Nitaqat rules for small businesses under review

Abdulrahman Al-Misbahi JEDDAH — The Ministry of Labor and Social Development is reevaluating the Nitaqat regulations for very small businesses. A source said the ministry was constantly reviewing and enhancing its Saudization policies to meet the demands of the Saudi job market. “Very small businesses were conditioned to have at least nine Saudi employees but that was then amended to at least one Saudi employees. Now the ministry is looking into changing the minimal number of Saudi employees in a very small business to five Saudi employees,” said the source. The source also said small business were required to have a minimum of 10-49 Saudi employees. “The minimum requirement was amended to only six Saudi employees and is now being reevaluated to a minimum of 49 Saudi employees. The ministry ran a survey among small business and very small business owners asking them what they think a fair number of Saudi employees in their business should be,” said the source. The source also said the ministry also evaluated the Saudi job market and its needs. “The ministry aims to engage stakeholders in its decisions to ensure that all new policies serve and protect both business owners and their employees. The ministry also runs regular statistics and surveys to have an accurate reflection of the Saudi job market,” said the source. The source added that very small businesses in the Kingdom — about 1.52 million — constitute 85.6 percent of all businesses in the country. A total of 223,347 small businesses constitute 12 percent of all trading activities. Economic analyst Mohammad Abdulhakim said increasing the minimum requirement for Saudization will decrease the rate of national unemployment as more Saudis will be employed. “Gradually the number of very small businesses will decrease as these businesses will become small businesses with around 6-9 Saudi employees. Because of the change in their status, now these businesses will be forced to employ even more Saudis to meet the minimum requirements for small businesses,” said Abdulhakim. Financial analyst Yasser Al-Taifi said the funding of small businesses will not be affected by the ministry’s planned adjustments. “Loans are extended to businesses based on the quality of their service or product and not based on the number of employees they have. Any new decision must be thoroughly studied. The ministry aims to decrease the rate of unemployment to 6 percent instead of 12 percent by 2030,” said Al-Taifi.