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Saudi Arabia Links Recruitment to Digital Systems to Strengthen Compliance and Wage Protection

Participants at the Global Labor Market Conference in Riyadh (SPA)
Participants at the Global Labor Market Conference in Riyadh (SPA)
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Saudi Arabia Links Recruitment to Digital Systems to Strengthen Compliance and Wage Protection

Participants at the Global Labor Market Conference in Riyadh (SPA)
Participants at the Global Labor Market Conference in Riyadh (SPA)

Saudi Arabia’s labor market is undergoing rapid transformation driven by reforms under Vision 2030, aimed at strengthening compliance, protecting wages, and improving the efficiency of the business environment. These efforts run in parallel with expanding the integration of recruitment into digital systems, advancing international partnerships to regulate labor mobility, and supporting workforce diversification, thereby reinforcing institutional trust and international cooperation in labor market governance.

In this context, Dr. Tariq Al-Hamad, Deputy Minister for International Affairs at the Ministry of Human Resources and Social Development, told Asharq Al-Awsat that labor market reforms in the Kingdom have delivered tangible progress in modernizing regulations, enhancing worker protection, and creating a more dynamic and inclusive work environment. He noted that these transformations are no longer confined to the domestic level, but have expanded to include a more structured international dimension through bilateral agreements, including those signed with Nepal and Nigeria, which serve as governance tools to regulate labor mobility and strengthen worker protection.

Labor market shifts

Al-Hamad said the reforms have achieved measurable progress in updating regulatory frameworks, enhancing worker protection, and improving operational efficiency, with clear gains in participation, compliance, and productivity. He added that updates to labor mobility regulations since 2021 have enabled greater flexibility for workers to move between employers within regulatory frameworks aligned with international best practices. This shift was reinforced by the Contractual Relationship Improvement Initiative launched in March 2021, which marked a pivotal transformation in regulating job mobility.

At the institutional level, more than 11 million employment contracts have been documented via the Qiwa Platform, enhancing transparency and raising compliance levels in the private sector. He added that the implementation of a wage protection system has introduced preventive safeguards and strengthened trust between parties to employment contracts.

Strengthening worker protection

Alongside these changes, the worker protection framework has seen notable progress. Al-Hamad stated that more than 90 percent of private-sector establishments are compliant with the Wage Protection Program, ensuring accurate and timely salary payments.

He added that labor dispute resolution procedures have become faster, more efficient, and more transparent. The reforms have also driven greater inclusivity, with female labor force participation more than doubling between 2018 and 2024, one of the fastest growth rates globally. Meanwhile, around 2.48 million Saudis have joined private-sector jobs since 2020.

Deputy Minister for International Affairs at the Ministry of Human Resources and Social Development, Dr. Tariq Al-Hamad (Asharq Al-Awsat)

International cooperation

As reforms accelerate, they are no longer confined to the domestic level, increasing the need for a structured international framework to sustain them. Al-Hamad emphasized that organized international labor cooperation is a strategic priority, as it strengthens the Kingdom’s position as a partner committed to ethical recruitment, regulatory modernization, and shared responsibility. It also reinforces institutional trust and diplomatic cooperation in labor markets.

He explained that these agreements align cross-border labor mobility with modern regulatory standards, transparency requirements, and digital compliance systems. The expansion of such agreements, including those with Bangladesh, Nepal, and Nigeria, reflects a shift from traditional recruitment models toward long-term institutional partnerships between governments, providing more stable labor mobility channels and strengthening trust.

Governance enhancement

Reflecting this direction, Al-Hamad said agreements with Nepal and Nigeria regulate the full worker lifecycle, from recruitment licensing and contract documentation to wage transparency and dispute coordination and resolution mechanisms. He added that they enhance oversight of recruitment agencies, clarify contractual obligations, and establish institutional cooperation between governments to monitor compliance and resolve complaints efficiently.

He also noted that linking these agreements to digital infrastructure, such as the Qiwa platform and the Wage Protection Program, ensures that commitments are translated into enforceable mechanisms supported by real-time monitoring. This is complemented by joint oversight frameworks and regular information exchange, strengthening continuous supervision and accelerating the handling of labor cases.

