Saudization, Emiratization, Omanization and the effects on recruitment
For the last few decades, countries in the GCC have relied heavily on the use of expat and migrant staff to support their rapid growth ambitions. To reduce dependency on expat staff and improve unemployment rates among country-nationals, nationalization programmes such as Saudization, Emiratization, and Omanization have become a key feature of human resource management and recruitment.
What is Emiratization / Omanization / Saudization?
Emiratization, Omanization, and Saudization is simply the term for the UAE, Oman, and Saudi nationalization programmes. These are local laws and policies that aim to:
- Reduce the country’s reliance on expat staff and labor
- Increase employment opportunities in the private sector for locals
- Increase the number of local women in the workforce
- Increase the local workforce’s contribution to the national economy
What does this mean?
Simply put, it means companies must prioritize local candidates over those already living abroad or on resident visas. This practice is in place in many other countries around the world.
For each country, there are specific laws that recruitment specialists, companies, and HRs must be aware of during their recruitment process.
Emiratization in the United Arab Emirates
In the United Arab Emirates (UAE), several laws and initiatives came into force in late 2022 to support the Emiratization initiatives:
- All companies must ensure that 2% of their workforce is Emirati, working towards 10% by 2026
- Companies that don’t meet their target may face fines
- If the UAE national resigns, the company must replace them with an Emirati “instantly”, according to the Ministry of Human Resources and Emiratisation (MoHRE)
- Companies that surpass their Emiratization targets are incentivised with discounts on MoHRE fees
The Emiritization percentage applies to those companies registered with MoHRE based on the number of work permits registered on the ministry’s system. There are, however, a few exemptions to these laws. You do not currently have to achieve these targets if you are:
- A company with less than 50 people
- Businesses based in free zones
Saudization in the Kingdom of Saudi Arabia
The official name of the Saudization programme in Saudi Arabia is called Nitaqat. Nitaqat was launched by the Saudi Ministry of Human Resources and Social Development (HRSD). The Saudi nationalization policy has been in place since 1985 and is part of ‘Vision 2030’, which aims to reduce dependency on Oil and Gas. The fundamental laws and policies of Nitaqat include:
- Nitaqat applies to all entities with 6+ employees
- Nitaqat divides private companies in Saudi Arabia into five categories: Platinum, High Green, Mid Green, Low Green, and Red.
- Each color zone represents the percentage of nationals required within a company, as well as what rules and regulations apply to that zone:
- Red Zone: 0 – 16.21%
- Low Green Zone: 16.22 – 19.25
- Medium Green Zone: 19.26 – 23.11%
- High Green Zone: 23.12 – 26.51%
- Platinum Zone: 26.52 – 100%
- The zone you are in will determine the rules for issuing new visas, your ability to hire new expat staff, and any limitations on the opening of new company branches within the country
Omanization in Oman
Omanization has been in operation since 1988. Some of the measures put in place in recent years have led to a decline in the number of expat staff and an increase in Omanis working for private companies. However, some companies have struggled to reach the quotas.
- The approach to nationalization in Oman is based on quotas for six areas of private industry: Banking and Finance (60%), Industrial Sector (35%), Hotels and Restaurants (30%), Wholesale and Retail Sector (20%), Contracting (15%).
- Free zones offer lower Omanization rates based on years of operation.
What does this mean for recruitment and people applying for jobs in the UAE, Saudi Arabia, and Oman?
While these are undoubtedly important initiatives, the laws have left some companies juggling roles they simply can’t fill in the local market. In some cases, this has led to project descoping. For others, this has led to an increase in hiring employees from third-party sources such as freelancers and contractors or using recruitment providers to help balance the numbers. Another option is outsourcing. Outsourcing is a practice used by organizations to reduce costs by assigning tasks or job functions to a third party rather than hiring someone in-house.
There are many pros and cons to each of these hiring approaches. For recruiters, this can help their organization hire the right people with the right skills while remaining compliant with local laws. However, these approaches can also lead to knowledge drain, fragmentation, culture, and integration issues in the long term. For job-seekers, it’s important that you get clarity on who exactly is hiring you – the benefits, salary, and culture may differ if you are being hired by an outsourcing company versus the in-house company or client.
Research by Deloitte found that leaders believe labor and skills shortages are among the top external threats likely to disrupt their business strategies. A Together 2021 UAE Culture survey found that 88% of the UAE workforce would consider leaving their job due to poor organizational culture. This, combined with the recent challenges of the ‘great resignation’ and ‘quiet quitting’, means that recruiters, HR teams, and businesses must double down on their corporate culture initiatives. Companies now need to invest more in upskilling, commit to long-term training, engage employees, and increase employee retention programmes to stem the loss of skills and the rising cost of recruitment.
For job seekers, it’s good news. Companies are still hungry to find good talent from across the Middle East and the rest of the world. For staff outside the GCC, the shortage of skills means that the region is still a good option for international job hunters. However, it is always advisable to thoroughly research the job, contract, company, and country before you accept a role.
For job seekers:
You can read more about the pros and cons of moving abroad for work here:
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