The Kingdom of Saudi Arabia continues to be a key market for multi-national companies as it opens up its markets in line with Vision 2030. Finding the right people and meeting resourcing needs continues to be one of the main challenges businesses face. However, recent developments have opened up a greater range of resourcing options and begun to see atypical models being used in the Kingdom. This article examines those options, including engaging contractors, using manpower supply companies and availing of the various Human Resources Development Fund programs.
In the coming year, many businesses have two stated aims: to increase the number of Saudi staff to comply with Saudisation requirements and to rationalise resourcing and base line costs. This means increasing the number of Saudi staff, potentially reducing the number of non-Saudi staff and looking at alternative resourcing. Recent statistics from the General Authority for Statistics for Q1 2018 shows unemployment at 12.9%, with the number of non-Saudi nationals in the labour market reducing by 796,000 and the number of new Saudi graduates entering the labour market each year standing at 230,000. Youth unemployment (ages 15 to 24) is an average of 54.1% and female youth unemployment is at 75%.
Over the past year, the Ministry of Labour and Social Development has moved to encourage part time working, freelancer working and employment businesses performing manpower supply. Vision 2030 aims to increase female participation in the workforce to 30% (from 22%) and to reduce unemployment to 7% (from 12.8%).
A mechanism for individuals to work as freelancers was launched in October 2017, with 78 designated professionals or roles which can be done on a freelancer basis. An individual wishing to work as a freelancer can log onto the Ministry's website and submit his or her professional certificates with a completed form applying for a freelancer certificate. Once granted he or she can start working on a freelancer basis and should usually register with the General Organisation for Social Insurance (GOSI).
Examples of the designated freelancer activities include being a translator, photographer, graphic engineer, web designer, various IT related roles, and beauticians.
There is at the moment no set definition for freelancing. However, there is a draft Freelance Professions Law being proposed which defines freelance work as activities that directly exploit intellectual and mental talents and depend on personal skills and, which permits freelancers to be engaged as consultants or service providers.
SMEs and Self Employment
Alongside other GCC countries, Saudi Arabia has a number of initiatives to promote the SME sector, with the aim being for more Saudi nationals to start and own their own enterprises. To assist this process, the Human Resources Development Fund (HRDF) has a number of initiatives to help start-ups.
Nine Tenths Program
This program provides financial support for new businesses and also a platform to connect with potential investors as well as providing access to Government and private sector tenders.
The program also acts as an incubator for SMEs and provides an e-commerce platform to coordinate sales, payment and delivery.
A separate program called Bahr aims to provide a platform that connects professional freelancers with clients, including assisting freelancers with website development, translation, writing, designing, sales and marketing, customer service, network management, data analysis, business consulting, engineering and planning. The platform aims to serve as an forum for clients to advertise projects, for freelancers to submit proposals and then to facilitate on line payment and rating of services.
Training Small Enterprises Owners Program
Specialised agencies such as Riyadah train business owners under this program with the HRDF contributing training fees of SAR 3,000 per trainee for programs of 3-5 weeks.
Subsidizing Small Enterprises Owners Program
The HRDF provides funding of SAR 3,000 per month for two years to support start-ups.
In April 2016, the Ministry of Labour issued its Regulations and Rules of Practising the Business of Recruitment and Providing Labour Services to the Executive Regulations of the Labour Law and the Annexes thereto (issued under Ministerial Resolution No 1982 dated 28/6/1437H which regulate the establishment of manpower supply companies.
A recruitment company wishing to provide general labour and domestic labour services, must be a closed shareholding company with a minimum of five Saudi nationals as shareholders; have a clean corporate record with no violations of immigration or labour rules for the past five years and have a capitalisation of SAR 100 million (for general labour recruitment) or of SAR 20 million (for domestic worker recruitment).
To apply for the relevant licence (potentially valid for 10 Hijra years), the corporate entity has to submit its articles of association, an economic feasibility study and have not less than two offices, a five year business plan, plan for labour accommodation as well as a bank guarantee of two percent of the company's capital and submit the recruitment and training plan for Saudi nationals. The company must also present its title deed, deed or lease for labour accommodation and an undertaking regarding the security and safety of its accommodation and branch offices. Its labour accommodation must as a minimum cover ten percent of the number of visas granted to the business.
The manager of a licenced manpower supply agency must be a Saudi national, without criminal convictions or registered violations of immigration or labour regulations.
Within one hundred and twenty days of being granted the licence, the manpower supply company must implement a Saudisation program.
Once a licence is granted, the business must be operational and have started within twelve months. It should have a website, and within one hundred and twenty days be able to submit records electronically to the Ministry, as well as have a portal and database to do so.
Significantly, manpower supply companies have to report to the Ministry on the individuals supplied to their clients and are prohibited from supplying individuals if the end user would effectively be circumventing its obligations under Nitiqat and generally regarding Saudisation.
Work Visit Visas and Commercial Visit Visas
These types of visas permit entry for short periods of time and for specific purposes. Commercial Visit Visas do not permit the holder to work in the Kingdom and are meant for business development activities (certain sectors may face further restrictions in this regard - for example financial services). These types of visas are clearly designed as a 'fly-in fly-out' model, which has its limitations in terms of establishing stable and long term operations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.