RIYADH // Saudi Arabia plans to tighten restrictions on foreign workers from September 3 to pressure companies into hiring more Saudi citizens, according to government sources on Monday.

The new policy could help the kingdom achieve one of its economic reform goals launched last year to ease unemployment among Saudis from the current 12.1 per cent to 9 per cent by 2020.

But by making it harder for firms to employ low-paid foreign workers and raising costs, the policy may complicate other aspects of the reform drive such as developing private sector businesses and diversifying the economy beyond oil.

The new rules could potentially affect large numbers of people since about 12 million foreigners work in Saudi Arabia. About two-thirds of Saudi workers are employed by the public sector.

Under a programme launched in 2011 and known as Nitaqat, the labour ministry grades firms according to the ratios of Saudis in their workforces. Companies with higher ratios get preferential treatment when obtaining visas for foreign workers or licences; those in lower categories face penalties.

Under the new policy, construction firms with between 500 and 2,999 workers would have to employ 100 per cent Saudis to be in the top “platinum” category; if they employ 10 per cent, they are rated “lower green”. This compares to current levels of 16 per cent for platinum and 6 per cent for lower green.

In the retail sector, a large company’s current percentages are 35 per cent for platinum and 24 per cent for lower green. This would rise to 100 per cent for platinum and 35 per cent for lower green, according to an official document.

Policy will also be tightened in many other sectors, according to the document, which lists more than 60 industries in which restrictions will be applied.

Some change is already occurring in Saudi employment practice, with many citizens now working as cashiers and sales people in retail shops. But there is still a scarcity of Saudis willing and qualified to work in the construction sector.

The tighter policy has been approved by labour minister Ali bin Nasser Al Ghafis, the sources said.

* Reuters