How Saudi Arabia Plans to Tackle Unemployment
Unemployment in Saudi Arabia reached a record high 12.9 percent in the first fiscal quarter of 2018. To alleviate this number and the ever-present wealth gap, Crown Prince Mohammed bin Salman has announced various social and economic reforms he hopes will mark a turning point in Saudi Arabian growth.

How Saudi Arabia Plans to Tackle Unemployment

Consistently one of the world’s top oil producers, Saudi Arabia hopes to lessen its dependence on the financially unstable resource to create a more diverse economy and to generate more jobs for its citizens.

The Saudi government will, however, continue to rely on oil for the foreseeable future in order to generate the capital that will allow them to invest in non-oil industry, ultimately alleviating the country’s reliance on oil.

Moving Away from Oil

Saudi Arabia has already shown a significant shift toward non-oil markets, specifically in the form of entertainment. The ban on movie theaters was recently lifted, and AMC Theaters proposed a plan to construct 40 theatres across 15 Saudi Arabian cities within the next five years, and a total of 100 theatres by 2030.

By introducing leisure-centric businesses, the Saudi government hopes to encourage spending by wealthy citizens while simultaneously providing jobs for the country’s impoverished citizens.

Incentivize Employment of Citizens

A major component affecting unemployment in Saudi Arabia is the number of foreign workers employed by private companies. Non-nationals account for 80 percent of the workforce, as they are typically migrants from neighboring countries willing to work for less than asked by Saudi Arabian citizens.

The Saudi Arabian government has announced in a series of reform plans, including the ambitious Vision 2030, that the country will invest in education for its people to prepare them to participate in the workforce. Additionally, the kingdom proposed strict nationalization quotas in the private sectors, meaning businesses will be required to hire a much higher rate of citizen workers.

By the end of the next decade, Saudi Arabia hopes that by investing in private enterprises and encouraging those enterprises to prioritize hiring Saudi nationals, they may increase the GDP generated by small businesses from 20 percent to 35 percent while simultaneously lowering the unemployment rate to 7 percent.

Social Reform

Beyond the humanitarian benefits that come from Saudi Arabia granting women many previously-withheld privileges, this key piece of social reform has the potential to bolster the economy by creating a new demographic of workers and consumers.

With nearly half the population of Saudi Arabia being female, introducing women to the workforce will allow for supplemental income in lower-class homes and help to fill the demand once nationalization quotas for small businesses are implemented.

The Saudi government expects social and economic reform to work cyclically, meaning that as previously marginalized people are introduced to the workforce, these members of society will help to grow the economy. This will then, in turn, create new businesses in need of more workers.

Looking Forward

Although Saudi Arabia is making very notable progress in terms of economic and social growth, it may take time for its efforts to translate to noticeable change. Many foreign and domestic investors remain wary of investing in Saudi Arabia, which are sentiments to be expected when a country announces major renovation.

However, once changes begin to take place and progress starts to show, investors may see the country as a place of economic potential. If the plans put forth in Vision 2030 come to fruition, unemployment in Saudi Arabia may dramatically decrease, and the country may find itself in a place of great economic development.

– Rob Lee
Photo: Flickr

Saudi Arabia
Sensing that change in multiple forms is necessary for the growth of the economy, Saudi Arabia has begun massive and unprecedented reform. At the heart of the reform, the Saudi government recognizes the need to invest more for the improvement of its impoverished people. Here are the top 15 facts about poverty in Saudi Arabia.

Top 15 Facts about Poverty in Saudi Arabia

  1. Saudi Arabia has the lowest reported poverty rate in the Middle East and the 10th lowest poverty rate in the world at 12.7 percent, as of 2017. However, the Saudi government does not release regular statistics regarding this information, resulting in varied estimates by outside agencies.
  2. The country is highly urbanized with close to 85 percent of citizens living in cities and many impoverished citizens, estimated to be around four million Saudis, reside in slums on the outskirts of those cities.
  3. Saudis who do not even live in the slums still struggle to afford the home in the cities. An estimated 60 percent of urban Saudis cannot afford to own their homes outright.
  4. The unemployment rate has risen slightly from 12.8 percent in 2017 to 12.9 percent in the first fiscal quarter of 2018. Crown Prince Mohammed bin Salman and the Saudi government have made tackling unemployment a key component in their economic and social reform program Vision 2030.
  5. The government has implemented an insurance program for unemployed Saudis, but it is still difficult for recipients to survive when the cost of living is constantly increasing.
  6. A major factor in unemployment is the number of foreign workers in Saudi Arabia. There are roughly three million Saudis in the labor force compared to 11 million immigrants who work in similar fields.
  7. Vision 2030 discusses plans to reduce Saudi Arabia’s reliance on oil as the largest economic asset. Instead, the country plans to invest in other industries that will generate more jobs for unemployed Saudis.
  8. The government announced plans to implement nationalization quotas for small businesses and education programs to allow impoverished Saudis to prepare for the employment.
  9. Prince Salman believes that addressing poverty and unemployment is as necessary from the economic perspective as it is from the humanitarian perspective. He believes that by diversifying the economy and improving the poverty and unemployment rates, Saudi Arabia will attract more foreign investment.
  10. Saudi Arabia’s lifting of their long-standing movie theater ban has drawn AMC to create numerous theaters throughout the country, introducing service industry jobs for impoverished citizens who may not be qualified for more specialized positions.
  11. The government has lifted several bans preventing women from working and participating in the economy. With these barriers eliminated, women will be able to work and help provide for their families.
  12. Despite Prince Salman’s popularity and economic ambitions, many are still troubled by the vast wealth gap in Saudi Arabia. While many Saudi citizens live in poverty, Salman’s father, King Salman bin Abdulaziz Al Saud, has an estimated net worth of $17 billion.
  13. With the possibility of water and farmable land becoming scarce in Saudi Arabia in the next few decades, the government will likely need to establish new ways of ensuring food production and food availability at a rate that can support the country’s population.
  14. Saudi Arabia has a history of refusing help from the nongovernmental organization because of the fears of deterring investors, but the government has recently begun to change its policies in favor of helping its impoverished citizens.
  15. Changes will take time. While it is clear that Saudi Arabia is in need of immediate change in some aspects, it will take time for sustainable growth to be implemented.

As Saudi Arabia finds itself in a highly transitional period in terms of social reform and economic reevaluation, its citizens face great uncertainty. However, despite what some of these top 15 facts about poverty in Saudi Arabia may suggest, the country’s leadership has made clear that their top priority is to build the economy into something that will work for, rather than against, the Saudi people.

– Rob Lee

Photo: Flickr