The new law, which stipulates that Saudis must make up at least 75% of a company's workforce, was approved during the weekly cabinet meeting on Monday in the Red Sea city of Jeddah, the official SPA news agency reported.

The law states that "the number of Saudi workers hired by the employer must be no less than 75% of the total workforce, although the labour minister is entitled to reduce the proportion temporarily" if there are no competent nationals to fill relevant jobs.

The legislation requires companies to "employ Saudis and ensure they remain in their jobs ... by training and grooming them to perform the tasks assigned to them".

Saudi authorities have moved to reserve jobs in a range of industries wholly or partly for nationals in a bid to tackle rising unemployment.

Quotas set

The Saudisation drive seeks to reduce the country's reliance on some six million expatriate workers, mostly poorly paid Asians.

The government puts joblessness among nationals at around 10%, but unofficial estimates put it at about 20% of the male population. Just 10% of women of working age have a job.

Only around 10% of Saudi women
are employed in the kingdom

Women, who are subjected to a host of restrictions in the ultra-conservative kingdom, will be allowed to work "in all sectors compatible with their nature", SPA said without specifying those sectors.

The new law states that at least four percent of jobs in companies employing more than 25 staff must be reserved for handicapped people who have received adequate training if the nature of the work permits.

WTO membership

Labour Minister Ghazi al-Gosaibi told SPA that the new legislation is compatible with the economic and social changes which have occurred in oil-rich Saudi Arabia since the previous law was enacted more than 35 years ago.

The legislation also aims to "fulfil international agreements ratified by the kingdom ... and is in line with the principles of the World Trade Organisation which the kingdom is poised to join", he said.

The law covers categories of workers previously not protected by the legal system, outlines clear terms for terminating employment, increases the holidays to which workers are entitled, enables employees to get leave without pay, sets end-of-service benefits and requires big companies to provide nurseries to help working mothers.

It also bans the employment of children and will speed up the settlement of labour disputes.