Under the title "Saudizing Jobs: The Old Model is No Longer Effective," Bloomberg Asharq published a report noting that after months of job searching, Saudi computer specialist Abdulatif Al-Jurfaan donned his red graduation gown with a master's degree from the U.S. and began selling homemade tea on the roadside. The 32-year-old hoped his clever stunt would attract customers, but instead, within hours, a video of him went viral on social media, turning Al-Jurfaan into a symbol of unemployment in Saudi Arabia. He stated, "I was applying for jobs and waiting for relief, but I could no longer sit at home and had to do something."
**Sector-Specific Challenges**
Creating job opportunities poses the largest local challenge for Saudi Crown Prince Mohammed bin Salman, as he reshapes the economy, which has long relied on oil exports and imported labor. Unemployment in Saudi Arabia reached a record 15% last year, as the coronavirus pandemic hindered the 2030 Vision aimed at turning the Kingdom into a regional center for business and tourism. High unemployment threatens to impoverish the previously sheltered middle class, supported by government spending. Without drastic change, the unemployment dilemma will become more complex, especially with an influx of youth entering the job market each year, increasing the potential for social instability due to rising frustration.
**Evolving Employment Dynamics**
On the flip side, while the pandemic has amplified challenges, it has also spurred officials to accelerate a shift in the mentality of Saudi youth, who are increasingly taking on "blue-collar" jobs—manual labor roles they had previously avoided. Saudi workers are now present across sectors, delivering packages, serving espresso coffee, and transporting oil drilling equipment. Many companies employing foreign labor, now stranded abroad due to border closures, have expedited their plans to hire Saudi citizens. In the third quarter of last year, even as the economy contracted by 4.6%, the number of Saudis working in the private sector rose by over 80,000.
Nawaf Al-Turki, Vice President of Rawabi Holding—a Saudi oil field services and contracting company increasingly seeking to hire local technicians—pointed out that "Despite some skepticism about whether Saudis want to work, they had to be put to the test and subjected to intensive training programs." He noted that based on his company's experience, "local employees rose to the challenge." In fact, Abdulatif Al-Jurfaan's plan to work as a tea vendor bore fruit, and he secured a job in his field. After six months, he is preparing to launch an application called "Country Food," which connects customers with informal home kitchens across the Kingdom. While he hopes this app will transform his career, he is also trying to "support those who are unemployed or want to earn extra income."
**A Long-standing Dilemma**
While numerous countries struggle with rising unemployment rates due to the pandemic, Saudi Arabia's issue has persisted for decades, beginning with the influx of foreign workers essential to developing the nascent oil industry. Foreigners now comprise one-third of Saudi Arabia's 34 million population. While the government remains the primary employer for Saudis—a model it cannot sustain—the private sector overwhelmingly relies on cheap labor from other Asian and Arab nations, as 75% of workers in Saudi private companies are foreigners who work longer hours for lower pay, making it exceedingly difficult for citizens to compete.
The Kingdom has long imposed quotas and incentives to direct more citizens toward the private sector, a process termed "Saudization." However, the results have not matched population growth. It is worth noting that unemployment steadily increased when Crown Prince Mohammed bin Salman assumed the crown in 2017, showing a notable decrease in 2019 with rising economic growth, before the pandemic disrupted progress in the first quarter of 2020.
**A Historic Turning Point**
As the most acute effects of the coronavirus crisis begin to fade, Saudi Arabia stands at a crucial crossroads where it must find a way to employ Saudis without stunting growth or hindering foreign investors, who are critical to the Crown Prince's vision but often view Saudization as a burden. Eman Al-Hussein, a non-resident Saudi Fellow at the Arab Gulf States Institute in Washington, sees it as a dilemma, stating, "I don't believe there will be a solution anytime soon."
To keep the unemployment rate stable, the Kingdom must provide 150,000 job opportunities annually over the next decade, according to Bloomberg Economics. The Crown Prince’s goal of halving the unemployment rate for citizens from 14% to 7% by 2030 requires more significant efforts. Furthermore, job estimates do not account for the rapid increase in women seeking employment as social restrictions ease, a historic shift credited to the young Crown Prince, who lifted the ban on women driving and eased gender segregation rules. However, this achievement also poses challenges, as it necessitates the creation of more jobs.
Notably, the size of the Saudi labor market has been shrinking in recent times due to various policies driving foreigners out of the job market and the country at a faster rate than Saudis are being employed.
**Immigration Policy Concerns**
Tariq Al-Turki, co-founder of the Saudi express delivery company "Saa'i," is struggling to cope with new Saudization requirements for temporary jobs or short-term contracts within just six months. Currently, around 70% of independent delivery drivers—those working on a fee-per-delivery basis—are foreigners, meaning replacing them with Saudis will likely increase delivery fees and, consequently, service costs for customers. He explained that "We have been placed in a dilemma, and while large companies can manage, for a startup, it will significantly impact its competitiveness."
Many Saudis argue that Saudization will not succeed without a fundamental change in immigration policy. The slow pace of new regulations in this area leads to alternative solutions, where companies may employ the required number of citizens at minimum wage to comply with Saudization regulations. In a conservative society, where marriage is paramount, this complicates job stability for these employees.
Fawaz A'id, a 30-year-old dentist who spent three years unemployed, expressed, "If years of your life pass by, you cannot get them back." After much hardship, he was hired last October, but the clinic paying him earns less than $1,200 monthly, which is insufficient to start a family.
**Bridging the Gap**
Starting this week, non-Saudis will be able to change jobs without their employer's consent. Economic experts expect this will raise wages for foreigners and make it easier for them to leave jobs "they do not want," thus reducing employers' complaints about the difficulty of hiring Saudis. However, this decision does not address the mismatch between Saudi youth searching for jobs in specialized fields and the available low-skilled jobs.
The Saudi Ministry of Human Resources stated in a Bloomberg announcement: "We continue to study reforms and initiatives to bridge the gap between Saudis and foreigners." The ministry is also examining the reduction of official working hours and how to shift the labor market towards higher skills and productivity. Data indicates that the labor market has improved since the third quarter of 2020, the most recent available information.
After graduating last August, 23-year-old Hamad Al-Rashid applied for all types of jobs—including a coffee maker position—which he would not have considered a few years earlier. Similar to Abdulatif Al-Jurfaan, he had to sell tea in the street. In February, he finally secured a bank teller job paying 8,500 riyals ($2,270) a month.
In an interview at a co-working space in Riyadh filled with Saudis, Hamad Al-Rashid expressed that the path ahead looks promising, stating, "Just a few weeks ago, there wasn't even a road."
