Saudi Unemployment: A Ticking Time Bomb?
Saudi Arabia is at a crossroads. With an economy that is feeling the pinch as the price of oil – its major source of income – tumbles to a $45-a-barrel low, other issues that have long been neglected may soon prove to be insurmountable obstacles.
A fast-growing population and shrinking reserves can be a volatile combination, especially if a large segment of that population is out of work. According to the United Nations 2015 World Population Prospects Report , the Saudi population has increased dramatically from less than 10 million in 1980 to approximately 30 million today. Some 60 per cent of the population is under the age of 25, according to government statistics, and youth unemployment is high.
The state is aware of the potential dangers. In 2011, the late King Abdullah (1924-2015) launched Hafiz, an assistance programme that pays unemployed Saudis 2,000 riyals ($533) a month for up to a year. As of September 2014, some 2.6 million people, 14 per cent male and 86 per cent female, had benefitted from the programme, the basic objective of which is to help jobseekers find permanent, stable employment and not rely on government benefits as a source of income.
The Hafiz programme is one of a range of initiatives introduced by the late king to support jobseekers. The King Abdullah Foreign Scholarship Programme, which runs until 2020, had at the time of writing paid for more than 130,000 Saudi students to study at top universities abroad. The government also funded a scholarship programme for technical instructors to encourage vocational education, with the aim of enrolling nearly half a million people by the end of the year.
Furthermore, the government has encouraged joint ventures with multinational corporations through SAGIA, the Saudi general investment authority, introduced more restrictions and hikes in fees to recruit foreign labour, and deported hundreds of thousands of undocumented foreign workers, all measures designed to increase the number of jobs available for Saudis. An estimated 10 million expats are employed legally. Statistics for undocumented workers are not available.
The Labour Ministry has also tightened the rules for foreign labour, insisting that companies look towards the domestic market first. Together with the Ministry of Education, it has organized job fairs both domestically and internationally, with major companies in the Kingdom courting fresh Saudi graduates. Highly qualified applicants are snapped up by petrochemical outfits, but many others complain of being offered positions far below their expectations or unrelated to their field of study.
There are other reasons, too, why young Saudis are unemployed or unemployable. Although there is an assortment of job openings in the country, many young jobseekers lack the qualifications and skills specified by employers. This is the result, say academics, of a higher education system that prioritizes theory-based learning. Graduates of Islamic schools, whose degrees have little value in a market that requires technical and vocational specialists, have contributed to the skills shortage.
Another concern for first-time jobseekers is that employers in the private sector offer low pay, little job security and unattractive packages while demanding long working hours. These employers also expect to receive the same level of commitment from Saudi employees as they do from foreign workers, without taking into consideration the social and economic pressures Saudi employees bring with them to their work environment. A recent study conducted by the Human Resources Development Fund indicated that 45 per cent of young Saudis refuse to work for private companies because of the attitude of employers.
The Opinions of the Experts
Nevertheless, the government has turned to the private sector for help in absorbing some of Saudi’s unemployed. Several business leaders have responded to the call. In June, Princess Basmah Bint Saud, a member of the Saudi royal family and a businesswoman, said that a coordinated response by the public and private sectors was needed. She added, “Businessmen can come up with solutions through developing plans that regulate the market and qualify the Saudi workforce all over the country. I’ve suggested this before and I’ll work on putting it into action in the future in order to contribute to solving the unemployment problem.”
Dr Abdulrahman Hayjan, a member of the Saudi Shoura (legislative) Council, said that unemployment should be treated in an innovative way “as the Kingdom is not an impoverished country that is facing budget problems”. He said the type and nature of the problem is different from those in other countries.
“Our labour market needs to be regulated in a way that ends this problem permanently. The number of expatriate workers in our market makes one wonder whether we have a real unemployment problem like other countries or whether the problem lies in the fact that we have plenty of jobs but our youth think they aren’t appropriate for them in terms of nature of work and salary.”
Dr Miqbel al-Sulami, an economic expert, believes that the problem facing the Saudi market is two-fold. “First, most Saudis rely on the government sector to create jobs for them while the private sector does not play any role in that. The problem is obvious and the results could be catastrophic in the future if the private sector doesn’t start offering more opportunities for Saudis,” he explained. He also believes that the retail sector, the largest in the market, has not been properly tapped or utilized. “This sector can create thousands and thousands of job opportunities for Saudi young men and women,” he added.
Wherever the solutions lie, they must be implemented rapidly as regional instability spreads. Radical groups such as Islamic State and other fringe elements, which once attracted only a few, are finding increasing support among those with no meaningful professions and pursuits. And herein lies the danger. The Saudi government, which controls the world’s largest proven reserves of liquid gold, must tackle unemployment quickly and effectively if its greatest asset is not to become its greatest liability.