Saudi Arabia to tighten curbs on foreign workers, say sources

Saudi Arabia plans to tighten restrictions on foreign workers to pressure companies into hiring more Saudi citizens and reduce unemployment among Saudis, government sources said on Monday.

The new policy could help the conservative kingdom achieve one goal of economic reforms launched last year to ease joblessness among Saudis from the current 12.1 percent to 9 percent by 2020.

But by making it harder for firms to employ low-paid foreign workers, thereby raising costs, the policy may complicate other aspects of the reform drive such as developing private sector businesses and diversifying the economy beyond oil.

The new rules could potentially affect large numbers of people since about 12 million foreigners work in Saudi Arabia, doing many of the strenuous, dangerous and lower-paid jobs shunned by 20 million Saudi citizens. About two-thirds of Saudi workers are employed by the public sector.

Under a programme launched in 2011 and known as Nitaqat, the Labour Ministry grades firms according to the ratios of Saudis in their workforces. Companies with higher ratios get preferential treatment when obtaining visas for foreign workers or licences; those in lower categories face penalties.

Under the new policy, construction firms with between 500 and 2,999 workers would have to employ 100 percent Saudis to be in the top “platinum” category; if they employ 10 percent, they are rated “lower green”. This compares to current levels of 16 percent for platinum and 6 percent for lower green.

In the retail sector, a large company’s current percentages are 35 percent for platinum and 24 percent for lower green. This would rise to 100 percent for platinum and 35 percent for lower green, according to an official document seen by Reuters.

Policy will also tightened in many other sectors, according to the document, which lists more than 60 industries in which restrictions will be applied.

Some change is already occurring in Saudi employment practice, with many citizens now working as cashiers and sales people in retail shops – the sort of jobs previously seen as undesirable. But there is still a scarcity of Saudis willing and qualified to work in the construction sector.

The tighter policy has been approved by Labour Minister Ali bin Nasser al-Ghafis, the sources said. It is scheduled to take effect on Sept. 3, one source said, declining to be named because an official announcement has not yet been made.