Mill pond, Shepshed

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Saudiization

The Central Department of Statistics (CDS) in the Saudi Ministry of Planning released the first-ever official labour force and employment data for the Kingdom of Saudi Arabia in September 2002. The data provide figures for the employment situation in Saudi Arabia in 1999.

The Saudi labour force represented just 19% of the Saudi population, since the median age of the population as a whole was and remains below the age of 15. Overall Saudi unemployment stood at 8.1%. Saudi male unemployment was 6.8%. The figure for Saudi female unemployment was much higher – 15.8%.

Uncertainties about the accuracy and provenance of data explain why the Manpower Council had estimated unemployment at 14% whilst other estimates put the figure as high as 27%.

Using the CDS data, the Saudi American Bank (SAMBA) published a paper in October 2002 analysing Saudi Arabia’s employment profile. Since 1999, SAMBA estimates that a further 340,000 Saudi males have joined the workforce, whereas only 175,000 additional jobs have been created. Thus SAMBA’s estimate of the Saudi male unemployment rate is now 11.93%.

Generally, unemployment rates are highest for younger age groups. Unemployment is almost zero for Saudi males aged 30 and over.

The unemployment situation remains particularly acute for women, who are restricted to approved occupations. Paradoxically, the requirement that women must not drive, and may also not travel in a vehicle (such as a taxi), which is not driven by a male relative, provides job opportunities for expatriate drivers.

As in Oman, most of the Saudi labour force is employed in the public sector. 89% of the total labour force is employed in the private sector, 11% in government. More than 95% of private sector employees are expatriates.

At all levels on a pay scale, Saudis earn anything from 2 to 5 times as much as expatriates. The Saudi British Bank says that it believes that Saudis will come to recognize the need to lower their expectations.

Saudis working predominantly in the service sector characteristically have lower skills and receive lower payments, pointing to the need for training. The Manpower Council has identified an imbalance between skills provided by training institutions leading to shortages in “Professional
and Technicians category” and “Agriculture and Related Workers”. Training programmes and major educational reform comprise a significant part of the Saudiization strategy.

The KSA Manpower Council has quoted the Saudi population in 1996 as 13.7 million increasing to 40.5 million by 2025. In the same period, the Saudi workforce is projected to reach 24.2 million, of whom half will be female.

Resolution no 50 of the Council of Ministers required companies employing 20 or more workers to Saudiize 5% of jobs annually. The resolution was ratified by Royal Decree 7/5/4010 in 1996. A policy of Saudiization has been pursued aggressively since 1997.

The Ministry of Labour and Social Affairs has stopped hiring expatriates in the following sectors: corporate administration (administrative managers and their assistants), training management (training managers), public relations, clerical, sales management, secretarial, telephone and communications operations, storekeeping, money collection (money collectors), cashier, money exchange (clerks), postal service (postmen), information and data processing, library, book sales, airline ticketing (salesmen and clerks), car sales (showroom salesmen), building supervision, tourism (tourist guides) and office messenger services.

Saudi nationals will now man the 600 Haj and 100 Umrah offices, which used to employ thousands of foreign workers.

Interior Minister Prince Naif, who is also chairman of the Manpower Council ordered that all gold shops should be 100% Saudiized by March this year, following an earlier instruction for gradual replacement of expatriates, which was largely ignored. Some shops have closed, but overall, the market for Saudi-made jewellery has increased, providing opportunities for export.

More Saudis are becoming taxi drivers, although they often find that their customers treat them rudely. A ruling has been issued demanding 100% Saudiization of taxi drivers, but the deadline keeps moving back, largely because Saudis will not work for companies on the same basis as Asians. Government conditions for employment continue to be flouted, and may require enforcement.

The retail sector has begun a programme of hiring and training for Saudis, to pre-empt government regulation.

Despite the implementation of the Saudi nationalization policy in 1997, the number of OFWs (overseas Filipino workers) deployed showed a steady increase from 160,302 in 1997 to 190,732 in 2001. However, they find that their positions are being Saudiized, and rather than return home, or because they are not given the means to return, many find themselves walking the streets of Riyadh looking for other jobs.

Saudi Arabia’s aim in its seventh 5 year development plan is to employ 817,000 Saudis, 466,600 through Saudiization and 328,700 through new job creation. SAMBA describes this as an ambitious goal, though attainable, despite a shortfall of 100,000 jobs in the previous development plan. The main concern is that government will try to meet its objective through expanding the public sector, if the private sector does not respond with more new jobs for nationals.

Many Saudis aged 15-19 have dropped out of schooling and are therefore unqualified educationally. Perhaps one of the most worrying issues for the government is an increasing incidence of begging, revealing a downside to the society and economy. A survey has shown that 69% of child beggars in Riyadh are Saudi, of whom half are girls. Not only are the mothers of these children largely illiterate, they are also often the rejected wives of Saudi males, most of whom never went to school, or only received elementary education. None of the fathers cared about their children’s education.

Published in Oman Economic Review, September 2003