What is Nitaqat's Classification?

The Nitaqat classification/rating system for private companies is a process that ensures the private sector's compliance with the Saudization program. Saudization is a nationalization initiative by the Government of Saudi Arabia (Ministry of Human Resources and Development) that aims to reduce the unemployment rate of Saudi nationals. Nitaqats classification or rating system segregates companies in a hierarchical order, depending upon their level of compliance towards Saudization policies. 

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Nitaqat Classification

The Nitaqat Classification or Rating system has five categories, starting from red as the lowest level of compliance, moving up to the platinum level, the most prestigious level of abiding by Nitaqat rules. 

[fs-toc-omit]Platinum

This is the most prestigious classification/rank of Nitaqat. Companies in the platinum category comprise approximately 40% of the Saudi workforce. These companies get maximum benefits from the government of Saudi Arabia for complying with the Saudization laws and regulations. Some of the most important perks that companies in the platinum category enjoy are that employers can easily get visas for their employees every two months or renew the Iqamahs of their employees three months before the expiration date. 

[fs-toc-omit]Green

This is the most common category for Nitaqat. Most private companies fall in the green category. However, they are further segregated into subcategories:

[fs-toc-omit]High-Green, Mid-Green, and Low-Green:‍

Companies in the High-green, Mid-green, and Low-Green categories have a Saudi workforce between 9 and 38%. These companies also enjoy many perks and benefits for developing their businesses offered by the government as a reward for complying with the Saudization rules, yet miss out on the prestigious status of being in the platinum category. 

[fs-toc-omit]Yellow

This is a dangerous classification to fall into. Companies in the Yellow category have a Saudi workforce of between 4 and 7% and face many limitations and challenges in running their business smoothly. Some of the consequences of falling into this category are trouble with the issuance of visas, iqamah renewals, employee retention, and reputational damages. 

[fs-toc-omit]Red

This category defines the lowest level of compliance with Saudization laws. Companies in the Red category have a lower than 4% Saudi workforce and do not benefit from any perks and services the Ministry of Labour offers.

3 Factors that determine the Nitaqat Status

The number of Saudi workforce a private company needs depends on its industry and business activity. Companies with more than six employees must adhere to specific Saudi employment quotas. At the same time, private organizations with fewer than six employees are exempt from the rating system but must employ at least one Saudi national. The Nitaqat status of an entity is determined by:

1. Company Industry: 

Companies are categorized based on their registered business activities or their industry. The Saudization quotas vary from industry to industry and define their Nitaqat classification or ranking. 

There isn't a standard percentage for the ratio of Saudi to expatriate employees; it fluctuates across different sectors. For instance, in the retail industry, in mega malls and retail stores, companies are expected to employ a minimum of 50% Saudis to qualify for a higher category like Green or Platinum. On the other hand, the construction sector only requires 10 to 30% of its workforce to be Saudi nationals. The specific ratio depends on the industry in question.

2. Company Size: 

A company’s size is determined by its total number of employees. Saudization quotas for the number of Saudis to employ vary depending on the size of a company and, therefore, impact its Nitaqat classification or ranking. 

3. Saudization Percentage: 

The percentage of Saudization is calculated based on the number of Saudi national employees in the entity.

How do you calculate the Nitaqat percentage? 

Here is a general overview of the calculation process:

Determine the Target Percentage:

• The government sets specific Saudization targets for each industry and job category.
• These targets vary depending on the nature of the business and the skill level of the positions.

Calculate the Percentage of Saudi Employees:

• Determine the total number of Saudi employees in the company.
• Divide this by the total workforce (Saudi and non-Saudi employees combined).
• Multiply the result by 100 to get the percentage of Saudi employees.

Percentage of Saudi Employees=(Number of Saudi Employees / Total Workforce)×100

Compare with the Nitaqat Categories:

• Depending on the calculated percentage, the company falls into one of the Nitaqat categories.
• The categories include Platinum, Green, Yellow, and Red, with Platinum being the highest Saudization level.

Nitaqat Categories:

• Platinum: Highest Saudization level.
• Green: Good level of Saudization.
• Yellow: Moderate level, with room for improvement.
• Red: Below the required Saudization level, requiring corrective measures.

Why is the Nitaqat Status Important?

Private companies that hire skilled Saudi employees and uphold the spirit of Nitaqat benefit from governmental rewards. Based on the company's Nitaqat classification/rank, companies gain access to various services offered by the Ministry of Labour. The Nitaqat classification/rank fosters trust among clients and stakeholders as the company becomes popular for its excellent compliance with Saudization laws.

Services by the Ministry of Human Resources and Social Development, offered to private companies in the Low Green, Mid Green, High Green, and Platinum ranges include:

• Allow processing visa balance applications for available occupations
• Allow transferring expatriate employees to other available occupations 
• Renewal of work permits for expatriate employees 
• Transfer services of expatriate employees from any range
• Issue compensatory visas for employees with permanent departure status
• Offer instant calculations & all immigration-related processes for employees to move swiftly and smoothly. 

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How can Qureos help with Nitaqat's Status?

Qureos is a talent-matching platform that helps recruiters and hiring managers find relevant talent. Iris is an AI tool by Qureos that enables recruiters to source and attract talent for various positions across multiple industries. Saudi employers looking to hire the right Saudi talent and meet Saudization quotas can leverage Iris to create the right job descriptions, post jobs, and gain access to a skilled talent pool, all in a few seconds. 

It is no secret that private companies looking to thrive in Saudi Arabia and grow their business have to abide by Saudization laws and regulations, planning their business development to align with the Saudi Vision 2030. Hence, all employers in the private sector must take the necessary steps to employ and train Saudis and benefit from the rewards and services offered by the government.