JEDDAH — Riding on a positive employment trend, the Kingdom of Saudi Arabia has boosted its local workforce by launching a new nationalization initiative on December 24.
The Ministry of Human Resources and Social Development’s latest move is part of its ongoing efforts to support the local labor force and enhance its contribution to the economic ecosystem, as well as to reduce unemployment rates.
The initiative includes the localization of the sales profession by 15 percent, covering roles like IT hardware sales, retail sales managers, and sales representatives. It also entails the localization of project management professions in the first phase by 35 percent. This drive has created favorable job opportunities in various sectors, leading to a recent downward trend in unemployment rates.
Welcoming the initiative, Talal Zaki Hafiz, a Jeddah-based banking expert, said that it would help qualified and deserving Saudi youth secure jobs in different sectors. This move bolsters the Kingdom’s Saudization drive and helps reduce unemployment rates.
Talat, a frequent commentator on the Saudi economy, remarked: “The localization of sales, purchasing, and project management professions that took effect this week, in cooperation with visible representatives, confirms that government efforts are successful. These are aimed at providing a stimulating, productive, and stable work environment for citizens across various economic sectors and regions of the Kingdom.”
The downside
Despite a decline in unemployment, concerns persist, particularly in regions beyond major urban centers where the cost of living remains high. To a large extent, job vacancies hinge on the government’s ability to attract foreign investment that is willing to be part of the Vision 2030 project.
Additionally, the Saudization of the labor sector has placed business houses in a challenging situation. With foreign employment decreasing due to the Saudization policy, employers are facing difficulties in finding qualified labor to maintain output. While they acknowledge the government’s policy to create more jobs for Saudi nationals, critics suggest that a transition period is needed to allow for adjustments.
So, will the nationalization drive not affect some major industries and MNCs in securing skilled labor, as the companies will be compelled to prioritize Saudi citizens over potentially more qualified foreigners?
Talat views this differently: “I believe that it will have a positive impact on MNCs, simply because Saudis are becoming highly professional and have shown dedication to their work.” He insists that in certain jobs, Saudization will enable MNCs to save money and reduce hiring costs.
Unemployment rates at historic low
Meanwhile, unemployment in the Kingdom fell to a historic low of 8.6 percent in the third quarter from 9.9 percent in the previous year, according to data released by the General Authority for Statistics on Thursday, December 28. These figures are the lowest since 2008. The overall unemployment rate among Saudis and non-Saudis reached 5.1 percent, slightly up from 4.9 percent in the second quarter.
Driven by rising oil prices and robust growth in non-oil activities, economic activity in the Kingdom is rebounding. This achievement is also attributed to the government’s policy of economic diversification, improving economic conditions, and tightening the labor market.
Talat added: “Saudi Vision has supported the localization of several jobs and functions by setting a clear target of 7 percent, and the Ministry of Human Resources and Social Development has done an excellent job in encouraging Saudization programs.”
According to the Saudi National Labor Observatory, the total number of employees in the private sector reached 10.7 million workers in October. The NLO revealed that out of these, 2.3 million were Saudi nationals.
Khaled Aloud, editor-in-chief of Riyadh Daily, said: “It’s truly an exciting development. The low unemployment rate is a remarkable achievement, considering the challenges the Kingdom faced just a few years ago.”
Khaled attributed this remarkable achievement to Vision 2030, which “played a significant role in this turnaround.” The Kingdom’s diversification plans have opened new opportunities in non-oil sectors like tourism, technology, and renewable energy, creating jobs and opportunities, he noted.
“These efforts are in line with the Kingdom’s goal to reduce the unemployment rate to 7 percent by 2030, as set forth in Saudi Vision 2030,” he said, adding that this will enhance Saudi participation in the labor market.
Women’s participation
Crown Prince Mohammad Bin Salman, the de facto ruler of the Kingdom, has prioritized creating employment opportunities for Saudi citizens, including women, in alignment with the objectives of Vision 2030.
According to reports, there has been rapid integration of Saudi women into the workforce, now constituting 36 percent of the total labor force in the country. This has led to a 3 percent decrease in their unemployment rate compared to the previous year, bringing it below 20 percent.
Fueled by Vision 2030, the emergence of mega-projects, and robust GDP growth, the private sector has also massively stepped up, leading to the creation of more job opportunities.
Sectors such as communications, tourism, logistics, and technology have significantly contributed to the declining unemployment trends. Leveraging the government’s success in attracting foreign investments, these sectors have created ample job opportunities.
Khaled pointed to government initiatives like Nitaqat, which have been instrumental in promoting the Saudization of the workforce and “contributed to this positive trend.”