Introduction of Nitaqat
After the Arab Spring in Egypt, Tunisia, Yemen and Libya the Arab world faced difficult times as far as unemployment is concerned. Kingdom of Saudi Arabia in a drive to reduce unemployment introduced a new law known as Nitaqat.
What is Nitaqat?
Nitaqat policy in Kingdom of Saudi Arabia rewards those companies in the Kingdom that meet naturalization requirements varying from 5% to 30% and punishes the companies that do not meet norms of the industry.
How Nitaqat System Works?
Saudi ministry of labor devised this system in order to boost employment of local Saudi people in the private sector. Nitaqat system is a parameter based upon which the performance of private companies is evaluated.
It is evaluated by calculating percentage of Saudi people working the company as compared to the foreign employees.
Based on the type of work in the company, percentage requirement of Saudi employees vary from 6% to over 50%. The performance is classified as red, yellow, green and excellent based on the nationality of people working in the companies.
Implementation of the Nitaqat System
Labor work has been classified into 41 different economic activities or categories by Saudi government. Firms are divided into five sizes. Micro company has workforce of 0-9 employees while firm is classified as giant if it has over 3000 employees.
Ministry keeps an eye on the companies through a network of inspectors. Companies falling in green and excellent categories have the liberty to hire labor or employees from any part of the world. Red and yellow marked companies have certain restrictions to their visas.
Yellow marked companies can renew visas of their workers for a limited time and after that they cannot renew the visa of those employees who have worked less than six years in the Kingdom. Red marked companies cannot renew visas, cannot apply for visas for their workers and cannot apply for opening new business branches.
Why is this System so Hated?
Due to Nitaqat system, Saudi workers will have to be paid a minimum of 3000 Riyals per month. Companies are also bound due to Nitaqat system to hire Saudi workers. They are missing on cheap foreign labor and have to pay higher wages to Saudi workers. This is why companies hate this system so much in Kingdom of Saudi Arabia.
Impacts of Nitaqat on Pakistan
Due to Nitaqat system, a lot of Pakistanis were not able to renew their visas and had to come back to Pakistan. More than 4000 Pakistanis are waiting for Freedom in Saudi jails. They were arrested because they could not get their visas renewed in time when Saudi government gave them deadline to renew visa or leave the Kingdom.