With the unemployment level among the younger generation of Saudi nationals running at such a high rate, it's crucial for the future health of the nation that the Saudization program is a success, Hay Group said in its "Nitaqat in the Spotlight" survey. The global management consultancy revealed that there is a disconnect between key stakeholders that needs to be tackled in order to address the concerns of private sector employers. Nitaqat, the Kingdom's program for measuring nationalization, poses real challenges to businesses which are tackling knowledge transfer and succession planning within their organizations, Hay Group said. The survey noted that the remarkable commitment to education reforms which are progressing the knowledge economy of the Kingdom at a rapid pace, will only be fully realized if private businesses are aligned with the intentions of the government. The survey, while looking at the views of expatriates working in the Kingdom, also highlighted the steps that should be taken to better align the needs and expectations of the government, business and education sector. Chance Wilson, General Manager of Hay Group in Saudi Arabia, said the report provides new insight into how private sector business views the program. "On the surface, national and expatriate leaders talk about a knowledge and skills gap between expatriates and the national workforce but on closer examination this is rooted in a deeper misalignment between the private, public and education sectors in the Kingdom. These are not matters that can be addressed in isolation by private companies or the Ministry of Labor," he said. "Leaders in our research tell us their concerns regarding Saudization centre around the work-readiness of Saudi nationals, fit to role and difficulties with the process of knowledge transfer. Many feel that the approach of recruiting in order to meet a Saudization target, followed by training for a specific role, means new recruits are sometimes not given the opportunity to find their true vocation." "Overall, expatriates in our research are supportive of Nitaqat and feel it is the right thing to do, with respondents overwhelmingly agreeing with this statement. They also told us they feel a great responsibility for knowledge transfer, with 37 per cent of responses concurring with this statement. However, 37 per cent of respondents said their organization has been unable to find a Saudi national with the required knowledge, skills and experience to Saudize their role, which suggests companies are struggling with implementation due to deeper-rooted issues despite comprehensive support from the Ministry of Labor." On the whole, private companies have embraced the Nitaqat program, but it hasn't been without its controversies, the survey noted. The Nitaqat program takes into account the sector-specific challenges in achieving nationalization as it compares each company to its immediate peer group (based on the economic activity/sector and size cohort). Nevertheless, it is certainly not an easy program for many organizations to adjust to, particularly those in sectors such as construction that have traditionally depended on a large number of foreign workers. According to our survey, 30 percent of expatriates think that the Saudization thresholds in the Nitaqat program provide useful guidance in encouraging their organization to meet its Saudization targets. 40 per cent say that it will force compliance because penalties are severe. What private sector organizations are most worried about is the possibility of the Nitaqat program having a negative impact on overall company performance. Sixty two percent of respondents said that Saudization will not enhance the performance of their organization and only 10 percent said that it would. Two related factors give rise to these concerns: Firstly, respondents told us they are worried about the disconnect between skills, education and experience of the candidates that are often not a natural fit for the roles that organizations need to fill. This means that additional support and training will be required. Organizations cannot expect new recruits to hit the ground running and enhance profitability immediately. Perhaps this short-term investment is an important one, and a phase the business has to endure to support the courageous nationalization agenda and extend a helping hand to young Saudi nationals trying to get a foothold on the employment ladder. Companies that are truly committed to Saudization need to be prepared to invest time in developing and coaching Saudi nationals. Facilitating knowledge transfer in this way will help in the process of creating sustainable employment for the national workforce. The second worry among private sector organizations is the rising salary expectations of Saudi nationals. Compared to five, or even three years ago, Saudi nationals are much more in demand, making it an employees' market, especially for those with good qualifications and experience. Hay Group salary report for 2011 indicates that salaries rose at an average rate of 4.4 percent last year in the Kingdom and are forecast to increase by a similar amount next year. The pressures on organizations to achieve their Saudization target is partly reflected in the fact that Saudi nationals are paid 13 per cent higher than the general market average. For private sector organizations this is certainly a challenge as they strive to compete with public sector packages whilst remaining commercially competitive. Hay Group's Compensation and Benefits report for Saudi Arabia 2011 also found that employee retention was becoming a more sensitive issue in the 12 months preceding the report, with 30 percent of organizations stating that employee retention had become more difficult. This is an increase of 10 percent over the previous year's figures. This is why many private sector organizations are feeling somewhat conflicted when it comes to Nitaqat. On the one hand they understand the need for change, and crucially support the change, but they also want to work with the government to create legislation that supports sustainable growth. Equally they feel they can't afford to shoulder the costs of Saudization because they are in direct competition with the public sector for nationals. Public sector jobs have traditionally offered attractive working conditions with better pay at more junior levels of work, longer holidays and shorter working hours.
