Unemployment In Kingdom Of Saudi Arabia Essay

Question:

Discuss About the Unemployment in Kingdom Of Saudi Arabia?

Answer:

Introduction

The oil exports significantly support the economy of Saudi Arabia, and the government exerts strong control over key economic activities. The country has approximately 16% of the globe’s verified petroleum reserves, ranks as the chief exporter of oil and performs an important role in OPEC. The oil sector provides approximately 87% of the budget revenue, 90% of export incomes and 42% of the Gross Domestic Product. The government of this country is currently encouraging the expansion of the private sector to diversify the economy and improve the employment of the Saudis (Central Intelligence Agency (CIA), 2017). The Kingdom of Saudi Arabia has many foreign-based workers who play a significant role, particularly in service and oil sector. The leadership is struggling to reduce unemployment levels among its nationals who are reluctant to take jobs in the private sectors (Al-Asfour & Khan, 2014). This paper explores unemployment in the Kingdom of Saudi Arabia. The article discusses the causes of unemployment, unemployment trends and measures taken by the government to increase employment levels among the Saudis.

Meaning of Unemployment

Unemployment refers to a situation where willing and able individuals fail to get work to do at the prevailing wage rate. Unemployment is a common issue all over the world and is accelerated by economic downturns and a high number of scholars entering the job market in search of employment (Arnold, 2013). Like many other nations, the Kingdom of Saudi Arabia faces unemployment issues.

Causes of Unemployment in Kingdom of Saudi Arabia

Skill Mismatch

Mismatch in the skills attained at universities and colleges and the needs of the businesses is the main reason why the employers in this country find it difficult to hire the locals. There is a weak linkage between labor market requirements and the curriculum. Many of the Saudis lack the necessary experience, soft skills, and exposure to international standards and practices (Flynn, 2011). Moreover, many of the students pursue courses in arts and social sciences while a smaller portion of them undertake science and technology related subjects.

‘Wait Unemployment’ Phenomenon

The ‘Wait unemployment’ phenomenon is also another issue that is making many Saudis unemployed. The graduates in this country prefer to work in the public sector than the private firms. The public sector employment is preferred by the locals due to remunerative wages and fixed working hours. As a result, most of the job market entrants willingly remain unemployed than occupying the jobs available in the private sector in the hope of securing employment in the public sector (Rajhi, Salamah, Malik, & Wilson, 2012).

Restrictions on Women Employment

Cultural beliefs facilitate the restrictions on women employment in the Kingdom of Saudi Arabia. For example, it is seen as a violation of the will of God for unrelated women and men to mingle and hence the restriction of women’s ability to take up jobs (Al-Asfour & Khan, 2014). As a result, the ladies graduating from universities find it difficult to secure employment in the presence of such cultural barriers.

Unemployment Trend in Kingdom of Saudi Arabia (2014-2016)

Graph 1: Retrieved from General Authority for Statistics

The rate of unemployment in the Kingdom of Saudi Arabia between 2014 and 2016 has been within 6 to 5.6%. Between these periods, the highest level of unemployment was recorded in mid-2014, that is, 6%. The rate declined sharply to 5.7 % at the end of 2014. The same unemployment trend was experienced in 2015 and dropped to 5.6% in the first and second quarter of 2016. At the end of 2016, the unemployment went back to 5.7% (General Authority for Statistics, 2017).

Government Measures to Reduce Unemployment

The Nitaqat Program

The Nitaqat initiative is one of the latest measures by the government of Saudi Arabia to increase the employment of Saudis. Nitaqat is a Saudiization program for the private sector that groups the companies according to the current proportions of Saudi workers. This initiative requires the private firms in most industries to guarantee that the Saudi employees fill at least 30% of their workforces. Under Nitaqat the companies are grouped into four categories depending on their present Saudiization rates. Excellent indicates full compliance, green shows good compliance, yellow and red poor and no compliance respectively (Al-Asfour & Khan, 2014). The program appraises the performance of the businesses in every class prizes the excellent and green groups with top priority. Those companies in the yellow group are given longer deadlines to comply with the Saudiization while those in red are given least priority. However, the enterprises with less than ten workers are exempted from the Nitaqat.

The “Hafiz” program

Hafiz is a searching for employment initiative that avails financial support to serious occupation seekers. Moreover, this program provides training and employment support services to help the job seekers find a sustainable work as well as the resources and skills needed to enter the job market. For example, this program provides financial support of 2000 SAR every month for 12 months to incentivize and support serious employment seekers who are qualified for such assistance as the per stipulated requirements (Al-Asfour & Khan, 2014).

Training of the Saudis

The government of Saudi Arabia is committed to ensuring that the Saudis are educated and trained to reduce the reliance on foreign employees. Both private and government funded training institutions are present in Saudi though public sponsored are dominant. The government has improved its spending on education and training to equip the citizens with the skills and knowledge to assist them secure employment in private sectors.

Conclusion

The economy of Saudi Arabia is heavily dependent on oil exports. The government has considerable control over the chief economic activities. Despite being an oil-rich country, unemployment is present. In 2016, the unemployment level in this country was 5.7%. Skill mismatch is said to be a major reason why the employers are reluctant to hire the Saudis. Other factors that contribute to unemployment include the reluctance of the unemployed to take jobs in private sectors and cultural barriers that impede the employment of women. Some of the measures adopted by the leadership to boost the employment of the Saudis include the Nitaqat Program, the “Hafiz” plan and the training of the Saudis.

References

Al-Asfour, A., & Khan, S. A. (2014). Workforce localization in the Kingdom of Saudi Arabia: issues and challenges. Human Resource Development International , 243-253.

Arnold, R. A. (2013). Economics. Mason, Ohio: South-Western.

Central Intelligence Agency (CIA). (2017, Jan 12th). The World Factbook: Middle East- SAUDI ARABIA. Retrieved May 6th, 2017, from

Flynn, P. (2011). The Saudi Arabian Labor Force: A Comprehensive Statistical Portrait. Middle East Journal , 575-586.

General Authority for Statistics. (2017). Labor Force Survey. Retrieved May 6th, 2017, from

Rajhi, A. A., Salamah, A. A., Malik, M., & Wilson, R. (2012). Economic Development in Saudi Arabia. Hoboken : Taylor and Francis.

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