200,000 Nitaqat-hit firms close down

JEDDAH: A total of 200,118 private sector companies in the Red Zone of the country's Nitaqat program, out of 1.8 million in 2013, have closed down, according to statistics released by the Ministry of Labor recently. According to the ministry, 58.6 percent of these firms are classified as micro and small enterprises, which are required to employ at least one Saudi national. A total of 180 large companies remain in the Red and Yellow zones for not having the required quota of Saudi workers. The nationalization scheme applies to 255,833 companies, which have 10 or more employees, whereas small companies with less than 10 employees, known to be in the "white" zone, are exempt, but are required to employ at least one Saudi national. Arab News reported in August, quoting Badr Almotawa, a Saudi business analyst, that most of these firms left the market because of the government’s campaign against illegal cover-up businesses and residency and labor law violators. Almotawa said that as many as 36,951 companies remain in the Red and Yellow categories because they failed to employ an adequate number of Saudis. More than 500,000 expats work in Red and Yellow-zoned firms. ARAB NEWS