Aligning skills with economic needs

As part of improving market efficiency, Al-Hamad stressed that aligning labor mobility with sectoral economic needs is a core pillar of the labor market strategy. Recent agreements are increasingly based on specific sector needs, ensuring recruitment is driven by actual demand rather than volume, particularly in sectors such as construction, tourism, logistics, healthcare, and advanced services.

He explained that the ministry relies on digital data through the Qiwa platform to continuously analyze market needs and identify skills gaps, allowing recruitment to be directed in line with economic requirements. Coordination with partner countries prior to worker arrival also helps verify skills, improve workforce readiness, and reduce skills gaps from the outset of employment.

He added that workforce planning is increasingly integrated with major national projects to ensure expatriate labor complements, rather than replaces, localization efforts. This is supported by programs such as Nitaqat, which incentivize the hiring of national talent across sectors.

International recognition of reforms

At the global level, these reforms have received growing recognition. Al-Hamad noted that the International Monetary Fund has pointed to tangible outcomes, including declining unemployment among Saudis, increased female participation in the labor market, and growth in private-sector employment.

He added that the “A Decade of Progress” report, developed in cooperation with the World Bank, highlighted structural transformations in the labor market.

The International Labour Organization has also commended the Kingdom’s role in developing labor policies and engaging in global dialogue, reflecting its growing status as a model in labor market reform, inclusivity, and economic flexibility.

Future priorities

Al-Hamad concluded that the next phase will focus on deepening international cooperation at both bilateral and multilateral levels by expanding labor agreements with new countries and strengthening partnerships with international organizations such as the International Labour Organization and the World Bank. These efforts aim to support knowledge transfer and policy development.

He added that the ministry is working to enhance collaboration with the private sector, academic institutions, and international stakeholders to keep pace with labor market transformations, with the goal of consolidating the Kingdom’s position as a trusted global partner in labor market development and delivering sustainable outcomes.

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ECB Says Will Have to Act Again if 2nd-round Inflation Effects Appear

European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE
European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE
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ECB Says Will Have to Act Again if 2nd-round Inflation Effects Appear

European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE
European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE

European Central Bank will have to raise interest rates again if high energy prices feed through to other areas but so far there is no sign of such second-round inflation effects, ECB policymaker ⁠Gabriel Makhlouf said on ⁠Wednesday.

"Although inflation is above our target, we're not seeing the sorts of second round effects ⁠that start feeding through to prices," Makhlouf, Ireland's central bank chief, told national broadcaster RTE in an interview.

"If that happens (energy prices remain high and feed into other areas), we will have to take ⁠action ⁠again to meet our target."

Makhlouf cautioned earlier this month following the ECB's second interest rate hike this year that raising interest rates "a great deal more" risked damaging economic growth.

Also Wednesday, the ECB said the European Union could close a third of its productivity gap with the United States if it had as many large companies, adding its voice to calls for reforms that make it easier for businesses to scale up.

European policymakers are trying to tackle the EU's economic underperformance relative to the United States, which is home to many of the world's largest companies and is leading the race to develop artificial intelligence.

EU workers produce ⁠20% less output ⁠per hour than their US counterparts, according to academic studies. They were almost on an even keel in 1995.

ECB staff found that if Europe had the same distribution of large and small firms as the United States – without changing how productive each ⁠type of company is – the productivity gap would shrink by roughly one-third.

Large firms are significantly more productive than smaller ones. Companies with at least 250 employees generate an average of €86,800 in value added per worker annually, while firms with fewer than 10 employees produce less than half that amount.

The ECB said Europe's weaker productivity performance also reflects lower innovation, fragmented regulation and less developed capital markets, all of which ⁠make it ⁠harder for companies to grow and compete internationally.

The central bank backed the proposed "EU Inc" framework, an EU-wide corporate law regime aimed at reducing barriers to cross-border business activity.

Modelled loosely on Delaware's corporate framework in the United States, EU Inc would create a single legal structure operating across the bloc, bypassing a patchwork of 27 national company law systems and dozens of corporate forms.

