Saudiization effort will transform workforce, bolster economic prosperity, experts say
RIYADH: The Kingdom's Saudiization initiative is not just a policy but a transformation strategy aimed at reshaping the nation's workforce and strengthening its economic prosperity.
The policy, also known as the Saudi Nationalization Plan, was implemented by the Ministry of Labor in 2011 and requires Saudi companies to employ a certain percentage of Saudi nationals.
The Nitaqat aspect of the initiative focuses on increasing the proportion of Saudi nationals working in the private sector and narrowing the employment gap with the public sector.
This is closely aligned with the government's Vision 2030, which aims to empower the country's people and promote private sector participation, thereby reducing dependency on oil revenues and fostering sustainable economic development.
In an interview with Arab News, Saudi Arabia-based economist Talat Hafiz highlighted Nitaqat as one of the most important programs that has boosted labor market participation.
He added: “The Nitaqat and Nitaqat Mutawar programs have improved the performance of the labour market by providing decent employment opportunities for the Saudi national workforce in a safe and attractive work environment.”
Since its launch in 2011, Nitaqat has achieved significant milestones and effectively increased the number of Saudi nationals in the private sector workforce. According to the latest figures released by the National Labor Observatory, the number of Saudi nationals working in the private sector was 2.34 million in June, up 16,598 from April.
This success is underpinned by the proactive measures taken to support Saudiization, including a regulatory framework that encourages companies to hire and retain local talent.
As a result, there has been a notable shift towards hiring Saudi Arabian professionals who not only possess technical skills but also a deep understanding of local culture, business practices and regulatory nuances.
Ahmed Boshnak, partner at Bain & Company, said: “One of the key contributions of Saudiization is strengthening local talent development. Through Saudiization, we are focusing on education and vocational training programs that are aligned with the needs of the market.”
“This will equip Saudis with the skills they need to thrive in a variety of sectors, improving their employment prospects and career advancement opportunities,” he added.
Looking to the future
Saudi Arabia is expecting a large influx of young university graduates into the labor market, with around 5 million new entrants expected by 2030.
At the same time, the government aims to create 3 million new jobs in the private sector over the next decade, strengthening efforts to achieve sustainable economic growth and lower unemployment.
The benefits of hiring Saudi Arabian nationals go beyond meeting regulatory requirements to leveraging local expertise to effectively overcome business challenges.
Our Saudi Arabian experts are fluent in Arabic and familiar with local resources, streamlining operations and improving organizational agility.
Hafiz said: “Saudi nationals have a better understanding of the Saudi labour market culture and have proven to be very hardworking workers, thus demonstrating their capabilities in the local labour market.”
He added: “In the long run, I believe it will be more effective and less costly for companies to hire Saudis because they will be able to avoid the labor costs associated with hiring non-Saudis.”
Additionally, incorporating Saudi Arabia's best talent into the workforce will foster national pride and a sense of ownership, contributing to a more cohesive and productive business environment.
Boshnak said: “Saudiization encourages collaboration between the private and public sectors. The initiative will require companies to invest in local talent and promote policies that help hire, train and retain Saudi nationals. This will not only boost jobs, but also foster a culture of inclusivity and sustainability in the workforce, leading to long-term economic stability.”
Complementing regulatory efforts, education initiatives are crucial in equipping Saudi youth with the skills they need to succeed in a rapidly changing job market.
The Fuel program, a collaboration between the Ministry of Communications and Information Technology, the Saudi Digital Academy, and Coursera, exemplifies this commitment.
By providing customized training in digital skills, the program aims to prepare 100,000 Saudis each year for careers in emerging sectors that are crucial to the Kingdom's digital transformation.
“Both the MCIT and the SDA have played a major role in promoting Saudization as Saudi Arabia moves towards a digital economy and high-tech, which requires a huge number of Saudis,” Hafiz added.
Additionally, the Human Resources Development Fund plays a key role in supporting Saudization through comprehensive programs to increase the employability of Saudi nationals.
These efforts include training, upskilling and employment support to ensure a steady supply of skilled talent to the private sector.
By working closely with small and medium-sized enterprises, the HRDF has promoted job creation and increased the competitiveness of local businesses in various sectors. According to Turki Al Jawini, secretary-general of the HRDF, the organization aims to support jobseekers in the private sector through a fund that pays part of employees' wages.
Ryan Alnesayan, a partner at Arthur D. Little, noted that the number of Saudis working in the private sector grew from 1.7 million to 2.3 million between 2016 and 2023, while female labor force participation rose from 17 percent to 35.3 percent, exceeding the Saudi Vision 2030 target of 30 percent.
He added: “These figures underscore the role of the Saudiization initiative in not only creating more jobs, but also enhancing the quality and diversity of the workforce, placing Saudis at the forefront of economic growth and development.”
Companies will also play a key role in driving Saudiization by investing in recruitment strategies, talent training and employee development initiatives.
Organizations like NADIA Global provide customized solutions to attract, retain and develop Saudi Arabia’s top talent, thereby strengthening workforce capabilities and organizational resilience.
By prioritizing the development of the local talent pool, companies will not only comply with Saudiization regulations but also contribute to broader socio-economic goals aimed at achieving sustainable growth and prosperity.
Hafiz pointed out: “Regulatory frameworks such as the Nitaqat quota and other programs have played a major role in improving Saudiization as they have rewarded companies that comply with the Saudiization program.”
He added: “For example, HRDF has provided programs and products that enable the efficient and effective delivery and exchange of mentoring, training and empowerment services to increase workforce stability and development in the Saudi Arabian labor market.”
Arthur D. Little promotes local talent development through initiatives such as AFAQs specifically for Saudi Arabian nationals. Alnesayyan explained, adding: “Our customized mentorship and coaching programs focus on developing future leaders, not just filling positions. The goal is clear: to attract and advance Saudi talent into top roles with specialized skills to set new standards across industries.”
As Saudi Arabia continues its journey towards diversifying its economy and becoming more globally competitive, strengthening the rights of Saudi citizens through Saudization remains a cornerstone of its strategic vision.
By developing a skilled and adaptable workforce, the Kingdom will not only reduce economic dependency but also position itself as a hub for innovation, entrepreneurship and technological advancement in the region.
“The potential for Saudi Arabia to drive innovation and entrepreneurship is incredibly promising. Saudization is not just about creating more jobs; it's about developing a generation of skilled, innovative leaders,” Alnesayyan added.
