São Paulo – Saudi Arabia created 600,000 private sector jobs since late 2011, causing unemployment rates among men to drop to 6.1% in 2012, the lowest rate in 13 years. According to information released by international agencies last Wednesday (19th), the decline in a unemployment and increased job openings were enabled by government reforms in 2011.
One of the measures taken by the Ministry of Labour was to implement the quota system that determines how many expatriate employees a private company can have. Companies employing more expats than Saudis will incur a US$ 640 fine.
The ratio of locals to expatriates that a company is allowed to have is dependent on its size, but companies prefer to hire foreigners because wages and labour charges are lower than for nationals. Government measures also include wage monitoring to prevent employers from bypassing labour laws.
The labour reform was implemented after a report from the Saudi Central Bank in 2011 showed that nine out of ten Saudi workers are in the public sector. The ratio is the opposite in the private sector, with six million expatriate workers. The government has decided to change this picture because it wants its citizens to work in the private sector and because high unemployment rates were partly the cause for the Arab Spring in other countries.
Women in the labour market
The Saudi vice minister of Labour, Mofraj Al-Haqbani, also said the government is increasing women’s participation in the labour market. He said prior to the reform, only 70,000 women held positions at private companies. Since late 2011, women have come to account for a third of all new personnel hired by the private sector.
The minister of Labour also reported that around one million Saudi workers are in a professional relocation program, and 86% of those are women. According to Al-Haqbani, some retailers, such as cosmetics companies, are now mandated to hire only women. He also said the government sends “hundreds of thousands” of women to scholarship programs overseas.
*Translated by Gabriel Pomerancblum