"EU Inc. has the potential to support the Single Market, by strengthening competition, innovation and productivity growth," the ECB said.

Business

Surveys: Europe's Economy Surprisingly Resilient amid War-Driven Energy Shock

A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET
A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET
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Surveys: Europe's Economy Surprisingly Resilient amid War-Driven Energy Shock

A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET
A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET

Europe's economy is showing unexpected signs of health even as conflicts in the Middle East and Ukraine drive up energy costs for firms and households, key business surveys showed on Wednesday.

Business activity across the euro zone accelerated in September at its fastest rate in over three years, S&P Global said, with solid growth registered across both the manufacturing and service sectors.

The S&P Global Flash Euro Zone Composite PMI Output Index — where readings above 50.0 signal an expansion in activity — jumped to 53.1 in September from August's 52.0, defying expectations in a Reuters poll ⁠for a dip ⁠to 51.7. The highest forecast in the poll was for 52.6.

"All in all, today’s PMI readings are almost too good to be true," said Carsten Brzeski at ING.

"A euro zone economy that remains completely unharmed by an energy price shock and supply chain disruptions is a welcome surprise. Let’s hope it doesn’t turn out to be a mirage."

S&P said the latest rise in output was broad based across geographies covered by its data.

Business activity in Germany, Europe's largest ⁠economy, expanded solidly in September despite firms facing increased inflationary pressures while in France it grew at its fastest pace in just over two years, driven by a rebound in services demand.

But in Britain, outside the European Union, growth cooled this month as inflation pressure built, its PMI showed, an awkward backdrop for finance minister John Healey ahead of his first budget next month.

Overall new orders in the currency union surged at their fastest pace in over four years supported by a further rise in exports — which include intra-euro zone trade.

The bloc's services PMI bounced to its highest in nearly a year and was well ahead of estimates for a fall, while the manufacturing index held steady.

A gauge of output - ⁠which feeds into ⁠the composite PMI - nudged higher.

To meet the rise in demand firms took on more staff but faced a jump in input costs due to elevated energy prices stemming from the US war with Iran. They were able to pass some of this on to customers.

"September’s big improvement in the euro zone’s composite PMI supports our view that despite the weakness in the official activity data in July, GDP will increase in Q3," said Jack Allen-Reynolds at Capital Economics. "The output price PMIs rose too, but there is still no sign of 'second-round' effects on wages."

Earlier this month the European Central Bank raised interest rates for the second time this year to quell an energy-driven inflation rise and warned price pressures could prove lasting.

Markets are pricing three more ECB rate hikes by the end of June 2027.

"Today's PMI readings make it more difficult for even the ECB's most dovish policymakers to rule out another rate hike," said ING's Brzeski.

Business

What Do Saudi SMEs Need to Grow?

What Do Saudi SMEs Need to Grow?
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What Do Saudi SMEs Need to Grow?

What Do Saudi SMEs Need to Grow?

Financing alone is no longer enough to propel Saudi Arabia’s small and medium-sized enterprises into their next phase of growth, as their needs increasingly extend to accessing markets and contracts, securing operating liquidity, reducing business costs and boosting productivity, competitiveness and their ability to expand.

Financing available to the sector has nevertheless continued to grow. Cumulative credit facilities extended to micro, small and medium-sized enterprises reached about SAR 467 billion ($124.5 billion) by the end of 2025, up 33% year on year.

At the same time, Saudi Arabia’s National Strategy for Entrepreneurship and SMEs is seeking to address challenges beyond the financing gap by improving access to markets, procurement and supply chains, reducing the cost of doing business and strengthening companies’ capacity for sustainable growth.

In the latest financing initiative, the Small and Medium Enterprises General Authority, known as Monsha’at, signed a cooperation agreement with STC Bank in September 2026 for a financing portfolio of up to SAR 5 billion ($1.33 billion) for micro, small and medium-sized enterprises.

The portfolio includes short-, medium- and long-term facilities covering working capital, operating needs, purchases of assets and equipment, and financing for contracts, projects and supply chains.

