laid off over the last two years.
The labour nationalisation program involves the division of companies in the Kingdom into four zones, based on their ratio of local Saudi employees to their foreign counterparts. The red zone comprises of companies with poor local-foreigner figures.
The Saudi Labour Ministry had earlier said 20% of Saudi firms were ‘still in the red zone, two years after the implementation of the Nitaqat program despite the ministry’s intensive campaign to nationalise jobs in the private sector’, as per a report by Arab News.
Companies falling under the red zone of Nitaqat are predominantly small and medium-sized enterprises (SMEs). These companies, given their limited scale of operations, ‘cannot generate enough jobs for both Saudis and expats’, added the report. Additionally, contractors for government bodies have stopped further employment of foreigners.
“Many expats have been fired in order to attract fresh Saudi graduates to work on a minimum wage of $1,500 just like expats,” said Farooq Al-Khateeb, an economy professor at King Abdulaziz University. “SMEs are interested in hiring these graduates who would agree to work for lower salaries than professional Saudis, who earn far more.”
40% of all establishments in mid-2011 were in the green zone, which comprises of companies with a healthy nationalised workforce ratio. The number of these companies increased to 81% by the end of 2013.
“Several hundred expats had also been fired by companies with a sufficient number of Saudis,” said Fadal Abu Al-Ainain, an economic consultant with several private firms. “The Labor Ministry must close the doors of foreign recruitment so that professionals already living in the Kingdom can find jobs,” he said.