Empowered employees are driving Saudi Arabia's dynamic labor market

Changes to rules around the Kingdom’s workforce include a drive for companies to hire more local workers — an initiative known as ‘Saudization’, have helped to empower women and bolster youth employment.

Research published by the US-based thinktank the Brookings Institution earlier this month showed that the number of Saudi citizens quitting their jobs in the third quarter of 2021 was up 95 percent from a year earlier.

“On the flip side, the hiring of new workers is rapidly picking up after the pandemic-related slump of last year,” the report said, adding that a growing economy is resulting in more favorable labor conditions and is facilitating workers’ transitions.

Average wages for Saudi workers are on the rise, specifically for highly educated Saudis, the institution added.

Speaking to Arab News, Dr. Fahad Alghalib Alsharif, a Senior Research Fellow at King Faisal Center for Research and Islamic Studies, said: “Reforms have definitely positively impacted the labor market.”

“The labor reforms objective is to increase 30 percent of women participation in the labor force in the next few years”, he added.

“To give you an example, many women now work in the consumer market, in the restaurant business and in government and non-government sectors.”

“One of the major steps to overcome the traditional rentier economy based on oil, and shift to a more diversified paradigm is to empower Saudi women who constitute 50 percent of the population to contribute their needed skills and talents to the Saudi labor market.”

The unemployment rate of Saudi Arabia’s working age population stood at 6.6 percent in the third quarter of 2021 — 1.9 percentage points lower than the same period of 2020, according to estimates from the General Authority for Statistics, also known as GASTAT.

The labor force participation rate of Saudi females rose to 34.1 percent, up 1.7 percentage points, over the same period, according to GASTAT.

This has been driven by the improved education of Saudi women. The female youth illiteracy rate dropped to 0.6 percent in 2017 from 5.9 percent in 2007, according to GASTAT. Additionally in 2015, women exceeded the number of men attending colleges and universities for the first time.

While there has also been progress at the level of youth participation, room for improvement remains.

The core working-age group of 25-to-54-year-olds is the largest of the three age groups in the labor market, according to GASTAT.

Youth participation — 15-24 year olds — in the labor force was less than half that of the core working-age — 34.1 percent vs 85.7 percent for Saudi males, and 14.6 percent vs 48.1 percent for Saudi females).

“Saudi Arabia faces a huge youth bulge, with about 70 percent of the population under 30,” says Al-Sharif.

Increasing churn is generally a sign of strengthening labor markets, as more confident workers move around companies, seeking better opportunities.