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Labor Reform Initiative in Saudi Arabia

The LRI brought into action by MHRSD under the National Transformation Program

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By: Omar Saleem – Director and Deputy CEO of Proven

The Labor Reform Initiative (LRI) brought into action by MHRSD under the National Transformation Program (NTP) has swung the focus back onto shared services and their significance in the business world. This initiative has not only set a strong precedent for the future of workers in the Kingdom of Saudi Arabia (KSA) but also carved a structured model for businesses looking to hire personnel. The road ahead for employees working in the KSA region looks bright as the LRI would strengthen labour competencies, enrich the work environment and put together an inviting job market.

That said, this initiative is not only beneficial for employees but can also turn things around for business owners and employers. Set to go on the floors on March 14, 2021, the LRI aims at integrating improved global mobility services, creating a secured and agile work environment, as well as making long strides in bettering the recruitment process. Among the various changes that these new labour reforms will bring to the business sector, one of the most significant moves is the digital documentation of employment contracts between employers and employees. This will bridge any existing gaps between ex-pats and local workers, promoting a healthier work environment. It will also help give the recruitment process a proper structure, allowing employers to verify employees’ documents digitally, with less hassle and easier access.

Another positive effect that the LRI will have on Saudi’s business world is the advancement of global mobility services. Allowing workers easier mobility between jobs as well as countries can work to the advantage of KSA’s business sector. It will improve Saudi Arabia’s standing as a globally accessible business and employee market. Under the new labour reforms, MHRSD plans to integrate international standards in the Saudi Labor law. This will set an inviting pretext for global organizations to set up their bases, helping the KSA region emerge as an international hub.

The Labor Reform Initiative will also bring forward a more disciplined, well-organized employee base, with personnel from all over the world tapping into opportunities in Saudi Arabia. The initiative will also give way to a stimulating and interactive work environment. This will not only benefit employees working in the region but also increase their productivity, helping businesses achieve their goals sooner and more efficiently.

This initiative has the potential to turn into a win-win situation for employees as well as employers. From steering the job market towards a positive set up to regulating the issuance of reentry and exit visa, the LRI has taken everything into account. With this initiative, the government aims at taking the flexibility, efficiency and competitiveness of the labour market a notch above. The LRI, along with other initiatives such as labour education and awareness, digital documentation of work contracts and other employee-friendly endeavours, can help Saudi Arabia become the hotspot of global organizations and world-class employees.

The new reforms suggest further consideration on behalf of businesses to the importance of HR functions. They now take a closer look, searching for newer ways to optimize the business process. The LRI is an additional toolkit from the Saudi government, meant to create a stronger market for investment and business, all part of an ambitious plan to rebalance the power between the oil and the services sectors.

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