Since the launch of the “Vision 2030” program in 2016, Saudi Arabia has been working towards becoming one of the world’s most economically independent countries. The program aims to create a modernized investment and legal framework that boosts private-sector activity and attracts foreign investors to invest in Saudi, diversifying the economy while considering the local workforce’s best interests. To achieve this vision, several reforms have been implemented, and more will be implemented soon. This article focuses on key employment considerations for business setup in Saudi Arabia to benefit from the opportunities presented by “Vision 2030.” Four key employment considerations in Saudi Arabia are discussed, along with major employment developments expected in the upcoming years.
- Employment Legalities in the Kingdom of Saudi Arabia
For any business considering investment in the KSA, it is crucial to understand the legal regulations that govern employment and protect the rights of employees. Some key points to note include:
- Expatriate workers must be hired on a fixed-term contract that is subject to annual renewal.
- Non-Saudi nationals employed under a sponsor cannot work for another employer without formally transferring their IQAMA.
- Employers have the right to place employees of any nationality on probation for a maximum period of 90 days.
- The Working Environment of the Business
To comply with Shari’ah Law, businesses must adhere to certain rules, including contributing to the General Organization for Social Insurance (GOSI), limiting working hours to eight hours a day and 48 hours a week, providing employees with 21-day paid holiday, claiming compensation for unlawful termination, covering medical insurance and expenses, and ensuring an end-of-service award upon termination. The retirement age is 60 for men and 55 for women. A good Government Relations Officer (GRO) service is essential for a successful business in the KSA, allowing entrepreneurs to focus on growth, logistics, and operations.
- Saudization of the workforce
Saudization is the nationalization policy promoting Saudi national employment, a crucial factor for foreign business investors. Employment agencies like TASC help companies acquire Saudi nationals, with over 100,000 active databases. Businesses should have a specific percentage of Saudi nationals to maintain their Nitaqat status.
- Enhancing Women’s Participation in the Workforce
The Saudi government’s “2030 Vision” aims to increase women’s workforce participation from 20% to 30%. In September 2018, certain sectors in Saudi Arabia were reserved exclusively for women, a move known as ‘feminization’. New businesses in the Kingdom are expected to support the government by employing a specified number of female workers. As women graduate from educational institutions, companies must address hiring fewer women employees and comply with labor regulations set by the government. These requirements are:
- Employers must provide a separate workspace that is segregated from men, and both genders should not stay alone together in a workplace.
- Female staff must wear modest and non-transparent clothing.
- Women may not work night shifts.
- Women are not allowed to work in hazardous or harmful jobs like construction workers.
The Vision 2030 initiative is designed to enhance the economy by generating employment opportunities and promoting growth in various sectors. The retail industry is projected to provide over 1 million jobs for Saudi nationals by the year 2030. Both local and international investors must take into account these workforce-related regulations. Adherence to the new guidelines is mandatory, and non-compliance is not an option.
Businesses seeking guidance on setting up operations, government relations (GRO), and recruitment processes in Saudi Arabia can reach out to Business Link for assistance. Business Link ensures full compliance with all labor laws for businesses in Saudi Arabia, guaranteeing protection for employees in situations such as the birth of a child with special needs or health complications in women post-delivery.