Saudi Jawazat

Ministry of Labor Cancels Yellow Category of Nitaqat system

Saudi Arabia was earlier known for a workforce all filled with Saudi expats and Saudi citizens to enjoy the development and resources created by them. The culture of Saudis to work and put in the effort for their economy was declining rapidly and the hold of Saudi expats over the country was increasing when the higher authorities put in head together to put forward a scheme that utilizes the Saudi manpower in the industries and companies.

It was this idea when the Nitaqat system came into existence. What is it about? How it benefits the business? What is the new announcement regarding it? Read the exclusive news about the Nitaqat system in the article below.

Nitaqat system, a system of Saudization

Nitaqat system is a program launched in 2011 by the higher authorities to increase the employment of Saudi nationals in the private sector under the Saudi nationalization that aims to give Saudi nationals a fair opportunity in the private market and also to reduce the reliance on foreign workers.

How does this Nitaqat system work in increasing Saudization?

Nitaqat system is the rating system, under which the companies are classified into 4 major zones,

  • Platinum
  • Green
  • Yellow

The first two are complaint zones while the other two are non-complaint. However, the minor zones of differentiation include,

  • High Green
  • Medium Green
  • Low Green

The benefits of being in the complaint zone than in the non-complaint

The compliant zones, platinum, and green have benefits that the other zones do not enjoy. These benefits include,

  • They can obtain and renew work permits for Saudi expat employees through an online process.
  • They can change the profession of Saudi expat employees.
  • They are allowed to hire Saudi expats from red and yellow zoned companies without approval from the current employer.

However, the yellow zoned companies have several disadvantages that include,

  • Limitations to their business operations as a result of non-compliance.
  • Allowance to renew Saudi Iqama for Saudi expats that have stayed in Saudi Arabia for less than 2 years.
  • No permission to apply for new work visas, as well as issue new work permits.

However, companies in the red zone have severe restrictions that include,

  • They are unable to hire new Saudi expat employees.
  • Cannot renew work permits/ Saudi Iqama.
  • Cannot open a new business or branch in Saudi Arabia until they have improved their Nitaqat rating.

The procedure according to which the different companies are categorized

Different companies can entitle themselves to various facilities or limitations depending upon the following 3 major criteria onto which they are rated. They are,

  • Entity classification– The type of primary activities registered with the Ministry of Social and Labor Development (MLSD).
  • Size of the company– The total workforce in the company.
  • Saudization percentage– The number of Saudi nationals employed in the company.

The new order that has threatened the companies in the kingdom

According to the new order issued by The Saudi Minister of Labor and Social Development (MLSD), the yellow category of the Nitaqat system will be canceled and it will be transmitted to the red category.

The idea behind the cancellation of yellow category

According to the statement made by the ministry, the new announcement is made to encourage companies to move out of the yellow category and raise themselves to green or higher categories to:

  • Increase nationalization/ Saudization.
  • More job opportunities for Saudi nationals.
  • Make services available for their citizens.

When will the new order be implemented?

 The decision of canceling the yellow zone and move the companies under this category into the red category will be effective starting from Jan. 27, 2020.

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Source: Saudi Gazette 

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