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Thu 28 May 2015 11:29 AM

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Saudisation forces 130,000 contractors to close

Contractors say several government projects are at risk because employment laws are forcing companies to shut up shop

Saudisation forces 130,000 contractors to close
Contractors say Saudisation push is having a negative impact on government jobs. (Bloomberg)

More than 130,000 Saudi contractors have been forced to close down, with many of them citing targets under the government’s Nitaqat – or Saudisation – programme as the root cause of their demise.

The programme was introduced in 2011 in an effort to drive more Saudi nationals into private sector work, but the system has been hit with issues since its introduction, and in August last year it was reported that 200,000 firms of all descriptions in the Kingdom had shut up shop.

The construction industry has taken a considerable hit – with Saudi sources now claiming that more than 130,000 contractors have been forced out of business because they've found it tough hiring the quota of locals required under the law.

While officials say many companies were illegal cover-up businesses, or companies flouting residency and labour laws, experts say that there is a reluctance by some Saudis to enter the private sector, either because the jobs were lower level positions that weren’t attractive, or because the salaries weren’t up to expectations.

Contractors have met with Minister of Labour Mufrej Al-Haqani and requested the Saudisation quota be cut from 10% to 3%, according to one report. They have also asked the ministry to grant more visas for foreign workers so that work can continue on key projects while the issue is ironed out.

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