The static notion that Saudi employees prefer and seek desk-bound managerial positions also must change Some 39 percent of Saudis aged 20-24 are without work JEDDAH: With unemployment among Saudis hovering around 10 percent according to the most recent labor ministry estimations - and youth unemployment as much as four times greater than that in some age brackets, education and labor market reform are the foremost challenges facing the Kingdom, Banque Saudi Fransi said in its report "Employment quandary: Youth struggle to find work raises urgency for reform" released Wednesday. It said concern over whether the education system is arming students with relevant technical skills for the workforce is paramount since only one out of every 10 employees working for a Saudi private sector company is a Saudi citizen. "This scenario must be drastically reversed if the private sector can shoulder the burden of future job creation to meet the needs of the 66 percent of Saudis below the age of 30 in 2009. Of the country's indigenous population of 18.5 million, 47 percent are 18 years old or younger," the report prepared by the bank's economic research department headed by Dr. John Sfakianakis said. In recent years, ministries and publicly linked firms absorbed many new job market entrants, offering better salaries and greater job security than private sector work. Yet the bias among Saudi citizens toward government jobs has had the effect of weakening public sector productivity, stifling labor competition, and propelling current expenditure upward. Comprising recurrent costs on items only used once such as salaries, current expenditure has almost doubled since 2000 and is a key cause for rampant public overspending. The report noted that the government sector's ability to create jobs will erode as it seeks to curtail unnecessary spending growth, otherwise it will have few alternatives than to keep on hiring. However, despite this scenario, it remains unlikely that Saudi Arabia will witness a similar degree of popular instability now facing North African nations, BSF report said. Income differentials are not as wide and the Kingdom has an enormous stash of oil wealth it can draw on to finance schemes to sooth popular frustrations without exerting too much strain on its budget, it said. Saudi Arabia held SR1.65 trillion ($440.4 billion) in net foreign assets at the end of 2010, a figure we expect to rise to record levels of at least $471 billion by the end of this year due to higher oil prices and anticipated rises in output among OPEC producers. Brent oil prices have topped $100 a barrel this month stemming partly from unrest in Egypt, while WTI oil prices have held near $90 a barrel, after averaging $79 a barrel last year. Meanwhile, the government slashed its debt-to-GDP ratio to 10.2 percent last year from more than 80 percent just seven years go, giving it the financial muscle it needs to formulate short-and medium-term policies to enable its population better cope with inflation, housing shortages and the tenuous job market. Moreover, Saudi quality of life indicators have improved in recent years unlike oil-importing countries in North Africa, but recent floods in Jeddah are a reminder that complacency is not an option. Policies designed to ease the burden of high property prices and escalating food costs, as well as infrastructure upgrades to better avert flooding damage, are necessary to quell concerns of citizens, the report noted. Saudi Arabia's young population is swelling in size and growth slowed to just 2.7 percent in 2009, it was able to generate throwing light onto a pronounced and risky trend toward joblessness among youth. Overall Saudi unemployment was about 10 percent in 2010, according to preliminary indications from the labor ministry that would mark a slight decline from 10.5 percent in 2009, although higher than 2008's rate of 9.8 percent. This fails to capture a more complex predicament facing Saudis under 30 years of age, more and more of whom are completing studies to find there are not enough appropriate jobs on the market. Unemployment among new jobs for expatriates. Some 39.3 percent of Saudis between the age of 20 and 24 was unemployed in 2009 - up from 28.5 percent in 2000, according to data of the Central Department of Statistics & Information (CDSI). Youth aged 25 to 29 also faced 20.3 percent unemployment in 2009, more than double the ratio in 2000 of 9.9 percent. The gender gap is one factor exacerbating the youth unemployment figures. Female jobless rates are much higher than those of males: overall unemployment among women in 2009 was 28.4 percent, including joblessness of 45.5 percent for women aged 25-29. Even excluding female unemployment, joblessness among men was also substantial in 2009. The data showed the ineffectiveness of so-called "Saudization" policies in remedying the disparity, BSF report further said. The dearth of jobs for Saudis has complicated social norms of marrying young and setting up a home. The cost of buying single family homes is fast becoming out of reach for the majority of Saudis whose monthly income is below SR8,000 ($2,133), in most cases a fraction of that. High property prices and limited supply are aggravated by a want for supplementary home financing. The government is simply unable to absorb all of the new workers entering the job market. In 2008, as the economic cycle peaked and then began to correct swiftly with the onset of the global financial crisis, the state hired 69,726 employees in its largest employee addition of the decade, according to data cited by the Saudi Arabian Monetary Agency (SAMA). The report forecast that in 2009 and 2010, employee additions were even greater as government sector GDP expanded more than 11 percent. This did not have a markedly positive effect on the job scene, however, as unemployment rose to 10.5 percent in 2009 from 9.8 percent in 2008. "What has emerged is a scenario where the private sector perpetuates the Saudi unemployment problem while state strives to act as a cushion restraining higher jobless numbers," the report said. In late January, Saudi labor minister said the Kingdom must create five million jobs by 2030 to meet the demands of the young, male-dominated workforce. The minister spoke of the private sector generating three million, or 60 percent, of these jobs. Regional employment conditions are moving along a similar trajectory. According to the Arab League, Arab countries need to create 40 million jobs by 2020 to tackle unemployment. The source of the unemployment problem differs in Saudi Arabia, however.
