approval of the rules and arrangements for the treatment of employees and workers in the targeted sectors for transformation and privatization

The Council of Ministers has approved the rules and arrangements for how to treat employees and workers in sectors targeted for transformation and privatization. Therefore, we have studied and prepared an explanation about these rules for clarifying the volume of investment opportunities that can be exploited through this system. According to what was published by Um Al-Qura newspaper in issue No. ______ dated _____, pursuant to the Council of Ministers Decision No. 616 on 20/10/1442, where the rules and arrangements apply to Saudi Arabian employees and workers in the government agencies in respect of which the decision of transformation or privatization is made.

The competent authority, in coordination with the Ministry of Human Resources and Social Development, establishes fair and clear mechanisms and criteria that define the basis for differentiation between employees and workers, to determine those who will be chosen for transformation.
The system also indicated that the employees will be treated according to their service duration in the government sector as follows:

First: Whoever has a pensionable service period of less than 25 years shall be terminated from the position in which he is employed and shall be given the choice between either the liquidation of his pension rights and the consolidation of his previous service subject to the civil pension law to the new service under the social insurance law.

– Whoever has a period of service calculated for retirement of 25 years or more shall be terminated from the posision in which he is employed, and shall be given the choice between either his assignment to early retirement or the consolidation of his previous term of service subject to the civil pension law to that of his new service subject to the social insurance law.

Many specialists concerned with the local affairs have dealt with a number of issues of transformation and privatization that will applied to public sector employees in the Kingdom for the near future. These changes are aimed at developing human capacities, improving working methods and focusing on productive competencies that will have a special presence in the future of the new functionalism variables at different levels and grades. Also, integrating the retirement with insurances is still the talk of the hour in Saudi community. 

Bender bin Abdulaziz Al–Dabaan, a leader and consultant in the field of human resources – who was one of the most prominent advocates of the process of merging retirement with insurance, stressing that the merger is not easy but not impossible at the same time. What was suggested in his media writings in this regard has been achieved. “Riyadh,” approached the guest and asked a set of questions about transformation and privatization, integration of retirement with insurance, and localization of leadership positions.

The Movement of Change

From your point of view, what are the most important advantages of transformation and privatization?
From my point of view, there are several advantages that result from the transformation and privatization, the most important of which are: First: The movement of change resulting from transformation and privatization will ignite competition in the labor market, whether competitiveness between entities or between individuals, in the sense that entities will ensure that work environments are attractive, and individuals will be keen to continue to raise their efficiency and develop their capabilities to keep up with the development. Second: The employees who transferred to the entities subject to transformation or privatization enjoy better conditions, such as the new compensation and benefits (salaries tied to scales different from those of the civil service, housing allowance, medical insurance, etc.) in addition they are subject to different mechanisms of performance evaluation. Thus, the criteria for entitlement to promotions change based on competence rather than seniority, with an abundance and diversity in vocational training and development programs. Third: Transformation and privatization are expected to create new job opportunities in the labor market, whether by developing new jobs or by hiring to replace the retirees who left the market due to early or normal retirement. Fourth: We may witness a group of new retirees re-enter the market, but through the gateway of trade and entrepreneurship. And thus, they will contribute indirectly in reducing cases of commercial cover-up and creating new opportunities for job seekers.

The real localization starts from the higher management. And the exclusion of the «The Foreign Lobby»

Employees in the public sector are in a state of anticipation and apprehension about where their future career is going in the entity that will be transferred/privatized, the reason goes to a phrase in their minds which is “job security,” and their fear that some entities will exploit the terms of the labor law in terms of non-renewal of the contract, whereas in the public sector there is no specific contract. What is your opinion?

In terms of guarantees, the rules and arrangements on how to treat employees and workers in sectors targeted for transformation and privatization stipulated that the transferee entity is obligated that the contracts of all workers – whose services have been transferred to – shall be for a fixed period of no less than (two years) from the date of the transfer of their services to it. It also stipulated not to terminate the employment contract of any of the workers whose services were transferred to it during the first two years from the date of transfer of their services to it.

