Saudiization gets a new limit

Posted on June 8, 2011


Nitaqat is aggressive, but will it be effective?

The new Saudiization drive, aptly labeled Nitaqat, is an aggressive strategy to get more local citizens into the workforce. Starting June 11, companies will be placed in one of three categories — green, yellow or red — based on their level of meeting Saudiization targets. Those in the yellow and red bands face punitive action after a five-month grace period. Some statistics: only 40% of Saudis of working age are employed; 43% of 20-24-year-olds are officially unemployed; 51% are below the age of 21; expat workers make up 90% of the private sector workforce.

Given this data, most analysts believe Nitaqat is an idea whose time has come — especially if it helps to satisfy some of the aspirations of the young. However, there needs to be some parallel initiatives to support Nitaqat. For one thing, a concerted and well-structured effort is needed to increase the qualifications and skill-sets available among nationals. For another, the forces of supply and demand will have to be stabilized and respected.

Expatriates who have been working in the Saudi Arabian corporate and government firmament for decades can be forgiven for believing that they have been and will continue to be the main force for nation-building. They can be forgiven for believing that their contribution has been the paramount one. And they can be forgiven for fearing that they may be kicked out of the country.

What cannot be forgiven is the notion — however quietly expressed — that nationals are lazy, demotivated and unwilling to pull their weight in the growth of the Arabian Gulf’s largest economy. There is an element of that in any large workforce and that element cannot be used to tar-brush an entire nation. In India, any corporate environment in which I worked had its share of those who used every trick in the book to shirk work. Not one of these was an expat.

In fact, I remember well the adage that helped us overcome anger that this trend generated among those who had to take on an increased burden. We’d remind each other of the 80-20 Rule: 20% of the people do 80% of the work in any organization.

The chasm between the “workers” and the “shirkers” becomes more noticeable in a country that employs large numbers of expatriates in its corporate sector. And that encourages the expats to believe that they are the ones doing all the work for the “lazy nationals”. After six years in the Middle East, the fact is there are as many hard-working nationals as there are in any country. Some are lazy, most are not.

Encouraging more nationals into the country’s workforce is a noble ideal. It is an effective way to ensure a more equitable distribution of wealth. It also promotes a deeper sense of involvement in and ownership of the nation’s destiny. A balance needs to be struck, however, between the achievement of these ideals and the imperative of enhancing the country’s competitiveness on the global business stage. Will Nitaqat walk that fine line?

More resources on this:

Nitaqat may wipe out 40% of private firms

Saudi job nationalization plan to help expats

Replacing expats

Posted in: Economy