The economic benefits of women driving in Saudi Arabia
After a prolonged debate over allowing women to drive cars in Saudi Arabia, finally the matter was put to rest on June 24 following a royal decree that was issued last year by King Salman. This has finally brought to an end a controversial social issue.
Allowing women to drive in Saudi Arabia is considered to be a major step forward, not only socially but also financially, since it is expected to reflect positively on the Kingdom’s economy and Saudi families’ spending power and habits.
On the economic side, it is expected that the number of Saudi women participating in the labor market will increase since one of the most critical issues hindering them previously was the limited availability of public transportation, especially those which are suitable for women’s needs.
Increasing Saudi women’s participation in the labor market will help in achieving one of the most important goals of the Kingdom’s Vision 2030, which is to increase Saudi women’s participation in the market to 30 percent, up from 22 percent in 2016. It will also help reduce the unemployment rate among Saudi women, which has reached a record high of 33 percent.
It is expected that, by lifting the ban on women driving in the Kingdom, the number of foreign chauffeurs will go down by about 30 percent, or close to 400,000 from a total of 1.3 million foreign drivers who are currently working in Saudi Arabia. The drop in the number of foreign chauffeurs will reflect positively on the amount of money transferred out of the Kingdom since it is expected to reduce foreign transfers by more than SR5 billion ($1.3 billion) annually, which in turn will reflect positively on the balance of payments.
Families living in Saudi Arabia also will benefit from women being allowed to drive, since it will reduce the amount of money paid to recruit foreign chauffeurs, which amounts to SR33 billion annually. Such savings can be redirected and spent on basic needs and necessities.
On the microeconomic level, a number of sectors in the Kingdom will also benefit from women being allowed to drive, such as car sales, which are expected to increase by about 145 percent to reach SR108 billion by 2022 from SR44 billion in 2017, according to one economist. The insurance industry and other businesses — such as spare parts sales and auto repair workshops — are also expected to benefit.
In short, the decision to allow women to drive cars in Saudi Arabia is a very wise one, since it is expected to reflect positively on both the Saudi economy and society at large.
Talat Zaki Hafiz is an economic and financial analyst.