Lest we forget: it’s social reforms that wrote the Saudi growth story
The Saudi delegation at Davos this week will proudly represent the vibrant, diversified economy of Saudi Arabia as it emerged as the fastest-growing G20 economy in 2022, and its gross domestic product is projected to grow 8.5 percent this year.
The country has delivered a robust performance despite the pandemic and in the face of rising global pressures backed by a series of economic reforms and, of course, helped by high oil prices, which have driven wage and employment growth.
The Kingdom has also embarked on a series of social reforms to modernize the country and promote greater equality and opportunity for its citizens, which has significantly fueled its economic growth. However, amid the economic transformation and tremendous pace of change in the country, it is easy to brush off the progress achieved on the social front as incidental changes. Still, the impact of these reforms should not be underestimated, as it will have far-reaching implications for the future of the Kingdom.
One major area of reform has been women’s empowerment, which has created societal change for women. By lifting restrictions on women and promoting greater equality and opportunity, the government has helped to expand the workforce and increase productivity. The immense scale of these changes and their unprecedented pace are both noteworthy. The impact is clearly evident in the domestic landscape, including a positive impact on various sectors of the economy, particularly education, healthcare, tourism, technology, renewable energy, and small and medium-sized enterprises.
The right to drive was heavily publicized and has made it easier for women to work and participate in the economy. This move has also increased consumer spending, as women now have more disposable income and can purchase goods and services. Other changes have been implemented, like dismantling guardianship, offering freedom to live and travel alone, working in a wider range of professions, and participating more fully in the public sphere.
Since the launch of Saudi Vision 2030 and the transformation program, in terms of economic implications within Saudi Arabia, there has been a marked rise in female labor-force participation from 17 percent in 2017 to 36 percent in 202 and an apparent decline in female unemployment rates from 33 percent in 2017 to 10 percent last year. The reforms have also led to rising female incomes, a declining gender pay gap and high growth in dual-income households fueled by more women becoming financially independent.
The impact of social reforms meant that when Saudi Arabia launched the tourist e-visas in 2019, it was over-subscribed in a matter of days. Since 2018, the Kingdom has hosted several prominent events, including the Formula 1 Grand Prix, the Red Sea International Film Festival and Riyadh and Jeddah seasons, among many other entertainment offerings. After 35 years, the ban on movie screening was lifted in 2018, and over 50 cinemas have opened across Saudi Arabia, with plans for hundreds more to open. In addition, there are now gyms, public music concerts and women serving in the Human Rights Council and military, and there was news on changes in citizenship rules last week.
Never has there been a more promising, more optimistic time to be a woman in Saudi Arabia, as opportunities are replacing barriers and cultural limitations are giving way to social transformation. Women comprise 60 percent of the nation’s university graduates — even in science, technology, engineering and mathematics. The participation rate of females in the tech sector was 28 percent in 2021, above the European average of 17.5 percent. Also, 16 percent of all startup founders in Saudi Arabia are women, while they constitute 14 percent of the startups in the Middle East and North Africa. These changes would have been unimaginable only a few years ago. Today some women are CEOs, bankers, soldiers, athletes, ambassadors, hijab-wearing supermodels, firefighters, ballerinas, commercial pilots, race car drivers, scientists and Uber drivers. And when women have their full voice, power and influence in society, they will change things differently because women have a different lens on culture.
While it is a work in progress, according to the World Bank’s Women, Business and the Law Index, Saudi Arabia has been one of the top countries globally in terms of implementing reforms relating to women in recent years. This index measures factors such as mobility, ability to work, including measures to combat discrimination in the workplace, equal pay, any legal constraints on work relating to marriage, paid maternity leave, access to financial and legal products to allow entrepreneurship property and inheritance rights, and workplace benefits such as pensions.
Saudi Arabia has seen a rapid increase in its overall WBL score between 2017 and 2020.
It is especially encouraging that the reforms mean so many more Saudi women are already in the workforce and thriving, but also how many more will be motivated to join the workforce in the coming years due to the transformation. And this job creation, a rapidly growing female workforce and the resulting rise in domestic incomes will mean a significant shift in consumer confidence and wallet and a corresponding rise in spending on healthcare, education, tech, leisure, luxury goods and more.
In a recent survey by Ipsos Global Advisor, 93 percent of Saudis said things are going in the right direction in the country, compared to 36 percent globally. The locals welcomed the social reforms with open arms, as there is sufficient evidence that these reforms are both meaningful and permanent. With 60 percent of the population under the age of 30, the only demand is that they push these reforms further and faster.