Employment rate in Saudi Arabia grew by 3.2% in 2014. The issue of foreign labor in Saudi Arabia is now one that touches all corners of the globe. Since 30% of Saudi Arabia’s population of 27.3 million are immigrants from other countries. On the other hand, Saudi nationals have witnessed high levels of unemployment for the past decade; the unemployment rate of nationals remained high at 11.7%. Besides, 35% of the population is under 19 years old, and in few years, this segment will enter the labor market.
- The expanding of foreign employees & high rate of unemployment
Currently, foreign employees represent around 31% (8.4 million) of the Kingdom’s population. They dominate the private sector workforce by holding about 90% of jobs. On the other hand, nationals who represent 70% (18.7 million) of the population account for the remaining 10% of jobs.
Foreign employees constitute the major chunk of employees in the Kingdom’s private sector. This is leading to higher unemployment rates among Saudi nationals and causing discontent among the locals. The exhibit above shows that the unemployment rate among nationals has been consistently high for several years.
High foreign remittance is another factor that has been brought to light. Every year, foreign employees in the Kingdom send significant sums of money in the form of remittances back to their home countries. In 2010, Saudi Arabia became the world’s second biggest remittance source, sending USD 27.1 billion in expatriate remittances.
- Rise in youth population
Saudi Arabia has a young population with over 40% of its people under the age of 20. Population under the age of 20 increased 4.3% during 2006-2009. The increase in the number of Saudis reaching the working age is exerting further pressure on the labor market. Figures from the International Labor Organization indicate that the Kingdom’s youth unemployment level is worse than that of Jordan, Egypt. According to the Central Department of Statistics and Information, unemployment rate in the 20-24 age categories stood at 30.2% in 2009. Unemployment, especially among the youth, is a critical issue which has diverse negative implications that could affect the Kingdom’s socioeconomic stability and burden the government’s welfare system.
- Unrest in the region
The wave of civil unrest that swept across the MENA region last year escalated the urgency for improving job opportunities for Saudi nationals in the Kingdom. Unemployment among others was believed to be a key reason for political instability in several countries across the region. The unrest led to the toppling of governments in countries such as Egypt and Libya. Although Saudi Arabia remained largely insulated from these events, the gravity of the situation is well understood. The Saudi Arabian government announced several social and economic packages during the year to address unemployment and income disparity in the Kingdom. In February, a USD 37 billion package, including pay hikes, unemployment benefits and affordable housing, was announced. Job creation emerged as a top priority in the government’s agenda. The King ordered the creation of 66,000 security force posts, and another 66,000 jobs for graduate teachers and health diploma holders.