Fakeih: No going back on Saudization

Fakeih: No going back on Saudization
Updated 08 January 2013

Fakeih: No going back on Saudization

Fakeih: No going back on Saudization

The Ministry of Labor spares no effort in supporting and strengthening the Saudization process and pushing it forward while implementing the directives of Custodian of the Two Holy Mosques King Abdullah. The “Nitaqat” program has so far been able to help 400,000 Saudi citizens get jobs.
In an exclusive interview with Nadim Al-Hamid of Arab News, Labor Minister Adel Fakeih confirmed that the ministry will continue its efforts to support and strengthen the Saudization process.

The following is the full text of the interview:

What are new in the plans and programs of the ministry to push the Saudization process forward?
We already launched a number of these initiatives and there are other initiatives that are being studied which are still in the development stage. These programs include the following:
• The Saudization initiative in the private sector known as “Nitaqat”, which depends on the classification of economic entities by their levels of Saudization. Since the start of the program, the ministry has continued to develop the program in order to transform “Nitaqat” from a program that first only addressed the volume of unemployment (by imposing Saudization rate up to 30%), to a program with qualitative nature by taking wages into account. We must point out here that about 400,000 citizens were hired since the start of the program so far.
• As for the “Hafiz” program, it's a program that supports male and female Saudis who are seeking employment by providing them with jobs matching program and basic training. The program also provides an incentive subsidy for job seekers until they can get a job.
• Meanwhile, the “Liqa’at” program aims to create a favorable environment that fosters communication between each of the young male and female job seekers and national companies and institutions.
• A forum and exhibition on Saudization was held in Riyadh and in Jeddah and we will continue to hold similar forums in other cities throughout the Kingdom.
• Also, a comprehensive database, known as the “National Observatory of the Workforce,” has been developed. This will help in tracking and understanding the labor market statistics in order to help the decision-making process to be based on facts about job seekers, employers and policy makers.
• We also intensified the strategic partnerships between the public and private sectors in the field of professional training in order to provide training based on the direct needs of employers.
• Moreover, we are working currently on launching a package of programs to support small and medium-sized enterprises in the near future. These will include 38 initiatives to stimulate professional development and growth in the field of creation and development of small and medium-sized enterprises.
• The ministry also established recruitment centers to register and provide advice for job seekers and help them become better qualified to fill job vacancies.
• A site that will be available in the next few weeks on the Internet was developed recently called a “virtual job market” to help in the search for job openings.
• There are also efforts to provide online distance training via the Internet.
• The ministry has also has been working on Saudization and the feminization of industrial jobs suitable for women, in accordance with a decree of Custodian of the Two Holy Mosques King Abdullah.
• On 10/21/1433H, a ministerial decree was made to organize calculating monthly wages and special cases in “Nitaqat” program. This decision will be effective on 03/21/1434H. The resolution includes organizing the calculation of the monthly wages and addressing the problem of low wages by requiring that a Saudi employee is calculated as one worker in the Nitaqat percentage only if his monthly wage is not less than SR 3000. According to the resolution, "a Saudi employee whose wage is SR 1,500 per month is to be calculated as half a worker by the organization toward the Nitaqat percentage, and those Saudi employees whose monthly wage is less than SR 1,500 are not to be counted toward Nitaqat percentages at all.” The resolution also addresses the situation of part-time Saudi employees in the private sector, in addition to Saudi students residing in the Kingdom, employees with disabilities who are able to work, and Saudi employees released from prison. It is worth mentioning that this decision allowed a period of five months for facilities to take appropriate action to implement its terms.
• The ministry also launched a wage protection program, which aims to improve the working environment in the private sector by ensuring that wages are paid on time and in the amount agreed upon. The program will also monitor the applicability and commitment to the private sector labor laws. This decision will start gradually, starting from 01/03/2013, and will include providing a long enough time to enable the private sector to adopt the requirements of the program.

What is your response to the discontent and complaints expressed by a lot of employers regarding decision of the ministry to impose a fee of SR 2,400 per year on employers for foreign workers, to the extent that many of them describe this as an unjust resolution?
I would first like to clarify the goal of the decision (the fees), which is to close the cost gap between expats and national labor by raising the cost of foreign labor, which will support national employment opportunities. There are some organizations that will not be required to pay this fee as they have hired an equal number of national and foreign employees. Studies have shown that raising the cost of expatriate labor has a limited impact on many sectors in general, such as the retail sector, as well as the construction, operation and maintenance sectors. I would also like to clarify here what the benefits of this decision are on the private sector. Incentives will be provided to companies in the red and yellow “Nitaqat” to help them overcome their crises. Companies which hire Saudi employees will be provided a support of 50 percent of the employee's wages up to a maximum of SR 2,000 per month for a period of two years. The same support will also be provided to establishments in the green zone, which is 50 percent of employee's wages up to SR 3,000 for a period of three years, and the platinum zone, which is 50 percent of the employee's wages up to a maximum of SR 4,000 for four years.

