Labor Ministry deals double blow to firms in 'red zone'

The Kingdom has started imposing sanctions on companies that have not employed the specified percentage of Saudis, set between 7 and 8 percent under the Nitaqat system. Nitaqat was initiated by the Ministry of Labor to increase the number of Saudis working in the private sector. The system categorizes companies in three zones. In the first category, the so-called green group, are the companies that have succeeded in employing enough Saudis. The yellow group faces a medium threat, while the red group is now under focus of the Ministry of Labor and faces sanctions that include prohibiting them from obtaining new work visas, starting a new branch or transferring a non-Saudis to its sponsorship. The program is currently being implemented alongside the new Hafiz system — also initiated by the Labor Ministry — which grants every Saudi looking for a job a monthly allowance of SR2,000. Private companies seeking to implement Saudization to improve their Nitaqat status encounter major problems due to the simultaneous implementation of the two systems. Saudis who get the allowance are unwilling to accept a job for SR2,000 or less. A Saudi investor in the contracting sector said the implementation of both systems at the same time made it hard to hire local job seekers who are already banking on Hafiz. He objected to the Labor Ministry’s decision to set the minimum rate of Saudis to eight instead of the previous five percent. According to him, the kinds of jobs they offer are technical ones that demand long hours, something Saudis do not accept. “We tend to find jobs for Saudis just to reach the target. They work as security men, drivers or administrators.” He added that Saudi job seekers would now look for high paying jobs, as Hafiz gives them the time to look for better options. Hattab Al-Anazi, spokesman of the Labor Ministry, said the defaulting firms will not get another chance. “We are proud of the green companies that have complied with the national project,” he added. Commenting on the simultaneous implementation of the two systems, Essam Al-Zamil said that private companies “got addicted to paying average salaries of SR700 to foreign workers, while for Saudis the average wage is SR3,200.” Al-Zamil added that in advanced countries, 70 percent of the population tend to work in the private sector, but in the Kingdom this percentage is only 30 percent. This problem, he said, doubles when considering gender, as more Saudi women are excluded from the job market. Describing the Saudi economy as “irrational,” he said that there were two million locals left without work, while the private sector could offer only 500,000 jobs. At the same time, some 400,000 students graduate annually. The way to solve this problem, according to Al-Zamil, was to diversify and capitalize on investment projects in the Kingdom. Asked about the advantage of Hafiz, he said that while its primary goal was to support unemployed Saudis, at the same time it could help indicate a minimum wage and provide data about job seekers. Despite some Shoura Council members suggesting that job seekers should pay back the 50 percent of the Hafiz amount paid by the government as soon as they land jobs, Al-Zamil said that he did not expect this to be implemented, as it would create dissatisfaction in society. For the time being, the ones benefiting most from the two systems are the employment offices, which assist Saudis in getting jobs in return for a SR500 fee. Some of these companies have contracts with the Ministry of Labor to help the job seekers. Other offices are opened for individuals seeking jobs and tend to take 30 percent of their first salary. Al-Zamil said these offices are not violating any rules. "In fact, they are providing a service for which they are free to specify a fee," he added.