In terms of job security, it depends on your ability to add value to yourself not on a job, entity or sector. If we noticed that there is an employee who have fears for job security, that would be related to his fears of being «exposed» as he did not develop himself. It is possible that the last training course he had was in the “typewriter” decades ago! Or that his performance is low, and in both cases his self-confidence is low. The employee, like programs, needs continuous updating to enhance strengths and addressing vulnerabilities, but if he consents to himself idleness and isolation in the comfort zone, he should not complain about job security, and it is fair to mention the rights and obligations of the employee. Just as there are employees who elude and manipulate taking advantage of the loopholes in the human resources law, there are managers who exploit the loopholes in the labor law, and dominate administratively against employees, and abuse their dismissal, and we have to pay attention to the two categories (the negligent employee and the bossy manager)!

After the merger stage, the rights and duties between public and private sector employees will be equal. Who will benefit the most from the merger process, a public or private sector employee?

The observer of the labor market for years is aware of the difference between the two sectors. For example, we note the difference in the probation period in the civil service law (a year), from the probation period in the labor law (three months), as well as the presence of two days off a week in the public sector, compared to a one day off in most private sector entities, and other differences.

But after a period of time, these differences will disappear as a result of the rule of application of the labor law and the social insurance law in the two sectors, and the benefit will be reflected on the Saudi employee regardless of the sector in which he works, making it easier for him to move between the two sectors according to the availability of opportunities without fear of any change that might affect his rights.

You were among those who demanded the process of merging employers and retirement, and you mentioned that one of its advantages is the elimination of illusory Saudization and the restructuring of influential players in the labor market, which enhances localization and eliminates unemployment. What is your vision to achieve that?

From an administrative and organizational side, it is always better to unite the entities, mechanisms and controls that control the labor market. The first steps in this blessed direction began when the Ministry of Civil Service merged with the Ministry of Labor to form the Ministry of Human Resources in February 2020 AD, then added to this step the merger of the Public Pension Agency with the General Organization for Social Insurance in June 2021 AD, and I am one of the optimists, and I expect that our ability to control the labor market (and thus raise the participation of Saudis in the market) will be enhanced whenever we bridge the gap that we were previously suffering from in the duality of employers (civil service and labor), and retirement authorities (retirement and insurance), labor laws (civil service and labor laws), and retirement laws (retirement and social insurance laws).

Quantitative Localization 

What is the importance of localizing leaders in the private sector in your opinion?

Since the launch of the Netakat program in June 2011 AD, I have talked a lot about the necessity to focus on qualitative localization (who do you have?) instead of quantitative localization (how many do you have?), real localization starts from the higher management, and not as the Ministry of Human Resources has been doing for years trying to achieve localization from the lowest level and upwards, knowing or not knowing that its efforts are being hampered by the «anti-localization lobby,» which is led by some expatriates who occupy positions in middle management in some companies.

We are not talking here about the number of leadership opportunities in the labor market, which are undoubtedly not abundant, but we are rather talking about their impact, because if you can localize the higher and middle management of any company, you will be able to localize the rest of the jobs in it, and this facilitates and speeds up the efforts of the Ministry of Human Resources.

With the unemployment rate of 12.6%, it is surprising that the ministry focuses on localizing unwanted jobs for Saudi youths and girls, most of whom hold university qualifications. Why do we insist on localizing vegetable markets, restaurants, cafes and ice cream cars, and delay the localization of jobs of higher value (professionally and financially) such as accounting, financial and leadership positions?

The Ministry of Human Resources announced that it intends in June 2021 AD to study the issue of localization of leadership positions, so how long will it study?

If «Netakat» program had stipulated at the beginning of its launch (June 2011 AD) a 10% localization rate for leadership positions, and we increased it by 10% every year, we would have reached 100% localization of leaders this year.

I am personally one of the most enthusiastic people about the haste to localize leaders. National competencies are the ones that will lead and run our institutions and companies, with sincerity, honesty and competence. There are 9 years left to reach the year 2030 AD, and two years remained from the execution of the decision issued by the government to stop contracting with any foreign commercial company or institution with a regional headquarters outside the Kingdom, starting on January 01, 2024 AD, and this includes the bodies, institutions and funds affiliated with the government or any of its agencies. How do we prepare for the upcoming transformations if we delay in discovering and developing the new generation of leaders?