Saudi unemployment and how to combat it
Unemployment is one of the main problems facing society in Saudi Arabia, with the jobless rate among Saudi nationals at its highest since records began being recorded in 1999.
The Kingdom is working hard to address the issue, to reduce national unemployment figures and to find suitable and productive jobs for Saudis.
There are two main types of unemployment. The first arises from a mismatch in labor supply and demand. The second is a shortage of job vacancies caused by a shrinking economy. Since the Saudi economy is strong and growing, rather than weak and fragile, solutions and initiatives to combat unemployment are concentrated on the efficiency of matching labor supply and demand.
Proposals to address the issue include targeted training in accordance with the requirements of the labor market; increasing wages and the movement of labor in remote areas; the establishment of a minimum wage; the introduction of income tax for expatriate employees; the stimulation of national labor; and the creation of comprehensive central national databases of vacancies in the private and public sectors.
But can all this be achieved without unifying the law governing the fight against unemployment? This is the most important question. In some societies, local legislation can actually cause unemployment or increase its spread. This is what happens when the study of the long-term effects of some of the laws is not clear and focused. For example, the employment of minors reduces job opportunities for unemployed adults, especially since minors are often poorly paid and otherwise exploited.
It is also important to focus on legislating realistically for the employment of foreign labor, and creating a social balance between job opportunities and the qualifications of unemployed young people. Yes, of course, employers who flout the laws on Saudization must be penalized — but we must also stop and ask whether young Saudis have a reasonable acceptance of jobs at all levels and types. This is where there is a role for a national database of applicants to direct them toward the appropriate training, through the Technical and Vocational Training Corp., private recruitment offices and training institutes in the private sector. The aim is to eliminate the origin of the problem and make it disappear, rather than merely address a temporary unemployment crisis.
The private sector has the largest number of jobs that will contribute to reducing the unemployment rate, which will be achieved only by strengthening the role of this sector in helping the service sectors to join the circle of competition. This does not detract from the importance of eliminating the bureaucracy of procedures in the development of competitive entities and enterprises, which Vision 2030 seeks to address.
Any new regulations must be targeted directly, and should also be applied to “disguised unemployment” — when more people are employed than are needed to complete the actual work, and their withdrawal makes no difference to the outcome.
The development of a unified law to combat unemployment can never diminish the role of motivational measures in addressing the issue. Rather it should be a base to bind such measures together, addressing all the elements and causes of unemployment in an effective way.
Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the International Association of Lawyers.