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Gulf unemployment and government policies: prospects for the Saudi labour quota or Nitaqat system

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  • Mohamed Ramady

Abstract

Saudi Arabia is facing a growing unemployment necessitating some radical rethinking of its current 'localisation' policies, and has introduced the Nitaqat or quota system which classifies local companies in different colour code zones according to the percentage compliance in terms of Saudi nationals employed, with penalties imposed for non-compliance. The government is cognisant that the private sector has to play an important role in job generation, albeit as willing partners, but one in five private companies operating in the Kingdom are a long way from meeting Saudisation targets. The government is also introducing incentives to companies that meet their Nitaqat quotas realising that the private sector's dependence on foreign cheap labour is causing a dilemma as Saudis are reluctant to replace expatriates at current wage levels for many unskilled and semi-skilled sectors. The paper examines the impact on overall national economic growth and productivity should the government also introduce a minimum wage level of SR 3,000 per month for the private sector equal to that in the public sector, under the so-called Hafiz system.

Suggested Citation

  • Mohamed Ramady, 2013. "Gulf unemployment and government policies: prospects for the Saudi labour quota or Nitaqat system," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 5(4), pages 476-498.
    • Handle: RePEc:ids:ijecbr:v:5:y:2013:i:4:p:476-498
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    Citations

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    Cited by:

    1. Faudot, Adrien, 2019. "Saudi Arabia and the rentier regime trap: A critical assessment of the plan Vision 2030," Resources Policy, Elsevier, vol. 62(C), pages 94-101.
    2. Ali, Imran & Ali, Murad & Grigore, Georgiana & Molesworth, Mike & Jin, Zhongqi, 2020. "The moderating role of corporate reputation and employee-company identification on the work-related outcomes of job insecurity resulting from workforce localization policies," Journal of Business Research, Elsevier, vol. 117(C), pages 825-838.
    3. Yahya Z. Alshehhi, 2017. "Demand And Supply Of Labor Market: A Case Of Uae," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 10(4-5), April.
    4. Patricia Cortes & Semiray Kasoolu & Carolina Ines Pan, 2020. "Labor Market Nationalization Policies and Firm Outcomes: Evidence from Saudi Arabia," Growth Lab Working Papers 159, Harvard's Growth Lab.
    5. Abla A. H. Bokhari, 2020. "The Twinning of Inflation and Unemployment Phenomena in Saudi Arabia: Phillips Curve Perspective," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 14(2), June.
    6. Patricia Cortes & Semiray Kasoolu & Carolina Ines Pan, 2020. "Labor Market Nationalization Policies and Firm Outcomes: Evidence from Saudi Arabia," CID Working Papers 381, Center for International Development at Harvard University.
    7. Faudot, Adrien, 2014. "Le régime rentier d’accumulation en Arabie saoudite et son mode de régulation," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 16.

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