By Abdullah Hamidaddin
15 October 2015
On Monday, the Saudi government launched a new organization to address the rising problem of unemployment in the country. The Commission for Job Generation and Anti-Unemployment will report directly to Deputy Crown Prince Mohammad bin Salman in his role as president of the Council of Economic and Development Affairs.
This is not the first Saudi government initiative to focus on unemployment. The Labor Ministry carried out multiple initiatives. The primary strategy of most of them was the nationalization of the labor market, or at least a large percentage of it. There are about 12 million employees in Saudi Arabia, 8 million of them expatriates.
The second important organization in this regard is the Human Resources Development Fund, which provided training, placements and salary subsidies for Saudis wanting to enter the labor. Employers would only need to pay half the salary for the first two years of employment of a Saudi placed by the fund.
While there have been many success stories, unemployment has still risen amid many persistent hurdles, the most visible being Saudi businesses, which prefer to hire foreign, low-paid labor. Another hurdle is that Saudi labor has been portrayed as lazy and less disciplined. This image has been consistently promoted by an informal anti-nationalization coalition of businessmen who see hiring Saudis as against their financial interests.
Another hurdle is the structure of the Saudi economy, which is still oil-based. Efforts to overcome this have so far not succeeded. The solution is to create new financial sectors that can expand the labor market. To place Saudis in jobs, they first need to exist - employing Saudis by firing foreigners is not a viable solution.
Most unemployment exists among Saudis with college education, and among Saudi females. Most of the jobs in the private sector are low-paid and low-skilled. These cannot be filled by women and are not adequate for college graduates.
Many Saudi economists say creating a commission directly linked to the deputy crown prince will allow it to execute its mandate and overcome some of the bureaucratic hurdles that other government bodies have faced. They also believe that the commission will be able to overcome pushback from Saudi businessmen who are resisting job-nationalization.
Optimistic economists say the most important aspect of the commission is its mandate to expand the labor market by supporting entrepreneurs and providing consultancy to small and medium-sized businesses. So instead of simply placing a Saudi in the job of an expatriate, the commission will work to create new jobs.
However, cynics question its implementation capacity, with memories of previous failed initiatives still fresh. They insist that without changing the economy’s high oil-dependency, it will not be possible to tackle unemployment.
However, the creation of the commission is itself a step forward. Beforehand, there were separate entities with different responsibilities (job-nationalization, training Saudis, supporting entrepreneurs). Those entities did not always cooperate well, and sometimes could not function due to resistance from other government bodies or from the business sector.
This new commission, however, has a broad mandate, and most importantly has the authority to push back against resistance. Being headed by the deputy crown prince is itself empowering. There is a more important reason to be optimistic. Unemployment among Saudi males is about 6 percent, while among females it is about 33 percent. If Saudi unemployment is a problem, it is almost solely because of high unemployment among females.
However, female unemployment in Saudi Arabia is not just about economics. There are many cultural and regulatory hurdles that only a strong government body can overcome. This commission gives hope to the female labor market, and should focus almost solely on that, because if Saudis tackle female unemployment they have solved most of the problem.
Abdullah Hamidaddin is a writer and commentator on religion, Middle Eastern societies and politics with a focus on Saudi Arabia and Yemen. He is currently a PhD candidate in King’s College London. He can be followed on Twitter: @amiq1