What is Nitaqat Policy

The Nitaqat is a policy enacted in 2011 by the Saudi government in order to reduce the unemployment rate among Saudi citizens. The policy makes it mandatory for Saudi Companies to reserve 10% of jobs for Saudi Nationals.

What are the possible Consequences of Nitaqat policy?

 

Nationalisation policies, and specifically Nitaqat, intend to increase Saudi employment in the private sector, which Saudi citizens have consistently avoided to either pursue or queue for higher paid jobs with better working conditions in the public sector. Our analysis shows that the policy increased the number of Saudis working in the exporting sector, but that this achievement came at a significant cost for the firms, as well as for the competitiveness of the economy as a whole.

How Nitaqat work? 

‘Nitaqat’ which means ‘Ranges’ classifies Saudi labor market into following ranges

Excellent : establishments which have highest localization ratio in their workforce 

Green: establishments which have high localization ratio Yellow : low localization ratio 

Red : lowest localization ratio.

The establishments which will be in Excellent and Green ranges will have advantages and rewards while those in Yellow and Red category will be under pressure to comply with the law.