New mechanism to eliminate fake Saudization

New mechanism to eliminate fake Saudization
Updated 11 August 2014

New mechanism to eliminate fake Saudization

New mechanism to eliminate fake Saudization

The Ministry of Labor has established a new mechanism to calculate actual nationalization rates in private sector companies in a bid to weed out fake statistics and encourage Saudi staff retention.
Nationalization rates will be calculated according to weekly employment rates over a 26-week period.
Statistics for Saudi employment will be provided by the General Organization for Social Insurance (GOSI), while the National Information Center at the Interior Ministry will provide figures on expatriates.
Weekly employment rates will also be assessed relative to compulsory nationalization rates stipulated in the Nitaqat scheme.
A source at the Ministry of Labor has asserted that the new mechanism will eliminate the phenomenon of “fake Saudization” and detect such violations, in which corporations register more Saudis than they actually have on their payroll in a bid to increase their overall ranking in the nationalization scheme.
The ministry also confirmed that the new mechanism would make companies less prone to being devalued in the Nitaqat scheme (classified into red, yellow, green and platinum zones depending on the expat-to-Saudi ratio) if Saudis suddenly leave.
“This mechanism stabilizes nationalization rates while ensuring that there be no surprises if Saudi employees suddenly quit,” said the source.
Mufrej Al-Haqbani, deputy Labor Minister, said this mechanism has been improved through an integrated approach using an e-portal and has been presented as a draft law.
“The ministry welcomes notes and suggestions on the new system,” he said.
Calculating the average number of Saudis during a specific time period is the best way since it takes into account appointment, resignation and termination cases, he said. “Several private companies have achieved increased and stable nationalization rates because they have offered a safe and secure working environment for Saudi employees.”
In the event an establishment changes size during the 26-week period, rates will be calculated by taking into account the available weeks the company operated in its original size.
“The Human Resource Development Fund (HADAF) supports the ministry in its initiatives and gives young people more chances to find work,” he said.
“The fund helps establishments find the best candidates for their vacancies through various employment channels, in addition to offering financial support for establishments to pay their employees through a bundle of training and incentive programs.”