The last twelve months have seen an unprecedented number of changes and reforms to employment, tourism and immigration opportunities in the Kingdom, as the government balances goals around the fair representation of its citizens in the workforce, whilst ensuring that KSA is firmly placed on the map as an attractive destination for foreign investors and talent.
As the Kingdom of Saudi Arabia marks ten years since the introduction of its Saudisation programme, we take a look at how the impact of this, combined with a renewed push towards the country’s Vision 2030 plan, is shaping the immigration landscape.
To understand how transformative recent years have really been for KSA, and to understand the future direction for its workforce, it’s important to understand the backdrop to these reforms.
The Nitaqat framework will have been in place for ten years this year. Under Nitaqat, a private company is required to meet specific Saudisation (the KSA nationalisation policy) thresholds, which are calculated based on the sponsoring entity’s size (total workforce), the industry sector under which it is registered (based on its primary activities as per the Ministry of Labour & Social Development (MLSD) and the number of Saudi nationals employed in the company.
Since the launch of the Nitaqat programme, which can be considered as the nub of all Saudisation policies, there have been a whole raft of changes introduced, retracted, reintroduced, redefined, implemented to enhance the programme and encourage the hiring of Saudi nationals. What impact then, has Saudisation had on the ability of companies to hire overseas nationals in the Kingdom?
Companies under Nitaqat are colour-coded according to their levels of Saudisation, with the highest rating being platinum and the lowest and non-compliant rating being red. Platinum-rated companies are afforded many immigration-related privileges such as expedited processing of immigration requests and preferential treatment of quota allocations. Lower-rated companies are effectively penalised as they are restricted from hiring foreign national employees, and are thus compelled to improve their rating before they can benefit from Platinum perks. In essence, the Nitaqat framework aims to provide incentives for companies that strive towards improving the representation of Saudi nationals in the private sector.
There have been notable revisions to the Nitaqat framework in recent years; such as stringent measures to ramp up Saudization across the board in 2017 where all Nitaqat categories and applicable percentages were amended across all industries, increasing the Saudisation rates. However, more recently, the Kingdom has taken a more holistic approach to try and ensure alignment with their Vision 2030 plans, which resulted in additional modifications to Nitaqat such as:
Another breakthrough has been the introduction of the Tourism Visa in 2019, granting 49 nationalities free visa on arrival status. Whilst the nation’s tourism drive has temporarily stalled due to the COVID-19 pandemic, the Kingdom held some “blockbuster” sporting events pre-Covid-19 and is discussing the possibility of hosting other global events in the near future. This is very much in line with their Vision 2030 plan and the Kingdom’s revolutionary Red Sea project which is focused solely on tourism. Opening up to international travel is likely to increase growth opportunities, and with that comes an increase in interest from investors and would-be expatriates to the country.
In addition to the wave of Saudization measures that have already been introduced and implemented, we have seen Saudisation ratios come into effect in the IT & Communication industry (25% of jobs to be available to locals under specific job titles), and the Accountancy profession (30% of jobs to be available to locals in prescribed positions), in June 2021. Minimum salary thresholds have already been set for Saudi nationals occupying a job on an approved list of professions, in these sectors. Falling foul of the requirements will lead to the suspension of business activities, including the issuance of work visas, and signals the vigor in which the Kingdom will apply new rules to protect their local workforce.
Authorities have also launched a Professional Verification initiative in Saudi Arabia’s private sector to evaluate and verify the skills of foreign nationals. This is due to take effect in July 2021, will affect over 1,000 specialised jobs across 23 sectors, and working expats already in the Kingdom may be required to take an examination through appropriate bodies (examinations will depend on an individual’s profession). The aim is to attract highly skilled expatriates to Saudi Arabia, ensuring that locals have more opportunity in the workforce.
Interestingly, the Kingdom recently introduced a Temporary Work Visit Visa (TWVV) after the removal of a Short Term Work Visit Visa in 2019, to protect the Nitaqat framework (as it was previously viewed as a route to circumvent the Nitaqat process). The TWVV has not been fully rolled out yet, but it is expected to have huge appeal to multinational companies and overseas talent who wish to conduct work in Saudi Arabia but not permanently base themselves in the Kingdom.
Despite the various initiatives that have been introduced to invest and grow the local workforce, there is also a clear intention from the Kingdom to drive investment into the country. The Kingdom’s Vision 2030 hopes to boost its economy by diversifying beyond oil, and setting out commitments to other sectors including manufacturing, education and tourism. KSA’s plan to build a zero-carbon city, the NEOM project, is part of this vision to diversify the economy with investment coming from local and global investors, and approximately 380,000 jobs are expected to be created.
Saudi Arabia’s immigration sponsorship system, Kafalah, is transforming following the launch of the Kingdom’s Labour Reform Initiative. In a move that will be viewed as more expatriate-friendly, the requirement to secure approval from an employer to exit and enter the country has been removed albeit approval is still required from the authorities. Expats will also be able to transfer employment between employers in the private sector (previously an onerous process), subject to meeting certain criteria.
In May this year, the Ministry of Human Resources and Social Development (MHRSD) announced developments of Nitaqat, which are due to become effective from 1 December 2021, with the aim to create 340,000 jobs by 2024. Economic activities (currently standing at 85) that have similar characteristics will be merged into 32 categories to simplify the design of the program. Saudisation ratios will also increase according to the number of employees a company has, as opposed to larger tier group classifications. It is also expected that Saudisation rates will increase on a year by year basis over a three year period, providing greater clarity and help companies workforce plan. We expect more details to be published in the next few months.
Undoubtedly, the Kingdom’s immigration framework will continue to evolve as the government tries to strike a balance between investing in its citizens and encouraging investment; companies and practitioners alike will need to carefully plan ahead and implement strategies to manage the hiring and retention of an expatriate workforce.
Immigration Leader, PwC Legal Middle East
Tel: +971 (0) 4 304 3922
Senior Manager - Immigration, PwC Legal Middle East
Tel: +971 (0) 54 793 3804
Senior Manager - Immigration, PwC Legal Middle East
Tel: +971 (0) 56 682 0572