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Majority of 269,000 contracting firms have only 9 or less Saudis

The Kingdom has over 269,000 contracting companies, a majority of which have only nine or less Saudi employees, accoding to officials.

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The Kingdom has over 269,000 contracting companies, a majority of which have only nine or less Saudi employees, officials attending the Human Resources Forum said here on Sunday.

The sector has long struggled with the new Ministry of Labor regulations which demand them to employ Saudis, something leaders in this business believe is not achievable — at least in the “short run.”

Muamar Al-Atawi, the head of the contracting committee at the Jeddah Chamber of Commerce and Industry (JCCI), said they have been “shocked” by the new Nitaqat program which demands at least 12% Saudization in this sector. “Saudis will not work in lower level jobs in this sector even if we double the salaries,” Al-Atawi told Saudi Gazette on the sidelines of the forum. He noted that only computer related jobs can be Saudized.

“The ministry is trying to increase the cost of employing expatriates. They believe this will result in employing more Saudis. This cannot be applied to this sector, at lest in the short run. This will only add more cost on contracting companies, which will lead to increased prices.”

Khalid Sindi, the general manager of Qaderoon, a business network company that helps find jobs for the disabled, said that 300,000 special needs people are unemployed.

He said that companies employ special needs people either because they feel pity for them or they consider employing them part of social responsibility or they want to benefit from the Nitaqat program which counts employing one disabled person as four Saudis.

Speaking at the first session of the forum, Ali Al-Othaim, the head of the National Committee for Young Businessmen, said the Kingdom is the fourth country in the world in terms of recruiting from outside its borders. Over 85% of workforce in the labor market is non-Saudi, he said.

Unemployment among Saudis has dropped from 12.1 percent in 2012 to 11.7 percent in 2013. In the same period the number of private sector companies dropped from 1.98 million to 1.78 million. The drop in the number of companies has sharply affected small businesses, Al-Othaim noted, adding that over 190,000 small companies have left the market last year. Such companies had at least 10 employees mandating them to hire at least one Saudi on a minimum salary of SR3,000.

He called on small business owners to follow up their own businesses and register themselves in the social security system. He also demanded that small companies employing nine and less workers should be excluded from the Nitaqat system for at least first five years of their establishment.

Adnan Mandoura, JCCI secretary-general, said about 20 percent of the labor force in the private sector is Saudi. “This is a low percentage and this is the main cause of unemployment. Business leaders have to honestly and transparently converse with the Ministry of Labor officials to come up with alternative solutions.”

He said the JCCI has a strategic plan to help over 4,000 small and medium businesses each year. So far they have provided support to over 4,600 Saudis of both genders. Services provided include training, lectures and workshops.

This article was first published in the Saudi Gazette on Nov. 17, 2014.