1. What is Saudization?
Saudization, officially known as Nitaqat, is a policy implemented by the Saudi Arabian government to increase the employment of Saudi nationals in the private sector. Launched by the Ministry of Human Resources and Social Development (MHRSD), the policy mandates private companies to hire a specific quota of Saudi citizens based on the company size and industry sector. For more information please visit Business setup in saudi arabia

2. Objectives of Saudization

  • Reduce unemployment among Saudi nationals.
  • Diversify the economy in line with Vision 2030.
  • Develop local talent and reduce reliance on expatriate labor.
  • Encourage private sector involvement in national development.

3. How Nitaqat Works
Under the Nitaqat system, companies are categorized into different bands based on their level of compliance:

  • Platinum
  • Green (High, Medium, Low)
  • Yellow (phased out in recent years)
  • Red

Higher categories indicate better compliance and provide incentives such as easier access to government services, visa issuance, and foreign worker transfers.

4. Saudization Requirements by Sector
The required Saudization percentage varies by:

  • Industry type (e.g., retail, engineering, hospitality)
  • Company size
  • Job category (some roles are restricted to Saudis only)

Examples of Saudized sectors/roles:

  • Sales roles in retail sectors
  • Human Resources and administrative positions
  • Pharmacy, optometry, and dentistry jobs
  • Engineering and legal professions

5. Enforcement and Penalties
Non-compliant companies may face:

  • Suspension of government services (e.g., visa issuance)
  • Financial penalties
  • Difficulty renewing or transferring foreign workers’ sponsorships

6. Benefits for Compliant Companies

  • Faster processing of labor and visa services
  • Access to incentives and government contracts
  • Competitive advantage in the Saudi labor market

7. Workforce Nationalization Programs
In addition to Nitaqat, the government has launched initiatives such as:

  • Tamheer (training program for fresh graduates)
  • Hadaf (Human Resources Development Fund)
  • Professional Accreditation for certain regulated professions
  • Localization of specific professions by royal decrees

8. Key Challenges

  • Skill mismatch between Saudi job seekers and private sector requirements
  • Cost implications for businesses
  • Managing workforce diversity and productivity

9. Compliance Tips for Employers

  • Conduct workforce planning with Saudization targets in mind
  • Invest in training programs for Saudi employees
  • Use tools provided by MHRSD to track and improve your Nitaqat status
  • Stay updated with regulatory changes and industry-specific rules