Companies ‘struggling to meet Nitaqat goals’

Private sector employers are struggling to keep up with the pace of reform as they grapple with the implementation of Nitaqat, according to a new report from Hay Group. The Kingdom's approach to nationalization via Nitaqat is the focus of a new report exploring the perceived strengths and weaknesses of the program, according to senior expatriate business leaders in Saudi Arabia.
Nitaqat in the Spotlight, highlights key challenges as well as many positive aspects of the program that provide a new and refreshing insight into development priorities for Saudization of the private sector.
The author of the report, Chance Wilson, general manager at Hay Group in Saudi Arabia, says one of the key themes to emerge from the report is the need for greater alignment between stakeholders: "Everyone aspires for the same end result but different approaches leave the private sector with a strong sense that they are bearing the brunt of the pain. In the short term this is bad for business and is ultimately unsustainable."
Wilson says one of the issues that came out of the report is the creation of artificial salary expectations in the market: "The current approach is resulting in upward pressure on salaries that is caused by a program which by design, inflates the worth of individuals through national identity, rather than skills and experience. This in turn distorts the market norms."
He added: "The other big influencing factor on upward pay movements is that of government itself. With perceived more attractive compensation and benefits on offer in the public sector, private sector employers feel the need to bridge a significant gap in order to compete. The two factors combined have a potentially critical impact, leaving private sector employers divided."
The research, which took place between August 2011 and January 2012, recognizes a need for more effective dialogue between the government and employers. Specifically, it recommends greater collaboration and better communication, planning, and resolution surrounding the implementation of the Nitaqat program.
The Hay Group report also highlights the need for greater education of the private sector on the benefits Nitaqat can offer to businesses, as well as more practical support and guidance for employers and their expatriate employees.
"There is strong evidence that expatriate professionals both embrace the reform agenda and want to contribute in a positive way. Knowledge transfer and succession planning are key to creating a sustainable national work force, and more practical action by all parties is required in order to make this happen," said Wilson.