Scrapping of two-year sponsorship transfer rule ‘will threaten SMEs’

Scrapping of two-year sponsorship transfer rule ‘will threaten SMEs’
Updated 23 September 2014

Scrapping of two-year sponsorship transfer rule ‘will threaten SMEs’

Scrapping of two-year sponsorship transfer rule ‘will threaten SMEs’

The Ministry of Labor’s recent decision to revoke a law that stipulates that expats remain under the sponsorship of their employers for a minimum of two years before transferring onto new sponsors may have come to the relief of many, but not everyone is rejoicing.
This decision, which came as a result of several expat workers being unable to renew their residency permits because their employers had an insufficient Saudi-to-expat ratio, will negatively affect small and medium-sized enterprises (SMEs), according to Saeed Hilal, a member in the Saudi Business Center.
“Several SMEs have criticized the decision, which they say will threaten the future of this business sector,” he told Arab News.
Under the old rules, expat workers could only transfer their sponsorships without their current employers’ consent after two years had passed, putting many in limbo.
“The Labor Ministry had taken into account the numerous complaints filed by expat workers, who were stuck with companies in the red zone of the nationalization scheme,” Sultan Al-Harbi, labor office director in Jeddah, told Arab News.
“Expat workers must, however, wait until the end of their contracts to leave their employers,” he said.
“Allowing expats to move companies without informing their employers will cause immense problems for SMEs,” Hilal added.
Several expats have also complained that companies with a high Saudi-to-expat ratio, which are classified in either the green or platinum zones of the Nitaqat nationalization scheme for having a more than 95 percent Saudization rate, are reluctant to hire expats. “I am looking for a job in companies classified in the green or platinum categories, but I have found most of these companies refuse to hire expat workers, especially companies in the petrochemical and oil sectors,” Nader Abbas, a Lebanese resident, told Arab News.