Businesses also require more than long-term financing. The Social Development Bank’s Working Capital product offers financing ranging from SAR 150,000 ($40,000) to SAR 10 million ($2.67 million), with repayment periods of up to 12 months, to cover day-to-day operating costs and strengthen cash-flow management.

The bank distinguishes between working-capital financing for operating costs and capital-expansion financing for assets and expansion.

From financing to growth

Rayan bin Ibrahim Alfayez, Monsha’at’s deputy governor for enterprise services, said the 13 initiatives under the National Strategy for Entrepreneurship and SMEs are designed to directly address priority challenges facing business growth and create a more efficient environment that supports expansion and sustainability while strengthening competitiveness in the coming period.

Alfayez explained that one initiative aimed at expanding opportunities for businesses focuses on empowering SMEs and startups in industrial cities and special economic zones. It seeks to help them capitalize on opportunities available in those areas and provide support and incentives suited to the nature of their businesses, supporting their growth and strengthening their presence in industrial and economic activities and value chains.

He added that the strategy also includes an initiative to increase SMEs’ share of procurement by large companies, broadening their access to opportunities and contracts, strengthening their participation in supply chains and helping build sustainable commercial relationships that support business growth and expansion.

Alfayez noted that another initiative aimed at reducing the cost of doing business addresses one of the challenges affecting enterprise growth by examining fees and requirements in coordination with the relevant authorities and developing mechanisms to support fees based on carefully considered criteria. The initiative is intended to ease the financial burdens associated with doing business and create a more favorable environment for companies’ growth and sustainability.

He said the initiatives work together to address a range of factors linked to business growth, from the operating environment to opportunities, markets and value chains, strengthening SMEs’ ability to grow and expand while increasing their competitiveness and contribution to the national economy.

Markets after financing

Financial and economic adviser Hussein Al-Attas told Asharq Al-Awsat that the increase in financing directed toward SMEs reflected clear progress in Saudi Arabia’s financing ecosystem, but the challenge was no longer financing alone. Rather, it was an enterprise’s ability to turn that financing into sustainable growth.

Al-Attas explained that an enterprise needs three interconnected elements: appropriate financing, access to markets, and operational and competitive capacity.

He said a company may secure financing, but in the next stage it needs contracts and sales opportunities that allow it to increase revenue, alongside managerial and technological development to boost productivity and the ability to manage cash flows and expand without allowing growth to become a financial burden.

Al-Attas added that access to markets and contracts represents the link most closely associated with an enterprise’s transition from survival to growth. Financing gives a business the capacity to act, while contracts and markets turn that capacity into revenue and cash flow.

He further stated that greater SME participation in government procurement and the supply chains of large companies, along with opening export channels, could have a direct impact on their ability to expand, alongside efforts to reduce the cost of doing business and raise productivity.

The next phase requires moving from the concept of “financing the enterprise” to “financing the enterprise’s growth,” he underlined, meaning that financing should be linked to markets, contracts, technology, productivity and expansion.

Strategy broadens its scope

The focus on markets forms part of the wider National Strategy for Entrepreneurship and SMEs, which includes 13 initiatives addressing sector challenges in access to markets and opportunities, financing, the business environment, innovation, data and expansion.

The strategy also aims to raise SMEs’ contribution to gross domestic product to 35% by 2030 and create more than 500,000 direct and indirect jobs.

Some initiatives seek to turn market access from a broad objective into direct contracting opportunities by qualifying enterprises and connecting them with the supply chains of large companies and projects.

This approach is reflected in Monsha’at’s Jadeer service, which aims to improve businesses’ readiness, qualify them to enter supply chains and enable them to benefit from procurement opportunities.

The equation for SME growth therefore does not stop at increasing available financing. It also depends on businesses’ ability to use that financing first to fund operations, then gain access to demand and contracts, improve productivity and reduce costs before moving into expansion and investment.

This reflects a shift from addressing the financing gap to addressing the growth gap: liquidity gives an enterprise the ability to continue operating and move forward, while access to markets and operational efficiency determine its ability to turn financing into revenue and sustainable growth.