Saudi Arabia unemployment eases marginally, still a long road to Vision 2030
Unemployment among Saudi Arabia’s citizens reduced marginally to 12.8 percent in the third quarter of 2018, compared to the 12.9 percent in the previous quarter, according to the latest data released by the country’s General Authority for Statistics (GaStat).
In the first quarter of 2018, the jobless rate rose to 12.9 percent, the highest recorded in 19 years, as private employers were adversely hit by sales tax and increased domestic fuel prices. Additionally, the number of foreign workers in Saudi Arabia dipped by 3 percent to 9.5 million in the third quarter of 2018, compared to the previous quarter. The real concern is that the unemployment rate is still high while the influx of expatriates remains considerable. This indicates that while the Saudi economy is creating jobs, its nationals remain unemployed.
The GaStat authority releases its survey every quarter based on administrative records with relevant authorities including the Ministry of Labor and Social Development, Ministry of Civil Service, General Organization for Social Insurance, Human Resource Development Fund and National Information Center.
The latest report shows unemployment easing slightly in the third quarter of 2018, with the jobless rate of Saudi women decreasing to 30.9 percent from 31.1 percent in the previous quarter. For Saudi men, the jobless rate dropped to 7.5 percent, compared to 7.6 percent in the second quarter of 2018.
Figures from Saudi Arabia’s Ministry of Civil Service show that the number of Saudi jobseekers decreased 17.5 percent to 923,504 in the third quarter of 2018, compared to 1,118801 in the previous quarter.
Saudi Crown Prince Mohammed bin Salman’s plans to reform the economy includes easing unemployment to 7 percent by 2030, and creating opportunities for 450,000 jobs by 2020. The Human Resources Development Fund (HRDF) in Saudi Arabia announced in January 2019 that it would contribute 30 percent of the salaries of Saudis in the sector in an attempt to encourage localization, increase the participation of its citizens in the labor, and provide nationals with skills training support.
Expatriates take up 90 percent of the jobs in the private sector. It doesn’t help that about 45 percent of the private sector jobs are construction-based, making it unattractive to male nationals and largely off-limits to female Saudi citizens. The government is therefore looking to create jobs for its nationals in sectors such as retail sales, targeting medical equipment stores and building material shops, according to recent report from Saudi-state agency SPA. The creation of jobs in sustainable non-oil sectors is also in line with Saudi Arabia’s “Vision 2030”, which aims diversify away from an oil-dependent economy.
Under the banner of Vision 2030, the kingdom also aims to have the private sector operate most of its transport and logistics infrastructure, with the government retaining a role as a regulator. This is expected to reduce unemployment rates to 7 percent by 2030.
Ths Saudi Ministry of Labour and Social Development, the Housing Ministry, the HRDF, the Council of Saudi Chambers (CSC), and the Saudi Contractors authority also recently signed a memorandum to localize 80,000 jobs in the contracting and real estate sectors. The deal intends to promote Saudization and create an environment for citizens to hone the necessary skills required to excel at their jobs.
New industrial strategy
On Sunday, January 27, Saudi Arabia’s Energy Minister Khalid al-Falih announced a plan to attract 1.6 trillion ($427 billion) in private sector investments for an infrastructure and industrial program. The country aims to channel the investments towards diversifying from oil and creating private sector jobs for Saudi nationals. The program encompasses initiatives that aims to triple the contribution in important industries, including mining, chemicals, logistics and small businesses.
The program seeks to raise money from both domestic and foreign investors.
The kingdom aims to create 1.6 million jobs, increase non-oil exports and boost its GDP growth. Implementation has already begun on some of the projects.