Saudi Arabia’s labor reforms appear to be working as more than 600,000 locals have landed jobs with private companies in the kingdom. While economists are wary of drawing conclusions regarding the kingdom’s job market and private sector hiring, these reforms appear to have recorded some early success stories.
New data by government sources reveal that the unemployment rate among men in the country dropped to 6.1 percent last year. This is the lowest recorded figure since 2000 and is expected to further improve over the coming months, as new rules reshape the expatriate-heavy labor market.
At a press conference in Riyadh, the deputy Labor Minister Mofraj al-Haqbani said, “it is the lowest since 13 years ago… I think next year, God willing, we will see better results”.
Saudi Arabia, the Middle East’s largest economy grew by 6.8 percent last year on the back of brisk activity in the private sector and higher oil prices in the global market. However, private companies have traditionally been reluctant to employ Saudi workers, who are paid more than foreigners and enjoy more worker protections. About 90 percent of the workforce in Saudi Arabia’s private sector are expatriate workers.
The government of Saudi Arabia has taken active measures to promote employment among Saudi-born men and especially women who face religious restrictions on gender mixing. In the wake of the Arab Spring uprisings, the government views native Saudi unemployment as a long-term strategic challenge that must be handled effectively. The Labor Ministry has undertaken aggressive reforms to overhaul an existing system of employment quotas for Saudi and foreign workers in the private sector, while companies that employ larger numbers of expatriates than local workers would face fines.
In late 2011, the government introduced a quota system, called “Nitaqat”, which categorizes companies by sector and size to determine the proportion of foreign employees that they may employ. Companies missing their targets face penalties and hiring restrictions.