Activation Policies for the Poor in OIC Member States
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model which the government is increasingly looking to move towards greater payments based on
results.
Training
The government has recently launched two initiatives that will give opportunities for the most
disadvantaged in the labour market. The first is Colleges of Excellence, which will establish a
network of vocational colleges across Saudi Arabia. This will provide vocational skills training for the
many jobs in the private sector. These will not necessarily benefit poor individuals but will lead to
access to a number of jobs that did not previously have mainstream training to provide access.
A more specific programme targeting the poor is a current pilot termed, Job Schools. The Job Schools
pilot is targeting those that have completed a period of engagement with employment support and
are nearing their eligibility for unemployment benefits but remain unemployed. These jobseekers
are therefore identified as being a long way from the labour market. Job Schools will provide full-
time participation in further skills development and intensive, work-like activity alongside
supported job search.
Job creation
As a high income country, the Saudi economy is characterised by low rates of labour market
participation of Saudi nationals and high rates of migrant workers particularly in the private sector.
The government has been trying to boost Saudi representation in the private sector for almost a
decade through job creation measures such as quotas. This means there is a very different approach
taken to lower income countries which target job creation through public works programmes and
micro finance activities. Through a policy of ‘Saudization’, quotas were introduced for Saudi national
representation in the workforce of each employer. This requirement was initially set at a flat rate of
30% and was intended to encourage private employers to hire more Saudi nationals. This policy was
abandoned when private firms fell short of the quota with only a third of the target being achieved.
The government then launched a new programme called ‘Nitaqat’ that measured nationalisation
performance based on the number of Saudis employed by the firm relative to the firm’s economic
activity and size. For poor performing firms, restrictions would be put in place regarding work
permit renewals. Policy requiring a number of employed nationals has been opposed by businesses
in Saudi who have argued that the local workforce is costly, lacks skills and is unproductive.
Companies are awarded Red, Yellow, Green or Platinum status according to their performance. This
attracts differential benefits in areas such as foreign visas.
There is an additional element to the program that covers persons with disability PwDs, whereby
hiring of one PwD can count for 4 non-PwD Saudi appointments. To qualify, the PwD must carry a
disability card issued by the Ministry of Social Affairs.
Red, Yellow, Green and Platinum status is issued based on payroll disclosure and the thresholds
attract scrutiny from government to identify gaming behaviour by companies who are close to the
next higher benefit threshold. There is suspicion of gaming based on so called “ghost hiring” of
PwDs, where the individual may (sometimes by mutual agreement) be hired and then left at home.
The PwD element may also have limited impact where companies (sectors) have achieved high
levels of local workforce participation and there is no perceived “need” for further scoring within the
system.
Outcomes are measured at company level but reported by sector (e.g. construction, financial,
communications) and there is frequent media coverage of relative levels of Greens, Reds etc. and
Saudization impact.
Nitaqat is further enhanced by a programme called Mazaya, which provides a series of incentives
and subsidies aimed at employers, employees and job seekers. This includes providing incentives for
employers to employ the local workforce. Examples include payroll rebates, which aims to channel
back funds coming from the levies on foreign workers to the private sector based on merit. This