Growing youth population in Saudi offers economic potential

Updated 23 August 2013

Growing youth population in Saudi offers economic potential

Pearson has welcomed a report by the International Monetary Fund (IMF) that finds youth unemployment in Saudi Arabia could be lowered by reducing reliance on public sector jobs and by improving the competitiveness of Saudi workers in the private sector.
Fifty percent of Saudi Arabia’s population is below 25 years, a figure set to increase further in the future, leading to a phenomenon widely referred to as a “youth bulge”.
Economists debate whether Saudi’s burgeoning youth population will be a burden or advantage to the country.
Such a large number of young people brings with it enormous opportunity for growth through the generation of innovative, new ideas, and a sufficiently large work force to power these ideas into practice.
However, if not managed appropriately, a rapidly growing population of young people could lead to an increased rate of unemployment amongst 15 to 25 year olds, a figure which already stands at around 30 percent.
The IMF Saudi Arabia Country Report found that a large number of young people will enter the local job market over the next decade, and that creating a sufficient number of rewarding jobs will be a challenge.
However, generating jobs is not the only difficulty the Saudi government faces.
Around 2 million new positions were created in the Kingdom between 2008 and 2012, but three quarters of these jobs were filled by non-Saudis, suggesting the local workforce needs to become more productive and competitive in the face of mounting competition from expatriate workers.
The Saudi Arabian Government has recognized the importance of harnessing the potential of its young people through education.
More than SR204 billion from the 2013 budget was channelled into education, a staggering 25 percent of the Government’s annual spending, and around 10 percent of its GDP.
Saudi Arabia is now ranked as the world’s highest spending nation on education.
Such initiatives have had a positive impact on the learning outcomes of individuals in the country, with the literacy rate among adults currently standing at around 97 percent, according to World Bank data, up from 30 percent in 1970.
The number of individuals completing school and tertiary education is also on the rise.
Mark Andrews, Pearson’s director of qualifications in the Middle East, says that these educational developments are instrumental in addressing the skills shortage the Kingdom faces.
Andrews says that providing young Saudi nationals with an education that will lead to placement in a rewarding job is not only important for the Kingdom’s youth, but also to the Saudi economy.
“Saudi Arabia’s youth bulge offers enormous opportunities in both Saudi and wider region. It has the potential to increase economic growth and living standards, and help realize the government’s goal of greater economic diversification,” he said.
Andrews said: “However, as the IMF report makes clear, equipping young people with effective education and training is critical to ensuring the youth bulge becomes an asset — and not a liability. Education and training needs to focus on preparing young people for the workforce.
Pearson’s research in the Gulf region indicates many local employers believe that the education system does not always prepare school and university leavers with essential employability skills.” Andrews added:
“Employers tell us they want candidates with 21st century skills, such as communication, collaboration, responsibility and problem-solving.”
Pearson’s 2009 global study into the links between education and employment, detailed in the Effective Education for Employment report found that skills gaps exist for both new employees and more experienced workers.
Gaps around leadership, teamwork, creativity and innovation continue to present employers with difficulties in training and development. And this is a problem not only for Saudi Arabia, but countries right around the world.
Andrews believes that giving young Saudi nationals the right workplace skills will help this growing demographic group enter and succeed in employment and contribute to the long term prosperity and stability of the country.
“Giving young Saudis an education that allows them to enter the workplace, and contribute meaningfully in their careers will not only help reduce youth unemployment,” he said.
“Making young Saudis more effective and productive in their jobs will also foster economic growth and raise the standard of living in the Kingdom. Saudi Arabia’s vast youth population has the potential to become an economic powerhouse in the region, but it is a matter of channelling that potential into positive and productive outcomes,” he added.

Oil steadies as demand uncertainty tempers supply cuts

Updated 52 sec ago

Oil steadies as demand uncertainty tempers supply cuts

  • Rising tensions between the US and China, the world’s largest oil consumers, fuel concerns about the outlook for demand

LONDON: Oil prices, which have been driven higher for the past four weeks, were steady on Monday, with holidays in Singapore, London and New York dampening trade, as rising concerns over demand recovery offset supply cuts.

Brent was flat at $35.13 a barrel, while US oil gained 10 cents, or 0.3 percent to $33.35 a barrel. Both are down around 45 percent so far
this year.

“Uncertainty around the current travel patterns in the US is so great that the American Automobile Association did not release its Memorial Day travel forecast,” Bjornar Tonhaugen, head of oil markets at Rystad Energy, said.

Rising tensions between the US and China, the world’s largest oil consumers, over moves by Beijing to impose security legislation on Hong Kong also fueled concerns about the outlook for demand.

Relations between Washington and Beijing have soured since the coronavirus outbreak, with the two countries already at odds over Hong Kong, human rights, trade and US support for Chinese-claimed Taiwan.

Prices are finding support from global supply cuts with the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, now nearly a month into a deal to voluntarily withhold 9.7 million barrel per day of production.

And the US rig count, an early indicator of future output, fell by 21 to a record low 318 in the week to May 22, data from energy services firm Baker Hughes showed.

“The huge decline in global oil production has doubtless been the key factor in the latest surge in oil prices,” Commerzbank said.

Forex trading

Meanwhile, the euro steadied around the $1.09 level on Monday in a potentially big week for European policymakers as they debate the outlines of a recovery fund aimed at helping member nations.

Austria, the Netherlands, Denmark and Sweden want loans from a time-limited fund for nations struggling to recover from the pandemic, rather than the grants proposed by France and Germany last week for the EU’s coronavirus recovery plan.

The Franco-German plan sent the euro rallying above $1.10 last week before the much-expected counter proposal by the four countries pushed it back
below $1.09.

The rival proposals come before the European Commission’s own plans for the recovery fund on Wednesday and any watered down proposals from the original plan would be perceived as
euro negative.

On the other hand, “if the Franco-German debt proposal (miraculously) passes the test during the coming week, we reckon that it would be a major euro positive event,” Nordea strategists said.

On Monday, the single currency steadied around $1.09 but remained about 5 percent below a 2020 high of near 1.15 hit in early March.

Elsewhere, the US dollar erased earlier gains and edged lower on the day. The greenback, which tends to behave like a safe haven asset at times of market turmoil and political uncertainty, was steady near a one-week high at 99.74.

The Australian dollar, by dint of its strong trade connections with China and the offshore yuan, led losers against the US dollar.

More turbulence for US-China relations is prompting some investors such as UBS Wealth Management to hold a “defensive” position in Hong Kong. “(The) larger risk for global investors is what happens if it becomes further enmeshed in broader relations,” said Mark Haefele, its chief investment officer.

With financial markets in Singapore, Britain and the US closed for public holidays on Monday, the weekend developments hit risk aversion in broader markets
in early trade.

Sterling was also on the back foot against both the dollar and the euro as political pressure grew on British Prime Minister Boris Johnson to fire senior adviser Dominic Cummings.

Cummings, the architect of the 2016 campaign to leave the EU and widely considered to be Johnson’s most influential strategist, came under pressure after reports he traveled to northern England from London during a nationwide lockdown in March when his wife was ill with COVID-19 symptoms.