This new decision, which was awaited by many citizens working in the private sectors in the Kingdom of Saudi Arabia, and this decision came after many demands to raise the minimum wage in the Kingdom, and after many Saudi workers complained about the problem of low wages in the past years.

What is the human resources domains program and its impact on the decision to raise the minimum wage.
Nitaqat program is considered a standard for motivating private establishments based on the idea of ​​classifying entities that employ ten or more than ten workers, and these domains are (red range, yellow domain, green range, platinum range), according to the percentage of employment in them, so that The red and yellow bands are the least localized, while the green and platinum bands are rated for a higher localization percentage, and the band is calculated according to the localization performance in other entities of the same category, and about the explanation of the domains classifications are as follows:

Platinum: They are distinguished entities with a high localization rate that deserved this scope.
High Green: It has a medium settlement rate and falls within the upper third according to the required settlement rate in the green zone.
Medium green: It includes entities in which the average percentage of localization falls within the average third according to the percentage of localization required for the green zone.
Low Green: It includes medium-sized entities with a percentage of Emiratization, and they fall within the low third of Emiratization.
Yellow range: It includes the entities that have not achieved the required nationalization percentage.
Red range: includes the least and worst localized entities.
It is required that the Saudi worker be calculated within the Saudization percentage in the human resources ranges program by one worker whose wage is not less than four thousand Saudi riyals, and the worker whose monthly wage is equal to the amount of three thousand Saudi riyals is calculated by only half of the Saudization percentages that were calculated in the program.

Also, the Saudi worker whose monthly wage is less than three thousand Saudi riyals is not calculated from the localization percentage that was calculated in the Nitaqat program, and the Saudi worker whose wage is more than three thousand Saudi riyals and less than four thousand Saudi riyals is calculated at only half of the Saudization percentage that Calculated in ranges.

– Part-time workers are calculated from the percentage of localization calculated in the domains of half a Saudi worker for the benefit of the entity to which they belong, provided that social insurance is paid, and the minimum monthly wage is three thousand Saudi riyals, and it is not counted among the inclusion rate with more than two entities.

– Workers in the flexible work system in Saudization according to the Nitaqat program are counted as one third of a Saudi worker for the benefit of the entity to which they belong, provided that they complete a total of 168 working hours, and pay all social security contributions, taking into account all the new ministerial decisions related to flexible work. This decision also includes Saudi students who They reside in the Kingdom of Saudi Arabia on a regular basis and part-time, and those who work part-time on a permanent basis, and those who work in a flexible work system.

The impact of the decision on the insurance treasury:

According to the report of the Social Insurance Institution, the number of Saudis who will benefit from the decision to raise wages to 4000 riyals to be counted in the “Nitaqat” program is 660,497 male and female employees, as the private sector is scheduled to pump approximately 660.49 million riyals to Saudis working in their facilities to ensure that they are not affected by the program “ranges

If we assume that the employee’s salary is the required minimum

On the part of the employee, the value of the pension will increase by 10%, and the support will increase from 300 to 400, with a difference of 100 riyals for each employee

On the part of the company, the value of pensions, risks and support will increase by 12% from 360 to 480 riyals, with a difference of 120

riyals for each employee.

220 Saudi riyals for each Saudi employee = 880 – 660

If we calculate the return on social insurance during one year of this decision = 660,497 employees

* 1000 increase * 22% subscriptions * 12 months = 1,743,712,080 Saudi riyals (the return is approximately two billion Saudi riyals).

The impact of the decision on the company’s treasury:

The company will have to raise its salary scale to a minimum of 4000, i.e. a difference of 1000 riyals from the previous salary.

In order to benefit from the Saudization rates, the company’s budget is likely to be damaged, and strict measures must be taken.

The percentage of Saudi employees’ participation in social insurance will increase by 120 riyals from the previous one, if we assume that the employee’s salary is the minimum required.

Increasing employees’ salaries leads to an increase in employees’ loyalty to the company and increases their effort and keenness on the job, thus increasing their productivity.

Impact of the decision on the employee:

Many job opportunities will be provided with a salary of 4000 and above, thus improving the standard of living and purchasing power. .

With the increase in salaries to 4000, the amount of social insurance deduction for employees will increase (10% for participation).

– Increasing the loyalty of employees to the company and increasing their effort and keenness on the job, and thus increasing their productivity.

Effective date of the decision to raise the minimum wage in Saudi Arabia:
The Ministry confirmed that the effective date of the decision is five months, starting from Wednesday, November 18, 2020 AD.