Entrepreneurship in the Kingdom of Saudi Arabia

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43% of Saudi youth are jobless

January 6, 2011

Saudi Arabia is suffering from a high unemployment rate among young men as more than 43 percent of citizens aged between 20 and 24 years are unemployed, according to government figures.

The rate at the end of 2009 was higher than in 2008 despite an ongoing drive by the world’s oil powerhouse to find jobs for its fast-growing nationals and dispose of hundreds of thousands of expatriate workers who dominate the private sector.

The figures by the government statistics and information center showed nearly 43.2 percent of the Saudi males and females aged 20-24 years were unemployed at the end of 2009, nearly 20 percent above the 2008 rate.

The report, published in Saudi newspapers this week, showed more than 450,000 Saudi nationals of all ages were jobless last year.

“This comes at a time when nearly one million labor visas for foreign workers were issued last year,” the report said. “The private sector continued a drive to import foreign labor although nearly 111,000 Saudis were looking for jobs.”

A breakdown showed nearly 300,000 of those visas were issued in the capital Riyadh while 199,000 were in the eastern province and 185,000 in Makkah.

Around 49 percent of the visas were for jobs in the construction sector while nearly 12 percent were for fishing and farming, 11 percent for trade, eight percent for the manufacturing sector and six percent for communication.

“The private sector’s excuse for its heavy reliance on foreign workers is that the Saudi labor is characterized by low productivity and negligence…but of course this is an incorrect accusation,” said Hamza al Salim, a university economics professor in Riyadh. “The real reason is that the foreign labor is cheaper…this practice is aggravating the joblessness problem and draining the country’s financial resources since the expatriates remit most of their money abroad.”

Saudi Arabia, the largest Arab economy, is suffering more from unemployment than other Persian Gulf oil producers given its large population and the slowdown in its economy in some years. As the public sector has become redundant, the government has sought help from the private sector to create jobs for Saudis.

Citing figures by the Ministry of Labor, a key Saudi bank said last month the Kingdom’s unemployment rate edged up to around 10.5 percent in 2009 from 10 percent in 2008 because of what it described as tightened market conditions.

“Private sector companies favour non-Saudi employees, who comprised about 90 percent of the workforce in 2008, up from 87 percent in 2006-2008,” Banque Saudi Fransi said in a study.

Two months ago, Saudi Arabia approved a massive five-year development plan aimed to create nearly 160,000 jobs for its citizens in the private sector.

Saudi officials said the strategy includes a two-year plan, a medium-term scheme for three years and a long-term plan stretching for 20 years. They said the target of the first plan, staring in 2011, is to bring unemployment under control while the second phase is to reduce the joblessness rate.

In recent comments, a senior Saudi official said the Kingdom could eliminate its festering unemployment problem by sacking one million expatriate workers.

Deputy Interior Minister Prince Ahmed bin Abdul Aziz said Saudi Arabia Labor Minister should give priority to tackling the joblessness problem caused by a rapid population growth, unstable economic growth due to volatile oil exports and preference of foreigners by the private sector.

The Prince said Saudi employers prefer expatriate laborers for lower salaries and other factors and called for measures to encourage them to change that attitude. He proposed a “blacklist” of national workers who quit their jobs in the private sectors within government attempts to encourage them to stay.

“There is a big gap between the private and public sectors the expatriate labor is favoured by the private sector,” he said.

“I believe that in case we manage to dispose of one million foreign workers and the Saudis who will replace them can do their jobs properly, then the Kingdom will be able to shut the unemployment file completely.” According to BSF, foreigners employed in the private sector earned SR764 on average, while Saudis’ pay stood at as high as SR3,137 per month.

“The huge divergence in salaries between Saudis and non-Saudis is obvious and without administrative measure taken the gap will always favor the non-Saudi wage earners,” said John Sfakianakis, Chief Economist at BSF. He revealed that despite the global fiscal crisis, remittances by Saudi-based expatriates surged 20.3 percent in 2009 from the year earlier to SR94.5 billion.

Between 2005 and 2009, money remitted home from workers in the kingdom jumped 84 percent, in keeping with a notable jump in the number of new work visas issued, according to Sfakianakis.   (Source: emirates247.com)



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