Saudization Policy and The 3 Major Issues of Recruitment Industry

Saudization Policy is one of the most challenging or, should I say, toughest areas for recruiters in order to find the best local talent available in the Kingdom, nowadays.

In recruitment or HR parlance, a ‘local’ would mean a citizen or a national living in his own country. Although I am physically living in the country and has the right to stay or work, I cannot be considered as a local.

And since the population of the country is less, citizenship is the main issue for recruitment specialists like me.

Now, if you are an expatriate (even if you are not in Saudi Arabia or your working elsewhere like in Singapore, UK, or UAE), where there is a tough policy about hiring foreigners, you will definitely find difficulty in this profession. Here are some of the reasons:

1. High government intervention

This policy means a company in Saudi Arabia should prioritize Saudis in hiring for employment before other nationalities in order to avoid penalty being imposed by the government. In Saudi Arabia, the ratio would be 1:10 (i.e., 1 Saudi is equivalent to 10 expatriates). If this is not followed, either the company will not be able to employ expatriates in the future or the company will close down its operation at the worst.

On a positive note, this is quite understandable and normal for the national government to have this kind of policy. I agree that every country must prioritize its citizens before other nationalities.  However, we are speaking about availability of local talents which sometimes are not found in the market.

2. Salary Allocation

Law of Supply and Demand where: when the supply is low, the demand will be high. This concept applies as well in terms of salary packages.

One of the major considerations of the company when it comes to manpower budget is the amount paid or the salaries of its citizens. This may not be applicable in other countries such as in Saudi Arabia. For example, if you are an expatriate, say your profession is a mechanical engineer with no local experience, and depending on your nationality, your local counterpartwill be paid more than double. In addition, the unpleasant thing is it doesn’t matter if you have more than X years of experience. On the other hand, the problem for recruiters like me is finding the local talents who can accept lower wages and, most of the time, we settle on expatriates. If this happens, we go back to the issue of localization as discussed above.

3. The lack of desired technical skills.

Since there are few locals in the market, recruiters will have the tendency to settle on a ‘second option’ candidate or a not-so-fit candidate. The major reason would be due to financial factor. And because of this, it is highly probable that you may not find the best candidate who has the best skill set for the available vacancy. Hence, it affects the productivity of the team and may lead to unfavorable opportunity cost.

Although, localization or Saudization is highly considered, there are some avenues or areas which you can tap in order for you to fulfill your job while closing a manpower requirement.

Your company may call the attention of your government agency and perhaps have a partnership with third party recruitment services provider, in order to have a better pool of local applicants. In Saudi Arabia, the Human Resource Development Fund (HRDF) is an organization that helps companies in searching for suitable candidates, with some financial benefits favorable to the partner company.

Another way is to tap state colleges or universities. There is enough number of applicants to fill in entry-level positions by pooling from the fresh graduates in the top tier universities and colleges.

There are many ways to resolve your recruitment issues, like the tight Saudization Policy here in Saudi Arabia. And as a recruiter, you must be creative in order for you to survive in your profession.