Saudi Arabia’s Growing Unemployment Headache

It is not about creating enough employment opportunities per se, but of creating rather the right jobs for Saudi nationals

Authorities in Saudi Arabia need to attend to the jobless problem to ensure that it does not spin out of control. The country’s unemployment rate crossed the 11 per cent line in the first half of 2007, the latest period for which statistics are available.

Adding to the urgency of addressing the unemployment problem is the fact that a sizeable portion of Saudi nationals happens to be below the working age, or close to entering the job market. Some 38 per cent of Saudi nationals are below the age of 14 and hence are soon expected to enter the job market.

The main challenge here relates to ensuring the availability of jobs that meet the requirements of Saudi nationals. Undoubtedly, at stake is not creating enough employment opportunities per se, but instead it is about creating the right jobs for Saudi nationals. The Saudis do not just desire all jobs that expatriates may be willing to undertake. For instance, they do not want menial jobs that provide relatively low wages, like those in the construction sector. Certainly, such attitudes can change in the long run through rehabilitation and training. However, Saudi officials do not have the luxury of delaying tackling the current unemployment problem that the country faces.

Increasing joblessness
According to the country’s Ministry of Economy and Planning, the unemployment rate amongst the national workforce stood at 11.2 per cent in the first half of 2007. The figure compares unfavourably with a reported jobless rate of 11 per cent in the first half of 2006.
The number of Saudi nationals without jobs totalled 453,994 in the first half of 2007, up by some 8,796 from the corresponding period in 2006. And, this at a time when it was expected to drop on the back of extraordinary economic conditions.


Spending problem
In fact, improved economic conditions should have led to a decline in the unemployment figures rather than increasing their number. Improved economic conditions here refer to the steady rise in crude oil prices. The petroleum sector accounts for more than three quarters of budgetary revenue and thus plays a primary role in the country’s economic activities.

Saudi Arabia’s real (adjusted for inflation) gross domestic product (GDP) grew by 3.5 per cent in 2007. The kingdom’s economy saw inflation grow at 6.5 per cent last year. Here, it must be remembered that inflation tends to be viewed as the worst enemy as it affects all, while the same is not necessarily true of unemployment.

Gender factor
Statistics released by the Ministry of Economy and Planning suggest worsening employment prospects for females in particular. The jobless rate amongst females increased from 24.7 per cent in the first half of 2006 to 26.6 per cent in the same period in 2007. This was even as the unemployment rate amongst males continued to hover around 8 per cent in the same time span.
Some employers in the GCC region, Saudi Arabia being no exception, prefer employing males. This is partly due to the concern that females tend to experience rising absenteeism as soon as they get married.

Eighth Plan goals
The latest jobless figures make the prospects of achieving manpower goals of the 8th Development Plan only more difficult. The eight five-year plan envisages some 139,000 job seekers by 2009 versus 268,000 Saudi nationals looking for employment opportunities in 2004. In fact, the plan expects Saudi unemployment rate to drop from 7 per cent in 2004 to 2.8 per cent by 2009.
Likewise, it will be extraordinarily difficult to achieve the plan forecasts with regards to contribution of females in the workforce. The plan envisages females representing 14.2 per cent of the national workforce by 2009 as compared to 10.3 per cent in 2004. As the latest figures suggest, the chances are that actual female participation will drop further unless authorities take concrete remedial steps.

For locals only
One way of tackling unemployment amongst locals relates to restricting certain jobs to Saudi nationals. The country’s Ministry of Labour and Social Affairs restricts around 40 job profiles to locals. These include taxi drivers, training and purchasing managers, public relations officers, administrative assistants, secretaries, operators, debt collectors, customer service, accountants, tellers, postmen, data handlers, librarians, booksellers, ticket kiosk keepers, auto salesmen, janitors, internal mail handlers and tour guides, among others. Officials contend that Saudi nationals prefer such professions.

In conclusion, it is clear that the government cannot overlook the employment problem amongst locals because of its implications. Yet, the authorities have an opportunity to maximise benefits to help address the jobless problem. Suffice to say, the budget recorded surplus of US$47 billion in fiscal year 2007. Possibly, Saudi officials need to enhance public spending in order to create job opportunities. Also, emphasis must be placed on providing nationals with the necessary tools in terms of education, training and work ethics, in order to be employees of choice in the private sector.

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