Saudi Arabia Eases Domestic Worker Quotas for Human Resources Firms

In a significant development for the human resources management market in Saudi Arabia, the Ministry of Human Resources and Social Development has announced a reform of a rule that required 30 percent of all employees to be domestic workers. This change is expected to balance supply and demand in the support workers sector, improving its legislative environment.

The Reform: A Shift towards Balance

Prior to this decision, companies with fewer than 3,000 employees were obligated to maintain a 30 percent quota of domestic workers. However, those with a workforce ranging from 3,001 to 10,000 employees had to meet a reduced quota of 20 percent, while firms with staffing levels between 10,001 to 15,000 had to adhere to an even lower quota of 10 percent. The revised policy shifts this threshold, exempting companies with more than 15,000 workers from any domestic worker quota.

Impact on Human Resources Firms

The reform has been welcomed by human resources firms in Saudi Arabia, which have acknowledged the benefits of the new rules. Mawarid Manpower Co., for instance, stated that "this decision will have an impact on the company’s business, as it will alleviate the company’s obligation to recruit a specific percentage of the total workforce."

A Boost to the Human Resources Management Market

The policy shift is expected to improve the legislative environment for the support workers sector. Saudi Arabia’s human resources management market has been experiencing rapid growth, with market research firm Horizon Grand View Research projecting a compound annual growth rate of 11.1 percent from 2024 to 2030.

Benefits to Companies

Companies affected by the changes have issued statements welcoming the new rules. Saudi Manpower Solutions Co., also known as SMASCO, highlighted that "this decision aims to achieve a balance between supply and demand, thereby improving the legislative environment for the support (domestic) workers sector."

Maharah Human Resources Co., which employs over 15,000 domestic workers, noted that "it is not required currently to comply with any percentage for the household workers out of the total workforce." The company emphasized the cost-saving benefits of the new system, stating that "it is expected that this decision will have an impact on the company’s long-term business, as it will alleviate the company’s obligation to recruit a specific percentage of the total workforce and reduce recruitment costs for household resources to ensure compliance with previous percentages."

A Step towards Modernization

The reform reflects Saudi Arabia’s broader efforts to modernize labor laws and streamline operations across key sectors. By revising the domestic worker quota rule, the government has demonstrated its commitment to creating a more favorable business environment.

Key Takeaways from the Reform

• The revised policy removes the 30 percent quota for companies with fewer than 3,000 employees.
• Firms with a workforce ranging from 3,001 to 10,000 employees will have to maintain a reduced quota of 20 percent.
• Companies with staffing levels between 10,001 to 15,000 will adhere to an even lower quota of 10 percent.
• Firms with more than 15,000 workers are fully exempt from any domestic worker quota.

Conclusion

The reform of the domestic worker quota rule is a significant development for the human resources management market in Saudi Arabia. By revising this policy, the government has demonstrated its commitment to creating a more favorable business environment and balancing supply and demand in the support workers sector. The benefits of this change are expected to be far-reaching, with companies able to allocate their workforce more efficiently and reduce recruitment costs.

Recommendations for Human Resources Firms

• Review existing policies and procedures to ensure compliance with the revised quota rule.
• Develop strategies to optimize workforce allocation and reduce recruitment costs.
• Take advantage of the improved legislative environment to grow your business and expand your operations.

Future Prospects

The human resources management market in Saudi Arabia is expected to continue growing, driven by the government’s efforts to modernize labor laws and streamline operations. By staying ahead of the curve and adapting to changing regulations, human resources firms can position themselves for success in this rapidly evolving sector.

By embracing these changes and adopting a flexible approach to workforce allocation, companies can capitalize on the opportunities presented by the revised domestic worker quota rule. The future looks bright for Saudi Arabia’s human resources management market, with companies poised to benefit from the improved legislative environment and growing demand for support workers.