Saudi Arabia’s unemployment rate dropped from double digits to 8.46% in the first quarter of 2023 in a year-on-year comparison, with an increase in real wages in the kingdom driven by a rise in women joining the workforce.
The findings of a report titled "Saudi Labour Market" by CI Capital, a Cairo-based financial services group, revealed that the unemployment rate in the kingdom dropped from 10.05% to 8.46% in Q1 2023, though it also represented a marginal increase from the previous quarter’s 7.95%.
The kingdom’s labour market recorded a total 15.4 million people employed in Q1 2023, 18.7% of whom were women. The number of expat workers reached 7.8 million — the highest since Q4 2017 — with the construction and agriculture sectors accounting for 53% of new expat hires.
Currently, expats account for 75% of the kingdom’s total labour market, according to CI Capital figures. These numbers continues to rise as the salary gap between expats and nationals narrows.
The private sector has emerged as a top draw for Saudi nationals, which saw a 1.8% rise in numbers in Q1 2023, pushing the total number of Saudis employed in the private sector to 2.23 million out of 9.9 million nationals in the workforce. The rise in numbers has been fuelled further by an increase in the minimum wage for locals by 25% to 4,000 Saudi Arabian riyals in September 2023, the report stated. The manufacturing, wholesale and retail trade, and transportation and storage sectors, accounted for 60% of new Saudi hires.
Total real wages saw a moderate growth of 1.7% in Q1 2023, compared to the last quarter of 2022, however, this uptick was largely driven by a rise in paycheques for male nationals who saw a healthy quarter-on-quarter growth of 2.6%. Despite a push for Saudi women joining the working force in the kingdom, their wages only rose by 0.2% for the same period.
Women joining workforce
Saudi Arabia’s labour market reforms have led the country’s female labour force participation rate for Saudi nationals to nearly double to almost 36% in 2022 from 19% in 2016, according to financial information and analytics firm S&P Global. This, in turn, has boosted the overall participation rate to a record high of 61.7% in March 2023, compared with a record low of 54.2% in June 2017.
According to CI Capital, 33,000 female nationals joined the workforce in Q1 2023, resulting in a 3.4% increase compared to the previous quarter.
This increase has been attributed to improved female education and cultural liberalisation, says S&P, with a drop in fertility rates also leading to more women joining the workforce.
The analytics firm estimates that if labour force participation continues to grow at the current pace for the next 10 years, the Saudi economy could potentially be $39 billion, or 3.5%, larger compared to a hypothetical scenario with historical (2000-2022) labour force participation rate growth.
(Reporting by Bindu Rai, editing by Seban Scaria)