By Saudi Arabia’s Ministry of Human Resources and Social Development has announced that the minimum wage required for a Saudi employee to be counted fully under the Nitaqat Saudization program will rise for five categories of workers in private sector establishments. Deputy Minister for Labor Affairs Dr. Abdullah Abuthnain confirmed the change, according to Saudi Gazette.
The increase will be implemented in two phases. The first phase takes effect on April 25, 2027, setting the minimum wage at SR5,000. The second phase begins on April 25, 2028, raising the threshold to SR6,000. Private sector employers have been granted a six-month grace period before the first phase, followed by a 12-month interval before the second phase takes effect. The five worker categories covered are full-time employees, part-time employees, workers under flexible work arrangements, part-time students, and people with disabilities who are capable of working.
Abuthnain said the decision aims to improve job quality, enhance employment stability, and raise income levels of Saudi workers. “The decision will strengthen the economic participation of Saudi nationals in the labor market by making private sector jobs more attractive, particularly to job seekers and those seeking to enter the workforce,” he said.
What the SR6,000 threshold changes in Nitaqat calculations
The Nitaqat program classifies private sector employers into bands based on the percentage of Saudi nationals in their workforce. A Saudi employee only counts fully toward that percentage if their registered wage meets a minimum threshold. Below that threshold, the worker may be counted as a fraction or not counted at all, depending on the rules in force at the time.
The new SR6,000 figure does not appear to be a universal statutory minimum wage for all workers in Saudi Arabia. It is a classification threshold for Saudization calculations. Employers should not assume that every Saudi employee must receive a pay rise to SR6,000. The rule changes how workers are counted for Nitaqat purposes, not necessarily what they must be paid under their employment contracts.
The phased approach gives payroll teams time to review wage data held in the Wage Protection System and the Qiwa platform. Workers earning below SR5,000 after April 2027, and below SR6,000 after April 2028, may no longer count as full Saudi employees for Nitaqat percentage calculations. That could lower an employer’s Saudization ratio and push the company into a lower band.
Which employers are most exposed
The five categories named in the announcement cover a broad range of employment arrangements, not just standard full-time contracts. Part-time employees, flexible work arrangements, and part-time students are included, which means employers using these arrangements to meet Saudization targets will need to reassess their compliance position.
The inclusion of people with disabilities who are capable of working is significant. Employers who have relied on this category to meet Nitaqat quotas may need to confirm that wages meet the new threshold for those workers to be counted fully.
Small and medium-sized enterprises are likely to feel the change most acutely. Larger employers often already pay Saudi staff above SR6,000, but smaller firms may have structured payrolls around lower thresholds. The grace periods are designed to allow time for wage reviews and adjustments, but the compliance risk is real for employers who delay.
Practical steps for HR and payroll teams
Employers should begin by auditing current payroll against the SR5,000 and SR6,000 thresholds. The first step is to identify every Saudi employee whose registered wage falls below each threshold and confirm which of the five categories they fall into. The second step is to calculate how the Nitaqat percentage would change if those workers were counted as fractions or excluded entirely.
Payroll records in the Wage Protection System must match the wages actually paid. Discrepancies between WPS records and employment contracts can create compliance problems even before the new thresholds take effect. HR teams should also check the Qiwa portal for current Nitaqat band status and model the impact of the wage changes.
Employers in the Red or Yellow bands face the most urgent pressure. Falling into a lower band can restrict the ability to renew work permits for expatriate employees or transfer sponsorship. Companies should seek advice from the Ministry of Human Resources and Social Development or a qualified Saudi labour law adviser if their band status is at risk.
What the announcement does not say
The Saudi Gazette report does not state whether the SR6,000 threshold replaces existing Nitaqat wage bands or adds a new one. Historical Nitaqat rules have used multiple wage brackets, with different counting weights for workers earning at different levels. The announcement does not clarify whether workers earning above SR6,000 will be counted differently from those at exactly SR6,000.
The report also does not specify whether the change applies to all sectors or whether certain industries have separate thresholds. Employers in construction, agriculture, and other sectors with historically lower wage levels should confirm whether any exemptions apply to their activities.
The announcement does not address expatriate workers directly. The Nitaqat program governs how Saudi employees are counted for Saudization purposes. The wage threshold does not create a new minimum wage for expatriate staff, nor does it change Iqama renewal or transfer fees.
Employers should monitor official communications from the Ministry of Human Resources and Social Development and the Qiwa platform for detailed implementation guidance before the April 2027 first phase.
Sources: Saudi Gazette
Photo: Half of Saudi Riyal, 1392 Hijri by Aelita14, CC BY-SA 4.0
