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Procedural guide for the decision of Nationalization Activity of Consulting Services

The guidelines for the localization of Consultation Services Activities in Saudi have been announced by the Ministry of Human Resource and Social Development and the Ministry of Finance. They have been released in implementation of the ministerial decision regarding the nationalization of entities and establishments of consulting services activity, and for the purposes of applications of the Ministry of Finance’s amendment to the government consulting contracts competitions models, which stipulates that consulting establishments shall abide by nationalization percentages determined by the Ministry of Human Resources and Social Development for these contracts.

This comes within a set of nationalization decisions that the ministry has worked in cooperation and partnership with the concerned governmental and supervisory entities to enable graduates with qualifications to obtain decent job opportunities, provide an appropriate and stimulating work environment for national cadres in the private sector, and enhance their work in important jobs to contribute to the development of the private sector.

In addition to answering the most common questions, this guide has been prepared to clarify all the details relating to the nationalization decision for the activity of consulting services, including the imposed percentages and the mechanism for calculating the percentages on workers, as well as clarifying the support programs provided by the human resources systems supporting the private sector in implementing the decision.

The first phase of the implementation will aim to localize 35% in targeted professions and establishments awarded government consulting contracts or any of the mentioned consulting services activity. While phase two will aim to localize 40% in targeted professions and establishments awarded government consulting contracts or any of the mentioned consulting services activity.

The planned commencement dates are April 6th 2023 for the 1st Phase: 15/09/1444 Hijri corresponding and March 25th 2024 for the 2nd Phase: 15/09/1445 Hijri corresponding.

Naturally, not adhering to the required Saudization percentage levels will result in penalties for the entity, which are:

  • 1. Class C ( 10 Employees or less): 5,000 SAR per exceeding Expat employee
  • 2. Class B ( 11-50 Employees): 10,000 SAR per exceeding Expat employee
  • 3. Class A ( 51 Employees or more): 20,000 SAR per exceeding Expat employee.

The decision for the releasing of the guidelines took into account the conditions of the labor market in the consulting sector, as well as the number of job seekers who graduated from the required specifications, and also took into account those currently studying in the relevant disciplines who will join the labor market in the next few years, as well as the reality of the private sector, and its ability to absorb nationals in different specifications.

The stipulation does have a grace period, which is the period between the date of the issuance of the ministerial decision and the start of applying the percentage. During this period, the facility can work on what enables it to achieve nationalization percentages to reach its target. The following details are taken into account when applying the decision:

  • 1. The decision does not conflict with nationalization percentages in other decisions that apply to the total employees of the establishment according to the Nitaqat program
  • 2. When calculating the number of Saudi workers out of the total number of workers in the targeted professions, the report is made to units (from 0.49 and less, it is close to zero, and from 0.5 and above, it is close to 1).

It is also important to keep in mind that the nationalization decision is applied in parallel with Nitaqat as it is applied to the targeted professions and the penalties stipulated by law regardless of the scope of the facility in Nitaqat. This means the scope of the facility within Nitaqat does not affect the calculation of the Saudization percentage for the target professions.

Also, the decision is applied to the actual work, and in the event that the professional title differs from the actual work, the appropriate penalty is applied. The Ministry of Human Resources and Social Development is constantly working to reduce unemployment and contribute to providing decent jobs for citizens through several initiatives to achieve this. It periodically reviews the required nationalization percentage by maintaining an up-to-date count of graduates and job seekers, and the ability and capacity of the market to absorb them to ensure their full participation in the labor market automatically.

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