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Wed 3 Aug 2016 01:52 PM

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Saudi private sector 'needs 4.1m nationals by 2030'

Expats dominate private sector workforce, better HR needed, says Oxford Consulting Group

Saudi private sector 'needs 4.1m nationals by 2030'
(Hassan Ammar/AFP/Getty Images)

Saudi Arabia must employ 4.1 million Saudi nationals in the private sector by 2030 if it is to achieve its aims of nationalising the workforce and diversifying the economy, a new report claims.

Research by Oxford Strategic Consulting analyses the kingdom’s labour needs in the context of its Vision 2030 economic strategy.

Saudi Arabia has a domestic labour force of around 6.4 million people, Oxford’s report says, with 4.2 million in the public sector, 1.6 million in the private sector and 0.6 million unemployed.

By 2030, it states, the kingdom will have a labour force of around 8 million and wants to employ 3.4 million of these in the public sector with around 0.57 million expected to be unemployed.

This means the private sector must employ 4.1 million Saudi nationals by that time – a rise of 2.5 million compared to current levels, the report says.

It notes most of the projected 8 million workers have not even entered the labour force yet, meaning there is a strong need for education and training provision.

A report published on Tuesday by Saudi Arabia’s Thought Manufacturing for Studies and Research Center found that the majority of Saudis (64 percent) said they preferred to work in the government sector than the private sector.

The study, reported in local media, found that only 27 percent of citizens said they would rather prefer to work in the private sector, while 9 percent would rather work in non-profit organisations.

Such research indicates the scale of the challenge facing the Saudi government.

Oxford urges the kingdom to improve HR (human resources) strategies to build the Saudi workforce and attract citizens into private sector jobs.

It claimed better HR could add $6.44 billion to Saudi’s GDP while helping the country plug a deficit in domestic human capital.

HR in Saudi Arabia should be an accredited profession, Oxford said, and anyone working in HR should be accredited by a globally-recognised body.

There should also be a Saudi-specific professional body for HR, supported by government, and “world-class HR centres” to develop specific industries and identify and manage human resources needs across the kingdom.

The military industry in particular will play a key role in recruitment of Saudi nationals by 2030, according to Oxford.

Vision 2030 states that half of the country’s military needs will be manufactured in the country and Saudi companies will be supported by the government to grow into new global leaders.

Saudi Arabia currently spends around $56 billion on the military industry but only $1 billion of that is spent in the kingdom. Oxford’s report estimates that around 190,000 people are employed to meet the country’s military needs yet only 4,000 of these are Saudis.

Under the vision, military expenditure in Saudi Arabia will increase to $28.5 billion and national employment will rise to 95,000 Saudis – so the sector presents substantial opportunities for recruitment in areas such as military manufacturing.

Oxford’s recommendations come as the Saudi government releases its own figures showing that expats are dominating the private sector labour market, with 8.9 million expat workers compared to 1.8 million Saudis.

Saudi nationals therefore represent just 16.7 percent of the labour force in the private sector, again demonstrating the scale of the challenge facing government.

According to local media reports on Wednesday, the figures from the Ministry of Labor and Social Development show that the proportion of Saudi nationals in the private sector is highest in the Eastern Province, at 19.6 percent (421,000 Saudis against 1.7 million expats), followed by Riyadh at 17.4 percent (690,000 Saudis against 3.3 million expats).

Makkah and Madinah follow, at 16.6 percent and 15.3 percent respectively.

The official statistics, compiled in March and published on Monday according to Saudi Gazette, show that Saudis still dominate the public sector, with 3.4 million nationals employed against 500,000 expats.

Saudis constitute around 35 percent of the entire workforce in the public and private sectors.

Women account for about 30 percent of the total number of Saudi nationals in the private sector, the figures show.