Saudi’s Nitaqat Law: Trouble for Indian Expats?
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Saudi’s Nitaqat Law: Trouble for Indian Expats?

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Saudi Arabia’s Nitaqat law, designed to localize labor, could cost hundreds of thousands of expatriates their jobs. The prospect of unemployment and even deportation has triggered a wave of anxiety among Indian expatriates in the desert kingdom.

Last month, airports in the southern Indian state of Kerala – the majority of the Indian workforce in Saudi Arabia is from this state – saw hundreds of downcast Indians returning home with their personal belongings.

Among them was Ashraf Ubaidullah (name changed on request), who was running a small grocery shop in Jizan that is “sponsored” by a Saudi. “I was unable to implement the Nitaqat law as I could not afford to hire Saudi workers,” he told The Diplomat on his return to India. A Saudi laborer expects wages that are at least three times higher than those paid to an expatriate worker.

Following the Saudi police crackdown on business establishments late last month, Ubaidullah decided to leave the country, “rather than face deportation.” “There are many more Indians like me in Saudi Arabia,” he said, warning of “an exodus” from there in the coming months.

Enacted in 2011, the Nitaqat law makes it mandatory for all businesses in the private sector to reserve at least 10 percent of jobs for Saudi nationals. Based on their level of compliance, establishments are categorized into Blue, Green, Yellow and Red groups – with Blue and Green businesses having the highest localization ratios, Yellow falling in the intermediate range and Red the least compliant. While Blue and Green establishments are being rewarded and Yellow given more time to implement the changes, companies in the Red zone are under pressure.

According to unnamed official sources cited in the Saudi media, “there are 340,000 businesses in the market with zero Saudization.”

Alwyn Didar Singh, secretary-general of the Federation of Indian Chambers of Commerce and Industry pointed out recently that if each of the 340,000 businesses were to hire an average of two or three Saudis it could result in “displacing some half to one million expatriates, if more jobs are not simultaneously created.” 

Many of those “displaced” by the Saudization could be Indians, who constitute the largest group among the expats in Saudi Arabia.

Saudi Arabia has depended on foreign labor for decades. This has left a large number of its own nationals unemployed. The private sector in particular has preferred to hire foreigners. According to figures provided by the Saudi Ministry of Labor, the kingdom’s private sector provides employment for 6.5 million expatriates, compared with 700,000 Saudis.

It is to tackle unemployment by forcing the private sector to hire locals that the government enacted the Nitaqat law three years ago, and is now acting to enforce it.

Indians, who constitute 20 percent of the 7 million-strong expatriate population in Saudi Arabia, are understandably worried about the impact this law will have on their lives. Many have been working here for years and support large families back home.

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