Saudi halts operations of one million firms for breaching Saudisation laws

Saudi Arabia’s Ministry of Labour and Social Development reportedly halted the operations of nearly one million companies for violating labour laws as it moves to introduce stricter Saudisation requirements.

The ministry said there were 739,701 private firm suspended and another 255,356 in a precarious position under the Nitaqat system, according to Arabic publication Al-Watan.

There were more than two million private establishments in the kingdom last year.

Nitaqat categorises companies based on the percentage of Saudis in the workforce and imposes either limits or preferential treatment in areas like the granting of visas for foreign workers.

Red and yellow are the lowest tiers and green and platinum are the highest.

Smaller enterprises with nine or less employees have only two categories, red or green, and are only required to have one Saudi employee to enter the green tier.

The report comes as the kingdom eyes changes to the Saudisation system that will place stricter requirements on companies to reach the top tier.

Reuters reported in March that much higher percentages of Saudi workers will be required to reach the platinum category under changes expected to take effect on September 3.

Documents seen by the newswire showed construction firms with between 500 and 2,999 workers would need a 100 per cent Saudi workforce to receive platinum and 10 per cent for ‘lower green’ compared to rates of 16 per cent and 6 per cent for each category today.

The kingdom rejected more than half of the work visa applications it received last year as it embarks on a reform drive that aims to improve Saudi employment levels.

Read: Saudi rejects 63% of work visa applications in 2016 ahead of Nitaqat changes

Under the plans, the labour ministry is making some jobs off limits to foreign workers, starting with mobile accessories shops last year.

It is now moving on to other sectors including healthcare, shopping malls and grocery shops.

Read: Saudi to ban foreign workers from grocery shop jobs