2021 - Restructure Nitaqat - E182495
2021 - Restructure Nitaqat - E182495
2021 - Restructure Nitaqat - E182495
Ministerial Decision
The Minister of Human Resources and Social Development,
Having reviewed the provisions of Article 11 bis, and article no. 26 of the Labor Law issued by the Royal Decree no. (M/51)
dated 23 / 8 / 1426 AH, as amended by the Royal decree no. (M/24) dated on 12/5/1434 AH, as amended by the Royal Decree
no. (M/1) dated on 22/1/1435 AH, as amended by the Royal Decree no. (M/46) dated on 5/6/1436 AH, as amended by the
Royal Decree no. (M/14) dated on 22/2/1440 AH, as amended by the Royal decree no. (M/134) dated on 27/11/1440 AH, as
amended by the Royal decree no. (M/5) dated on 7/1/1442 AH;
Having reviewed the Royal decree no. (38100) dated on 15/8/1433 AH, including the approval of “Nitaqat” program and the
ministerial decision no. (4040) dated on 12 / 10 / 1432 AH regarding the approval of “Nitaqat program document” and the
ministerial decision no. (939) dated 20 / 6 /1438 AH regarding the amendment of Localization rate of economic activities
in “Nitaqat” program and for serving the public interest to regulate the market labor and stimulating the Firm for
Localization;
First: Approve the Restructuring of “Nitaqat” in the program document as per the mechanism set forth in the
procedural manual attached to this decision, including:
Fifth: The VICE Minister for Labor Sector shall take the necessary action to implement this decision.
God Bless,
// Signed //
Procedural Manual
1- Merge small and micro economic activities and add them to other economic activities.
2- Provide a permanent Localization plan for the coming three years for providing the legislative stability.
3- Improve the direct correlation between the number of workers and percentage of Localization needed as
alternative for the rates based on fixed and permanent volumes of Firms.
Accordingly, the updated “Nitaqat” program represents the most important pillars and initiatives of strategic
transformation of the Ministry of Human Resources and Social Development aiming to improve the performance
of labor market and provide an appropriate job opportunity and labor environment safe and attractive for all Saudis.
This manual has been prepared to explain all details related to the updated “Nitqat” program, so that the Firms
and entities working in Kingdom of Saudi Arabia could review the program amendment to enable their internal
systems to cope up with the program and to continue their commitment to the program.
2- Definitions
- Firm: every project managed by a natural or legal person who employs one or more workers for a fee whatever
its kind.
- Entity: the capacity with which the Ministry will deal for the purpose of calculating the Localization rate,
recruitment and transfer of services and which represents all branches of the same economic activity owned by
one Firm.
- Economic activity: a classification of Firms that depends on the business sector practiced by the Entity.
- Expatriate Workers: And workers who is not a GCC citizen and works for an employer in the Kingdom.
- Localization rate: the rate calculated through dividing the total of the average Saudi workers in the Entity’s
Firms by (the total of the average Saudi workers in the entity’s Firms + the total of the average expatriate workers
in the Entity’s Firms) ×100.
- Range: a classification of the Nitaqat Program based on the Localization rate in the Firm.
3- Technical Details:
This Guide is prepared to clarify all the technical details related to Nitaqat Program, including:
The Firm can determine its Range automatically via the following link: click here
The Program runs for three years for the purpose of increasing the Localization rate annually and gradually and
giving the private sector’s Firms the time to align the HR plans. The main clauses of the Guide include:
SECOND: Merge the economic activities in the Nitaqat Program according to the attached Table No. (1).
THIRD: Cancel the classification of Firms according to its size and the applicable Localization rate within Nitaqat
Program and apply the method of calculation of Ranges based on the number of workers.
FORTH: Adopt the table of fixed values of the economic activities according to the details mentioned in the
attached Table No. (2).
(B) Method of calculation of levels for each Range in the Firm:
The Nitaqat Program helps the private sector’s Firms to comply with the Localization rate because it
significantly achieves the compatibility between the Firm’s size and its Localization rate.
Here is an example in the sector of restaurants. The below chart shows the increase in the required Localization
rate when the Firm’s size increases in the restaurants sector in the previous system. We notice that the
required Localization rate increases significantly, when the number of workers is 500 and more.
Localization rate
Total workers
Low Green Medium Green High Green Platinum
In contrast, the following chart shows how the Nitaqat Program addressed this problem through making the
relation between the Firm’s size and the Localization rate more compatible, which make it easy for the Firms to
comply with the Localization rate and help to its growth.
Nitaqat System- Restaurants Sector
Localization rate
Total workerss
Low Green Medium Green High Green Platinum
R = M Log (O) + W
The color of the Firm’s Range is determined through applying (N) which is the Localization rate of the Entity and
comparing it with the Ranges according to the values mentioned in the previous table (R) as follows:
Example: Abdullah Al Barak Factory For Plastic Products is a manufacturing company that employs 400 workers
and its Localization rate is (38.75%).
1. Specify the Firm’s activity from the Annex No. (2) (Industrial Sector)
2. Specify the value (M) (The fixed value of the curve of Localization of the economic activity and the range).
3. Specify the value (W) (The absolute fixed value of the curve of Localization of the economic activity and the
range/per year) from the Annex No. (2) according to the table below.
4. Use the following equation to calculate the minimum for each Range:
R = M Log (O) + W
B- Calculate the register (Manpower) and the natural log of total workers in the Firm (Total number of workers
is 400).
The Range of the company for the first year is Platinum because the Localization rate of the Firm (38.75%) is
more than the minimum of the Platinum Range which is (36.33%).
The Range of the company for the second year is Medium Green because the Localization rate of the Firm
(38.75%) is more than the minimum of the Medium Green Range which is (34.07%).
The Range of the company for the third year and beyond is Low Green because the Localization rate of the Firm
(38.75%) is more than the minimum of the Medium Green Range which is (35.15%).
Platinum Range:
Receiving applications for visa balance for available occupations.
The Entity may change the occupations of expatriate workers to any other available occupations, taking
into account the requirements of changing the occupation contained in the provisions of the Unified
Guidelines of Customer Services, the Executive Regulation of the Labor Law and the relevant ministerial
decisions.
The Entity may renew the work permits of its expatriate workers, regardless of the duration of their
stay, provided that the remaining workers’ stay does not exceed six months upon renewal.
The Entity may transfer the services of expatriate workers from any Range, taking into account the
controls of such service and the requirements set forth in the Executive Regulation of the Labor Law
and the relevant ministerial decisions.
The Entity may grant a compensatory visa for every workers whose status is left permanently, taking
into account the requirements for obtaining an alternative visa upon the final exit (Compensatory Visa).
The instant calculation in Nitaqat Program.
High Green Range:
Red Range:
The Entity may not change the occupations of its expatriate workers.
No expatriate workers’ services may be transferred thereto.
The entity may not apply for any new visas.
No work permits may be issued for new expatriate workers.
The entity may not open a file for a new Firm or branch.
The entity may not renew the work permits of its expatriate workers.
Annex No. (1)
This table shows and merges the current activities of "Nitaqat" Program with the updated new activities.
Air Transport
Laundries