Crossroads Arabia

The Saudi Enigma: Rich but No Job For Many

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While Saudi daily Arab News is full of praise for the late Crown Prince Sultan, including a special section dedicated to that purpose, it continues its mission of reporting and commenting on news.

Here, it offers a column by Abdel Aziz Hamad Aluwaisheg, Director General for International Economic Relations at the Gulf Cooperation Council (GCC). He comments on the seeming paradox of a fabulously rich country faced with a serious unemployment problem, no unemployment crisis. He notes that throughout the GCC, for every hundred new jobs created, 70% of them go to foreign nationals, with fewer than 30% going to host country nationals. That, he says, is the symptom that identifies the issue; the causes are threefold:

  1. 1. Foreign labor is incredibly cheap and available; this depresses wages for national workers;
  2. 2. Local job-seekers don’t have the skills that employers want, a failing of the educational system;
  3. 3. Unrealistic wage expectations on the part of job-seekers.

These are systemic problems, not to be solved by quick-fixes, he says. And he’s right. Fixing this is the work for a generation, but it’s got to start now, even with inadequate quick-fixes because it will not fix itself.

Probing paradox of unemployment amid prosperity

Many outsiders find it hard to believe that Saudi Arabia has an unemployment problem. It is indeed perplexing; unemployment of nationals is rising despite rapid economic growth.

The Saudi economy nearly doubled in size over the past five years, reaching $435 billion last year. While in most economies such phenomenal growth would translate into higher levels of employment for nationals, this has not been the case here.

According to official statistics, unemployment went up instead of down over the past decade. In 2009, the last year for which official figures are available, unemployment among Saudis reached 10.5 percent, up from 8.3 percent in 2001. For women, the rate was 28 percent in 2009 — or four times the rate among men — compared to 17.3 percent in 2001. Those rates translated into about 450,000 Saudis who could not find jobs in 2009. To be considered unemployed, they had to meet a narrow and strict definition of unemployment.

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