GCC Insights: Saudi Arabia suffers serious unemployment problem

The unemployment rate, which by one report is as high as 18 per cent, is an acute challenge facing the Saudi economy. The authorities have undertaken certain measures to help remedy the situation but undoubtedly more efforts are needed to solve the problem. Strong representation of expatriate workers is partly blamed for the high unemployment rate.

Nationals comprise less than 15 per cent of employment in the private sector. Saudi Arabia's total workforce is estimated at 8.13 million, of which two-thirds, or 5.36 million, are expatriates. Press reports have suggested that there is even serious unemployment among expatriates, but this is not reflected in official figures.

In the last few months, the government adopted concrete steps in addressing unemployment. As part of efforts to create job opportunities for locals, expatriates are banned from 34 job categories.

These include training managers, public relations officers, administrative assistants, purchasing managers, secretaries, operators, warehouse supervisors, debt collectors, customer service accountants, tellers, postmen, data handlers, librarians, book sellers, ticket kiosk keepers, taxi drivers, auto salesmen, janitors, internal mail handlers and tour guides.

The Ministry of Labour and Social Affairs desires to expand the barred jobs in order to replace the expatriate labour force with Saudis. Also, the authorities seem determined to reduce the size of foreign communities in the kingdom.

In February, the Manpower Council approved a plan calling for making foreign nationals working and living in Saudi Arabia comprise 20 per cent of the population by 2013.

Currently, Saudi Arabia's total population is put at around 24 million, including 7.5 million expatriates. Thus, foreign workers and their dependents constitute 31 per cent of the total inhabitants.

Accordingly, the total number of foreign nationals must be reduced to 6.6 million by the target date. The plan stipulates a quota system whereby no nationality should exceed 10 per cent of the total expatriates.

Certainly, overcoming the unemployment challenge is a daunting job, but at the same time the authorities do not have the comfort of ignoring it. It is believed that some 0.6 million Saudi nationals are jobless.

The problem could only get worse with the new entrants to the job market. More than 40 per cent of the population is below the age of 15 on the back of a 3.6 per cent population growth. The government's seventh five-year plan, which covers the period 2001-2005, calls for creating some 817,000 jobs for Saudi nationals.

The IMF has called on the Saudi authorities to address the unemployment problem through training and education to increase job opportunities for Saudis while applying the Saudisation policy flexibly.

Graduates

According to the Ministry of Planning, more than half of 23,842 graduates completed degrees in the fields of social sciences and literature. The figures for students with degrees in engineering and computer sciences are 7.6 per cent and 4 per cent respectively.

The IMF has recommended that the strategy of enhancing training and education "should be supported by measures aimed at bridging the gap between local and expatriate labour costs as well as between costs in the government and private sectors".

A report by a Saudi bank has found that a Saudi national with a post-graduate degree expects to earn a monthly salary of $5,630 versus $2,895 for an expatriate.

At 18 per cent, the jobless rate in Saudi Arabia is the highest in the Gulf. It is worse than Bahrain, which is reeling under a 15 per cent unemployment rate. It is widely acknowledged that the relatively high unemployment rate triggered the civil unrest that rocked Bahrain in the 1990s.

Certainly, the Bahrain experience provides a lesson. Jobless people can only provide the fuel for Saudi extremists and terror organisations.

The writer is assistant professor, College of Business Administration, University of Bahrain