Saudization goes retail: Rules violators face penalties

September 12, 2018 9:00 am


The Saudi retail sector is the current Saudi leadership focus to lower unemployment among nationals which currently stands at 12.8%.

Fragomen, immigration professionals, said that effective September 11, restrictions on employment of foreign nationals in the Saudi retail sector, across four sub-sectors will be restricted to Saudi nationals only.

“Foreign nationals will be prohibited from working in forty-three different professions,” said Fragomen in a statement based on Saudi’s Labor Ministry.

“Thirteen professions across three additional sub-sectors will be subject to restrictions effective from 9 November 2018, and forty-four designations within five other sub-sectors will be affected from 7 January 2019 onwards.”

Related: Why is the retail sector central to Saudization plans?

Affected sub-sectors

Professions restricted to Saudi nationals are within the below-listed sub-sectors:

From 11 September 2018 onwards:

1-Automobile and motorbike showrooms;

2-Shops selling ready-to-wear apparel, children and men’s clothes;

3-Shops selling home and office furniture; and

4-Shops selling household goods and utensils.

Read: VAT, Saudization, cause sales of mobile phones to drop in the GCC?

From 9 November 2018 onwards:

1-Electrical appliances and electronics shops;

2-Shops selling watches; and

3-Shops selling optical instruments.

From 7 January 2019 onwards:

1-Medical appliances and equipment shops;

2-Shops selling building and construction materials;

3-Shops selling vehicle spare parts;

4-Shops selling carpets; and

5-Confectionary shops.

“Those who violate the decision that aims to replace foreign workers with Saudi workers in these activities will be subject to penalties mentioned in the Law,” the ministry said on its website.

A total of 200 inspectors will be deployed across the kingdom to catch any violating stores from September 11.

Read: Saudi VAT App helps consumers avoid price traps set up by retailers

Macro view

General Authority for Statistics labor reports showed 234,000 foreign workers left the market in the first three months of the year and more than 277,000 in the final quarter of 2017.

Gulf Business reported that Bank of America Merrill Lynch (BofAML) said in a February report that “tens of thousands” of expats could lose their jobs under the restrictions.

About 490,000 jobs at sales outlets of 12 business activities will be Saudized by the beginning of September 2018, according to Mahmoud Mazi, retail sector development manager at Small & Medium Enterprises Authority, Saudi Gazette reported.

“Big and small retail firms have achieved 24% Saudization, with grocery stores registering 10% of the total Saudi employees in the sector,” Mazi said, adding that related agencies are working to increase Saudization rate from 24% to 50% by 2020.

Financial analysts Argaam said that Saudi Arabia’s Ministry of Labor and Social Development is considering to reduce Saudization rate at 12 retail job types to 70% from 100%, according to the ministry guidelines.

“Certain professions are excluded from the Saudization requirement, mainly opticians, car mechanics, watch and maintenance technicians, tailors, cooks, and confectioners, subject to compliance with the general conditions set by the ministry,” said Argaam.

“Last January, the ministry issued a directive limiting 12 jobs at various shops to Saudi nationals, starting from the new Hijri year,” Argaam reported.

Reuters said that Saudi needs 1.2 million jobs by 2022 to hit unemployment targets, and seeks to do so by focusing on the retail sector in order to reduce unemployment to 9%.

Read: Which GCC city is defying the retail apocalypse?

Alshaya endorses Saudization

Alshaya International Trading Company, a leading international franchise operator, has announced excellent progress in the hiring of Saudi retail staff in all customer-facing roles, Arab News reported.

Over 3,250 successful applicants have been offered roles within Alshaya’s portfolio of leading global retail brands, which includes Mothercare, Debenhams, H&M, American Eagle Outfitters, Victoria’s Secret, Bath & Body Works, Starbucks, West Elm, and Vision Express.

Saudization has taken centre stage at Ascott Rafal Olaya Riyadh, ahead of Saudi Arabia’s National Day on 23rd September, with the announcement of two new key staff member appointments at the property.

Ascott trains and hires Saudi professionals 

As KSA celebrates its 86th National Day this month, Ascott has placed a key focus on training and recruitment of Saudi nationals.  Along with the required Saudization obligations in the Kingdom, Ascott is undergoing traineeships and development training for career growth tailored to the requirements of young dedicated people wanting to work in the hospitality industry.

 Ibrahim Tawfig joins as Executive Assistant Manager, overseeing guest services, security, and HR as well as assisting the property’s General Manager with daily operations.  Tawfig has more than 16 years of hospitality experience, specifically within the 5-star hotel market in KSA, having most recently been the Executive Assistant Manager at Le Meridien Madinah.  Prior to that, Tawfig held several hospitality-related positions, including Duty Manager, Front Office Manager, Rooms Division Manager, and Guest Experience Manager.  Tawfig holds an Executive Bachelor’s Degree in Business Administration (Marketing) from King Abdulaziz University in Jeddah, and a High Diploma in Hospitality from Cornell University (USA).

 Abdulrahman Al Mansour has been appointed as the property’s Assistant Director of Sales.  Mansour has been in the hospitality industry for six years and has a sound understanding of the local market and culture.  He has extensive knowledge of branded and independent hotel operations, sales, marketing, revenue, and public relations. He is currently completing his MBA via correspondence at the University of Liverpool (UK) and has, since 2011, completed several sales, PR, and marketing courses.

 Vincent Miccolis, Ascott’s Regional GM for the Middle East, Africa, and Turkey says: “We are proud to welcome two new team members to Ascott Rafal Olaya Riyadh.  They each bring valuable experience and a set of key skills to their roles, and we are confident that this growth is another step to continue providing an outstanding level of service and customer satisfaction to our guests.”

 Ascott, a wholly owned subsidiary of CapitaLand Limited, is one of the world’s leading serviced residence owner-operators.  Its current KSA presence spans 12 properties and 1,624 units, of which five properties are in operation and six are in the pipeline.  This year will see Spectrums Makkah open in Q4, and Ascott Corniche Al Kohbar in early 2019, the first of two properties in the region. KSA has developed to be the largest region across the Middle East for Ascott as it continues to work towards its 2020 target of 2,500 units.

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Hadi Khatib
By Hadi Khatib
Hadi Khatib is a business editor with more than 15 years' experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.



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