By Ed Attwood
Almost 40% of Saudis aged between 20-24 out of work, minimum wage needed
The ongoing fallout in the Arab world over uprisings in Egypt and Tunisia will force Saudi Arabia to reconsider education and unemployment, according to a new research note.
Banque Saudi Fransi (BSF) said that youth unemployment, which is almost four times greater in some age brackets than the official 10 percent unemployment figure, is one of the foremost challenges facing the country.
Among the answers suggested by the bank to galvanise interest in the private sector from Saudi nationals are an eight-hour working day and a minimum wage.
“Concern over whether the education system is arming students with relevant technical skills for the workforce is paramount since only one out of every 10 employees working for a Saudi private sector company is a Saudi citizen,” the report said.
“This scenario must be drastically reversed if the private sector can shoulder the burden of future job creation to meet the needs of the 66% of Saudis below the age of 30 in 2009.
“Of the country’s indigenous population of 18.5 million, 47% are 18 years old or younger.”
But BSF also said that it was unlikely that Saudi Arabia would witness riots seen in some Arab nations, due to its significant oil wealth.
Saudi Arabia, the most populous Gulf state, has doubled its education budget since 2005. An addition of just under 700,000 new jobs from the private sector should, in theory, help to soak up the 39.3 percent of Saudis aged between 20 and 24 who are out of work.
However, just under 10 percent of labour force employees in the private sector are Saudi, BSF reported. By comparison, the number of work visas issued for foreigners working in the private sector has doubled since 2005.
The government has piled on more jobs in the public sector, but it has not managed to keep pacing with a rising population.
“We anticipate in 2009 and 2010, employee additions were even greater as government sector GDP expanded more than 11%,” the BSF note stated.
“This did not have a markedly positive effect on the job scene, however, as unemployment rose to 10.5% in 2009 from 9.8% in 2008. What has emerged is a scenario where the private sector perpetuates the Saudi unemployment problem while the state strives to act as a cushion restraining higher jobless numbers.”
The bank also said that Saudi Arabia was “years away” from a robust private sector that would enable the kingdom to move away from expensive subsidy programmes.
Incentives for private firms to hire nationals are slim, given that labour laws currently make it hard for non-performing Saudis to be hired, while their wages are invariably higher.
Another key concern is the curriculum, where students are encouraged to learn by rote, rather than benefiting from more analytical teaching methods.
“Improving education is absolutely vital to tackling the unemployment quandary as joblessness among Saudis holding bachelors-level or higher degrees is substantially lower than among those just completing high school,” the report said.
“In 2009, 36% of job seekers held only high school diplomas, while only 7% were university graduates.”