It represents a 1.5 percent increase in average household income, Bank of America Merrill Lynch (BoAML) said.
“The combination of royal grants and household allowance disbursements more than fully shelter Saudi households from the cost of fiscal reform costs,” said chief regional economist Jean-Michel Saliba in the report. “Further out, Saudization efforts and targeted stimulus should support consumption.”
Saudi Arabia recently introduced financial grants aimed at easing the impact of removing subsidies and other ongoing economic reforms under the Vision 2030 strategy. That aims to reduce the country’s reliance on oil by developing new industries which will increasingly rely on Saudi citizens rather than expatriates.
There are about 3 million households in the Kingdom eligible to receive the household allowance known as the ‘Citizens Account’ which was announced in December 2017.
That equates to about 10.6 million people — or more than half of the population.
The bank estimates that almost 67 percent of eligible households receive the full amount of SR900 per month.
The smallest partial coverage payment is SR300 per month.
A massive push to employ more Saudis in the Kingdom is unlikely to trigger the mass departure of expatriates, BoAML said.
It found that despite the introduction of expatriate dependent fees and expatriate levies, many foreigners would still be better off financially than at home.
The reform of the Nitaqat Saudization scheme in mid-December could demand hiring as many as 25,000 Saudis just to maintain compliance levels, the report found.
That could be a boon for overall consumption in the Kingdom but may dent corporate profits because it could raise costs as companies pay more for their staff, BoAML said.
The bank also warned that Saudization should be handled carefully because the process risks prolonging labor scarcity in some sectors of the economy.
The government recently announced limiting 12 retail sector job types to Saudi nationals — however the likely impact on expatriates currently holding jobs in those sectors is difficult to determine because of a lack of job data in those areas.
But BoAML notes that there are some 304,865 expatriates working in sales roles of various type.
Employing more citizens in economically productive jobs is a key plank of Vision 2030. Some employers have struggled to fill certain roles because of a lack of vocational skills in particular areas of demand and shortages of graduates with the relevant degrees in others.