Saudization programme crackdown closes thousands of firms

Published:  9 Sep at 6 PM
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Tagged: Visas, Australia
The tightening of Saudi Arabian employment laws has forced the closure of 200,000 private companies in the Kingdom over the past year.

Recently-released official figures from the Saudi Labour Ministry have confirmed that the controversial ‘nitiqat’ laws aimed at replacing expat workers with local staff have decimates smaller, private firms unable to comply with the regulations. The laws apply to residency and work visas, and involve quotas for the number of Saudis employed.

According to the ministry, another 40,000 private companies will be forced out of business in the near future. The firms employ around 500,000 expat staff, with only eight per cent of the workforce sourced locally.

Companies in the so-called ‘yellow zone’ are being heavily targeted for not employing enough Saudi workers, with expat workers’ visas being slashed to two years from May next year. According to the ministry, those ignoring the tough new regulations will be prohibited from hiring foreign labour and will be forced out of business.

Many privately-owned businesses in the Kingdom are nominally run by expats but owned by Saudi nationals. Such businesses are complaining that local Saudis have neither the skills nor the experience needed to fill the positions offered.

One reason for the introduction of the newly tightened laws is that the Saudi government is afraid that the recent Arab Spring revolts will spread to the Gulf States. For the same reason, Kuwait, Bahrain, Qatar and Oman have also introduced laws to reduce the number of expat staff and replace them with local labour.

Gulf State governments are relying on job creation for nationals to minimize any chance of revolt, although the schemes have been met with varying levels of success. Across the Gulf States, expats make up around 33 per cent of the total populations, with many in high-level positions in the crucial oil and gas business.
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