Entrepreneurship in the Kingdom of Saudi Arabia

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Jobs Rush

The Gulf states will need to create 3.3 million jobs over the next ten years, but programmes like Natiqat won’t work, says Al Masah Capital.

The Gulf states will need to create 3.3 million jobs over the next ten years, meanwhile the MENA region will need to create 30.7 million jobs by 2020, according to Al Masah Capital.

Unemployment in the Middle East stands at 10.3% and North Africa at 9.8%. While that may seem comparable or even favourable to some OECD countries – (U.S. 9.1% unemployment, Spain 21.3%), joblessness in MENA is a structural problem.

“The unemployment rate among the youth in the MENA is high – one in every four youths living in this region is unemployed. The youth unemployment rate in the Middle East and North Africa stands at 25.1% and 9.8% respectively,” says Al Masah Capital.

Clearly, much of the dismay and resentment that drove the raging Arab Spring was led by the unemployed or underemployed youth and led to the dismantling of least two regimes.

Regimes that have been left standing are quaking in their boots. Regional countries have stepped up their efforts to create jobs for the youth.

Saudi Arabia has earmarked $40-billion for education and training in the new budget, from its earlier allocations of $36.7-billion in 2010 and $32.5-billion in 2009.

“The logic is simple, if you keep the population busy, they won’t have time to take to the streets. However, the actions so far, especially in Saudi and Egypt, are cosmetic at best,” says Al Masah.

The Dubai-based financial institution does not expect the wholesale removal of expatriate force with a national labour force to work.

“The current actions taken by Saudi Arabia seem cosmetic. Actions such as the Nitaqat program and capping of expat residency (expected in Kuwait) are not long-term solutions for the problem of unemployment in the MENA region. Restricting employment for expatriates, if done aggressively, could prove detrimental to the region’s economy.”

Nitaqat Programme categorizes private companies in Saudi Arabia under various bands. Establishments with high rates of Saudization have been placed under the Excellent/Green band and granted most privileges in visa requests and operations for non-Saudis. Companies with a lesser number of Saudi employees are classified under the Yellow and Red bands. These companies have been given a period of three months (until 10 September 2011) to comply with the policy before restrictions come into effect, Al Masah notes.

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