Saudi Arabia's new work permits to improve flexibility in hiring talent from overseas

System will attract workers to 'teach Saudis skills like data science and AI engineering'

A foreign worker at a construction site in the Saudi capital Riyadh. AFP

Saudi Arabia's new work permit classification system will introduce a more flexible approach to hiring high-skilled expats and attracting global talent but less-skilled workers may face more scrutiny, recruiters say.

The kingdom's Ministry of Human Resources and Social Development introduced a new system on Sunday to hire non-Saudis by classifying work permits into three categories of high-skilled, skilled and basic. This is based on specific criteria including educational qualifications, professional experience, professional skills, wages and age.

"This initiative aims to foster an attractive labour market and empower human competencies within a professional and sustainable work environment," the ministry said at the time.

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The system will be introduced in two phases, according to the ministry. The kingdom’s reclassification of work permits for those currently employed in the labour market was scheduled to take effect on July 5. From August 3 onwards, it will start the classification of work permits for those entering the kingdom.

Recruiters say the move is largely a positive step for the kingdom's labour market but are watching how the new rules will be introduced.

If you are high-skilled and well-paid, you are fine. But if you are low-skilled or borderline, you are at risk

Nevin Lewis,
chief executive of Black & Grey HR

"It is good in theory, but execution will decide if it’s truly business-friendly or just another bureaucratic drag," Nevin Lewis, chief executive of Black & Grey HR, told The National.

"For Saudis, it's good, for expats, it's a mixed bag. If you are high-skilled and well-paid, you are fine. But if you are low-skilled or borderline, you are at risk. More paperwork, more scrutiny and more chance your role will be 'Saudised'."

Positions such as administration, clerical work, drivers, helpers, junior HR executives, junior accountants, retail floor staff and call centres will "get squeezed first", followed by mid-level support roles including junior supervisors, co-ordinators and technicians, he added.

"If you're easy to replace, you're exposed," Mr Lewis said. "Engineers, tech specialists, senior finance and C-suite niche roles will stay attractive for expats."

Companies in the non-oil private sector in the kingdom are hiring at a fast pace. In June, business conditions strengthened, spurring volumes of new work and an acceleration in hiring activity that resulted in the sharpest rise in employment levels since May 2011, the latest PMI report by S&P Global found.

Non-oil companies' outlook for the year was bullish as they remained confident of an uplift in activity over the next 12 months, with the degree of positivity rising to a two-year high, the report showed. Optimism was driven largely by resilient domestic economic conditions, robust demand and improving sales pipelines.

Saudi Arabia's economy grew 2.7 per cent in the first quarter, fuelled by a 4.2 per cent jump in non-oil activities, as the kingdom pushes ahead with diversifying from hydrocarbons.

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The new skills-based work permit classification system aims to achieve strategic objectives including improving the performance of workers and transferring expertise to the Saudi labour market by attracting highly skilled workers, the ministry said. This comes amid the kingdom's push for Saudisation and more job creation for citizens.

Recruiters say the system will take into account non-Saudi workers who may have slipped through the cracks in previous classifications.

"If you have somebody with 30 years of experience but they haven't got a degree, you can still get them into the kingdom because you weigh one [skill] against another," David Mackenzie, group managing director at Mackenzie Jones Group, told The National.

The new system takes a more pragmatic approach in classifying jobs that Saudis can do against positions for which expats are needed to fill a gap in highly skilled talent.

"The system seems to be a lot more flexible ... if you're an AI engineer you can come in as a highly skilled person because that's what the kingdom needs at the moment," Mr Mackenzie said. "But if you're an HR person, you're further down the line because there are Saudis that can do the job."

The move is a positive and flexible way of bringing much-needed talent into the kingdom in areas such as AI, health care and technology, sectors in which Saudi talent has yet to develop fully.

"I think what the Saudi authorities are realising is that there are some [job] categories that they can easily fill with Saudis," Mr Mackenzie said. "What they need now is to bring in talent who can teach Saudis other skills, such as data science and AI engineering."