In the same context, there are rumors that the ministry is not only considering reversing this decision now, but also returning financial amounts to owners and applying the previous amount of SR 200 for work permits ... is this true?
This is not true at all, especially since this decision is the decision of the Council of Ministers, and the Ministry of Labor does not have the right to cancel or modify the decision. If there are objections through rational cases by people affected by the decision, the ministry will receive these grievances and study them, and then will submit them to the king for consideration. It is not the right of any organization to refrain from the implementation of the decisions of the Council of Ministers. The ministry will not issue or renew any work permits to those establishments until after the payment of fees has been made in the event that the number of foreign employees exceeds the number of Saudi national employees.

In the same context, when this decision has been made a year ago, did you announce it to those concerned in this matter at that time?
The decision was not made individually or abruptly, but rather it was released with the consent of the Supreme Economic Council, the Council of Ministers, and after the consent of the Chamber of Commerce, which represents business owners.

Over the years, the Ministry of Labor has issued many decisions and orders concerning either the labor market or Saudization. What are the obstacles facing the ministry in the context of their application?
With the high number of expats employed in the Kingdom and the high number of unemployed Saudi citizens, what concerns us most is that in a time when we suffer from unemployment, we find that for every 10 employees working in the private sector, there are only two Saudis for every eight expats. So the aim is to solve the problem of long-term unemployment in the country, as well as harmonize the labor market, and improve educational outcomes and training according to the needs of the labor market. We must review the policies and mechanisms of government support for the various sectors and develop support mechanisms for small enterprises, while coordinating between them and the various ministries. All these challenges will not be overcome easily or quickly, or through the Ministry of Labor only. It will need the coordination and integration of a wide range of different ministries and agencies. In the short term, there are challenges that are in the scope of responsibilities of the Ministry of Labor, which are the replacement policies that will help to make our sons and daughters replace foreign workers in some jobs that are suitable for them and with reasonable salaries. There is also the issue of building and providing an integrated database for job seekers and the modernization and development of mechanisms to create jobs and facilitate the substitution by citizens.

As the first of its kind, the organization responsible for Technical and Vocational Training recently implemented a professional examination program for more than 6 million foreign workers. Have you received any insight on the latest developments in this project?
The application of the test program will also include training of citizens and professionals, enabling them to obtain a license to practice the profession. As for migrant workers, they will be associated with this test in a future phase of the renewal of residence permits.

What are the major challenges facing young Saudis now, and what are the solutions from your point of view?
We want to change this negative mental perception of owners of private enterprises about job seekers within the community. We also want to change the negative mental perception of youth about owners of private enterprises in general, and to do so, we have created a media marketing campaign to document the true success stories in our society to be promoted through the Internet first, followed by other media channels. We are also working on providing training and rehabilitation programs for all.

Are you satisfied with the course of the Saudization process so far?
We have achieved good results over the past year and we have plans and new programs that we will push forward toward the Saudization policy.

How can the Saudi labor market absorb such a large number of graduates, whether from inside or outside the country? Is there a plan drawn up by the ministry to accommodate them?
If we want to finally solve our problems, we must generate more employment opportunities at better and higher levels. This requires a strategic shift in the structure of employment in the private sector, whereby replacing low-wage employment opportunities with better-paying employment opportunities that suit citizens, and at the same cost.
The question that arises is: How will the enormous number of young men and women job seekers (about 2 million job seekers, 85% of whom are women) find employment if the majority of private sector jobs provide low wages? Here, we must look at the experiences of other countries that do not face the same problem and apply the same solutions applied in many countries of the world, especially the advanced ones. However, these cannot be adopted as long as the door to bring in expats at low wages remains open and available at any time. This is what the Cabinet’s decision aims to address.

The first company recruitment will be built in the region of Makkah, with a capital of SR 100 million in the next few days. What is the role expected of this company?
The recruitment companies will offer their services in two areas. The first area is to mediate in labor recruitment and provision of services for household labor. This will be allotted a capital of at least SR 50 million. The second area is to mediate in labor recruitment and provision of services of household labor, and employment of the public sector and the private sector together. The area will be allotted a capital of SR 100 million.

What procedures and special programs are undertaken by the Ministry of Labor to create greater employment opportunities for Saudi women?
The Royal decree concerning the employment of women in female stores was implemented recently, and this program has succeeded despite the challenges it faced. We now have a guideline council composed of 30 women, and this council contributes to helping us think about how to address the problem. Also, we have 13 different initiatives to support women's employment opportunities. There is an initiative to support the work of women in factories and in certain places of the private sector. Also, our studies on telecommunications, domestic work and part-time work are in place. This is besides the provision of support services, such as the provision of transportation and provision to facilitate children's nurseries in the workplace.