The term “Saudisation” has been around for many years and has its primary origins in policies that were brought in after the last global financial crisis in 2008. At the time, I was working as an HR Director of a large regional law firm in the Middle East.

For those not familiar with the term, Saudisation is essentially a catch all name for policies that support the shift of Saudis into employment and into roles which might otherwise have been undertaken by ex-pats. The driver at the time was the fact that KSA had one of the highest youth unemployment rates in the world (29%), and an overall unemployment rate in excess of 12%. The other related driver was the fact that 80 percent of all roles in the private sector were occupied by expats. The process of “Saudisation” began more on a softly, softly basis, and was effectively linked to a quota approach based on sector and company size along with role/salary. Some roles which were viewed as more menial were not included in the policy on the basis that they were best suited to non-Saudi labour. The first wave of Saudisation which I saw for myself was from 2011 onwards:

“The first wave (July 2011 – January 2013) was successful in increasing overall Saudi employment in the private sector, however it came at the high cost of firm exits, increasing labour costs, shrinking firm size and declining labour productivity”. (Harvard Working Paper No132 July 2021)

Whilst I completely supported the logic for “Saudisation”, I could see for myself some of the challenges that went with this type of approach. The private sector was no longer simply able to select the best candidate for a role, they now had to be mindful of the nationality composition of their workforce which at times could, and did, negatively impact on service/production levels.

Whichever way you look at it, it clearly makes no sense for a rich country like KSA to have high unemployment, and just accept that its nationals should be excluded from the private sector. The reliance on foreign labour in the private sector, particularly for highly skilled roles, had to stop and there have been a plethora of rule changes ever since to reduce the dependence on expats.

When I was in the region, my law firm had always employed a mix of Saudi nationals and ex pats as lawyers in our KSA offices. Finding KSA lawyers had been challenging as the route to admission was complicated and the talent pool small. Now, the pool is a little bigger with around 9500 registered lawyers with a further 8000 in training (source:Zawya.com/legal/June 30 2021). Although a significant proportion of these may well stay within the government/courts sector, others will head for private practice. To put this into context, while the UK has double the population of KSA, it has over 160,000 practising lawyers. Given the number of projects and phenomenal growth going on in KSA, the figure of 9500 lawyers is clearly insufficient to meet the envisaged demand. It is also true to say that there is an experience deficit for many Saudi lawyers which will require expert legal mentoring and support to overcome given the complexity of the projects involved and legal advice required.

If we fast forward to the present day, there are a number of interesting developments going on in the legal sector in KSA. Whilst foreign law firms have previously only been allowed to operate in KSA if they have been in association with a local firm, they now have the additional option of operating as entities in their own right. Whilst this development is positive, it is by no means straight forward. In the past when I oversaw our KSA offices, it was the case that some work was sent elsewhere in the region to be worked on as we did not always have sufficient expertise on the ground. Under the new regulations, international law firms that opt to be stand alone cannot simply use their presence in KSA as a representative office supported by a larger network outside of the jurisdiction. At least 70% of the work must be done in KSA and the senior lawyers in these entities must be resident in the Kingdom.

In the past, I know of lawyers in some firms who resided in Bahrain but notionally worked in KSA which typically meant the odd flying visit. This arrangement would now be very difficult to sustain. The new requirements also set out obligations for stand-alone international entities to train local Saudi lawyers and maintain appropriate levels of Saudi nationals as support for the firm’s operations.  My previous firm had already been working to this brief and even as far back as 10 years ago, training local lawyers was central to the philosophy of our operations in overseas jurisdictions.

Perhaps the more challenging aspect of Saudisation and its’ impact on the legal sector is the overall aim to reduce the number of ex pat lawyers so that Saudi nationals make up at least 70% of the total by 2030 (current target is 50%). All expat lawyers would have to be registered at the Saudi Bar Association and junior ex pat lawyers with less than 5 years PQE are unlikely to be eligible for registration.

Again, one could argue that these measures are perfectly sensible. However, given the comparatively small number of KSA lawyers to service a country that is going through rapid expansion and change, there will always have to be some common-sense work arounds. This is similar to my experience in the UAE with Emiratisation. Happily, some targets  in the Middle East are there to be interpreted as long as those doing the interpreting are local nationals as they are the ones who know the acceptable margins for any interpretation.  It is important to note, however, that some regulations relating to specific requirements cannot just be interpreted as there is also an enforcement element to Saudisation. The authorities do carry out sudden inspections on businesses to make sure that directives are being followed and if any firms are knowingly in breech of the regulations, they can be liable for heavy fines and in the worst-case scenarios, forced to close down. 

Candidates we have been talking to about legal opportunities in KSA are understandably concerned by what they are reading and are now thinking twice about roles in KSA. My advice to them is to look beyond this at the opportunity.  Now is actually a great time to be thinking about KSA as much of the rest of the world flatlines in terms of economic development. KSA is as exciting now as Dubai was when I first went there in 2008, if not more so. The legal world in KSA will continue to be a mixed one for many years to come for the reasons I have already alluded to. KSA is changing fast as a society and becoming much more open than it has ever been. It is no longer the hardship destination it once was when lawyers would often insist on being based in Dubai or Bahrain to service KSA work. KSA is now the place many actively want to work because it is exciting and dynamic.

In summary, Saudisation is an understandable approach to the problem of structural unemployment in the Kingdom which still stands at around 10% overall. More and more professional jobs will quite rightly become the domain of Saudi nationals. However, with the demand for legal work outstripping the supply of local lawyers by a considerable amount, some targets and goals will always be more aspirational than absolute. There will still be plenty of scope for suitably qualified expat lawyers in KSA for many years to come.