Managing a business in Saudi Arabia means more than just overseeing operations; it means navigating the regulatory environment and employee welfare systems that exist in the region. One of the more important frameworks for both employers and employees in GOSI or the General Organisation for Social Insurance. GOSI manages the social security system in Saudi Arabia and provides financial protection and stability for the quickly growing workforce in the country.
The largest share of the total subscriber count belongs to expatriates, as their number reaches 9.91 million out of 12.87 million, while the number of Saudis amounts to 2.96 million only. Hence, the percentage of expatriates to the total number of subscribers is 77%, whereas that of Saudis is 23%. These numbers illustrate how central GOSI is in sustaining the national and expatriate workforces within the private sector in Saudi Arabia.
Understanding GOSI: The Foundation of Employee Social Protection
GOSI is a public organisation put in place to protect workers in Saudi Arabia, offering benefits such as old-age pension, work injury protection, disability benefits, and unemployment (Saned) benefits.
The system was established in 1973 by Royal Decree, and is managed by the Board of Directors under the Ministry of Human Resources and Social Development (MHRSD). The purpose of GOSI is to ensure that all employees, whether Saudi or non-Saudi, are protected through a common protection scheme for employees that will provide financial security during and after their employment.
Whether you are a local employee or a business working with non-Saudi employees or expatriates, it is not optional to be a part of GOSI but a requirement to do business legally in Saudi Arabia.
How GOSI Works
Both employers and employees make monthly contributions equal to a certain percentage of the employee’s wages to the GOSI fund. The percentage varies for the employee based on whether the employee is Saudi or not.
GOSI Contribution Rates (Effective July 2025)
For employees who are Saudi:
- Employees are responsible for a 9.5% deduction (up from 9%)
- Employers are also responsible for an additional 9.5% (up from 9%)
- Both the employer and employee are responsible for a 1% contribution to unemployment insurance (Saned).
For employees who are not Saudi:
- Employers are responsible for a 2% contribution covering work injury insurance only
This standardisation of contributions allows public sector employees to have social security coverage and employers to comply with the laws of Saudi Arabia.
Why GOSI Matters for Employers and Employees
For Employers:
GOSI compliance is not only a legal obligation but also a way to establish trust and credibility. By complying with GOSI, businesses remain in good standing and are able to establish a reputation as an ethical and trustworthy employer, avoiding potential legal penalties.
For Employees:
GOSI provides long-term financial insurance, providing benefits such as:
- Retirement and Pension: Monthly paid retirement income paid to retired Saudi nationals
- Injury Protection: Compensation awarded to those who are injured while at work or as a result of occupational injuries and hazards.
- The program also provides disability and death benefits to the family of the injured worker.
- The Saned Unemployment Insurance Program provides benefits to Saudi nationals who have lost their jobs.
These benefits provided by GOSI are critically important in today’s job market, where overall labour force participation was reported at 67.1% and the unemployment rate reached an all-time low of 3.2% in the second quarter of 2025.
GOSI’s Expanding Role in 2025: Pension and Savings Reforms
For the first time, the Kingdom of Saudi Arabia made a historic decision to include foreigners in its voluntary pension and savings program. The project is meant to promote saving in the domestic sector and reduce the demand for money transfers, which were at SAR 144.2 billion ($38.4 billion) in 2024.
The shift demonstrates Saudi Arabia’s global leadership in creating an inclusive social insurance model that serves an estimated 12.9 million contributors in 2025.
GOSI’s Impact on Business Operations and Payroll Compliance
The accuracy of payroll is the crux of compliance with GOSI, as any discrepancies between salary data reported to GOSI and actual payroll records of a company can lead to audits or penalties.
To help ensure payroll accuracy, employers must:
- File GOSI reports and contributions every month through the GOSI digital portal.
- Reconcile wage data to the Wage Protection System (WPS)
- Maintain their employee records for accuracy
At small to medium-sized businesses, performing these actions can be laborious, especially for those with both Saudi and expatriate labour. Many businesses are utilising reputable HR and payroll service providers to ensure compliance and a more efficient workflow.
The Economic Impact of GOSI
GOSI serves not only to protect individuals but also contributes greatly to financial stability in Saudi Arabia. The International Monetary Fund (IMF) points out that GOSI’s assets amount to close to 32% of the Saudi Arabian GDP, which makes it one of the most significant social security funds in the Arab countries in general.
GOSI is the financial support that fits the development with social welfare and openness in the two sectors, public and private, as the Saudi labour market reforms and demographic changes impact the economy.
Key Insights for Employers
Compliance with GOSI is a fundamental aspect of doing business in Saudi Arabia. All employers must:
- As soon as they hire an employee, they must register them in the GOSI online portal.
- Accurately calculate and remit their monthly contributions
- Stay updated on changes in rates and benefit savings programs
- Simple and clear payslips should be issued to employees stating their GOSI deductions and benefits.
When employers integrate GOSI compliance into their HR and payroll systems, they not only create a positive environment with their employees but also reduce the risk of legal consequences.
How 6 Pence Can Help
Managing GOSI registration, social insurance obligations, and payroll compliance can be a lot to coordinate, especially with the constantly changing legal environment.
At 6 Pence, we simplify compliance for businesses in Saudi Arabia through end-to-end HR and payroll management solutions. Our team will help you:
- Register employees with GOSI accurately
- Calculate monthly contributions and manage WPS submissions
- Keep up to date with the latest social insurance changes
- Use digital tools that reduce complexity and streamline the payroll process
Regardless of whether you are an SME or a large organisation, with 6 Pence, you can rest assured that your payroll will run smoothly while maintaining your compliance with GOSI, which allows you to get back to what you enjoy most: building your business.
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