Nitaqat is a solution to the challenges that the Saudi labour market have been facing, such as; high Saudi unemployment, key positions being given to foreign labour, low productivity, lack of a female workforce and challenges regarding the mismatch between the qualifications obtained and the job opportunities available.
What is Nitaqat?
Nitaqat is a program of Saudization, to increase employment of Saudi nationals in the private sector. Nitaqat uses a rating system, by classifying companies into four zones; platinum, green, yellow and red.
Nitaqat requires employers in the private sector with over 9 employees to hire a certain percentage of Saudi nationals, depending on the company’s industry and the number of employees in the company. Companies with less than 10 employees are exempt from the zoning system, but are still required to hire at least one Saudi national.
How does the colour zoning system work?
Nitaqat uses a colour zoning system to categorize companies into compliant zones, platinum and green, and non-compliant zones, yellow and red.
The compliant zones, platinum and green, obtain certain benefits, that the other zones do not. These benefits include; being able to obtain and renew work permits for foreign employees through an expedited online process, they are able to change a foreign employee’s profession and are allowed to hire employees from red and yellow zoned companies without approval from the employer.
Yellow and red zoned companies have limitations to their business operations as a result of non-compliance. Yellow zoned companies are only allowed to renew visas for employees that have stayed in Saudi Arabia for less than 2 years. Companies that fall under the yellow zone are also not permitted to apply for new work visas as well as issue new work permits.
Companies in the red zone have the most restrictions; they are unable to hire new expatriate employees, renew work permits, or open a new business or branch in Saudi Arabia until they have improved their Nitaqat rating. Yellow and red zoned companies also forfeit their authority to give permission to their employees to change employers in Saudi.