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Features: International Spotlight: Saudi Arabia

Population Growth
Training and a growing economy are vital to creating jobs for a young and rapidly expanding workforce.

The Saudi government is acutely aware that the population is fast growing and young, as is the case throughout the rest of the Arab world. The last census in 1992 put the total population at almost 17 million, last year it was estimated at 22 million and in 2010 it is estimated to be 30 million, with a population growth rate at something over 3.5 percent a year.

The Saudi population has the characteristics of a developing country. Where in 1992, at the last census, around 56 percent of the population were of working age (15-64), it is now reckoned that at least 60 percent of the population are under 20 years old and the vast majority are of working age. These are not figures a responsible government can walk away from — there has been no recent census and all these figures are best-case guesstimates, but there were reckoned to be 660,000 adult Saudis coming onto the labor market between 1994 and 1999. This figure will spectacularly increase as the baby boomers of the 1980s come of age.

In fairness to policy makers, the Saudi government has been keenly conscious of this population explosion and its impact on the job market and unemployment. Of all government policies, Saudiisation and job creation is rated the most important. From this standpoint has flowed the rest: accession to the WTO, the liberalization program, reform, training, skills assessment — all these stem from the government's consciousness of the perils of unemployment, poverty and social discontent.

Job creation is the single most important economic driver in the Kingdom and the most critical factor for the liberalization and reform program. "The government is making a tremendous effort, headed by HRH Prince Abdullah, who is really trying to move this country from a very bureaucratic system to a more transparent, lenient one and encouraging all the foreign companies. No one ever thought in the beginning to ask foreign companies to come and carry out work needed in the country," commented Shaikh Khalid Juffali of E A Juffali & Bros.

Yet, the figures mask a malfunction in the Saudi labor market. In 1996 the Saudi Manpower Council estimated the civilian labor force, both men and women, in the Kingdom was 7 million but only 2.5 million were Saudis. The rest were foreign labor. Now Saudi labor participation is about 33 percent of the total, due to the young age of Saudis, relatively high adult illiteracy, inappropriate skills and a very low participation rate of women in the labor market, although that is changing.

The Labor Office regularly checks Saudi companies for their numbers of Saudis employed — and sometimes comes back with a batch of young Saudis in tow. But the problems of matching Saudis to the needs of the market are many. Many young Saudis have few or inappropriate qualifications. The schools need their curriculums overhauling; more technical colleges are needed. Some young Saudis still think they should be paid over the odds. It is however true that unless they have a two pay-check marriage, they need sufficient wages to support a wife, four to five children, and some help in the house.

It is not possible to quote unemployment figures as they do not exist, but there is good evidence to suggest that somewhere between 20 to 30 percent of Saudi males are unemployed. In the past the public sector — which used to guarantee a job for life — or a kindly uncle or cousin with a business would have sopped up this unemployment. Saudi society has accepted the reality of unemployment but both the government and the private sector need to do more to create jobs.

The pervasive presence of foreign nationals from the lowest paid manual labor through middle management to top executive jobs is another cause. In the boom periods of the 1970s and 1980s the government cushioned Saudis, assuring them jobs and giving them a sense of financial security without skills acquisition. The dilemma is that foreign labor or expertise is generally cheaper than Saudis.

"We have in Saudi Arabia jobs that are filled by non-Saudis...this is a wealth [of expertise]; they are being paid for the work they do and it would be a pity for this body of human beings to be lost. Having said that, there are many Saudis coming from the schools and colleges ready to work but without the right skills," points out one local businessman, Wahib Binzagr of Beit Binzagr.

The old story that Saudis will not work is often most unfair. The new generation of Saudis who have the appropriate skills and are lucky enough to find a job are hard working and responsible. Many have trained with major companies like Sabic and moved to their own companies. Others are working in the services sectors such as the banks. Able and ambitious young Saudis work extremely hard and in for example the petrochemicals sector are now running the Sabic affiliates.

Major companies all provide training or have training schools. For instance, Ouday Al-Shaikh of the newly established Al-Raedah International Company explains: "When we first got into the telecoms sector, we saw the demand, and thought about training, which takes time, especially when the projects already exist. So we set up a training program to help people do better what they already know."

Training is a key factor in the demographic argument. More training, more jobs, fewer foreigners and an expanding economy are all needed. Again as Wahib Binzagr says: "I pay them [foreign labor] for their productivity. I don't want them to lose their opportunities because of Saudis. In order to ensure this does not happen, our business has to grow. And for this to happen the economy needs to grow."

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