EXPERTISE | CORPORATE SERVICES | SAUDIZATION

What is Saudization?

Saudization is a policy that requires overseas' companies to employee a certain percentage of Saudi nationals, when expanding in Saudia Arabia. It's also known as the Saudi Nationalization Scheme or Nitaqat, and is run by the Saudization Agency.

The purpose of Saudization is to reduce unemployment among Saudi citizens and diversify the economy. It's a quota system, which varies by company type, industry, and size - classifying companies based on Saudi employee ratio, and offering incentives or penalties to ensure compliance:

Platinum: Highest level
High Green: Good level
Medium Green: Moderate level
Low Green: Minimum level
Red: Below the required level

What does Saudization look like in practice?

The Nitaqat Program also stipulates that specific positions are reserved for Saudi nationals. We can explain more about this, through our support services for setting up a business in Saudi Arabia. However, as an example:

If you're an international company, then the second employee hired after the General Manager must be a Saudi national.

If you're a company that has up to 5 employees, then at least one must be a Saudi national.

And if your organisation has over 100 employees, then you must have a Saudization rate of at least 30% (although this can vary by sector or license type).

The reality is, many expats enjoy working in an environment where their experience is appreciated by Saudi professionals who want to learn best practice. However, when you're setting up a business in Saudi Arabia, falling foul of the Nitaqat program can have severe consequences. These range from restrictions on getting Saudi work visas or acquiring government contracts, all the way through to fines and financial penalties.

We've supported many companies through Saudization, and can offer tailored advice on the roles and employee regulations that need consideration during Saudization. For general information, you will find more details about Saudization on the official website for Human Resources and Social Development in Saudi Arabia - but we also encourage you to reach out to us, and find out how AEI can guide you with Saudization. Contact us to learn more.

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