The issue of female participation has dominated labor market policy discussions in the Gulf region for years. The reasons for this are essentially twofold. Firstly, even as the dependence of private businesses on expatriate labor remains systemic, female economic participation lags far behind that of men.

Region-wide, it increased by 5 percentage points during the decade to 2019 to reach 44 percent. Secondly, lower female participation entails costs that go beyond these headline numbers because of the higher average educational attainment of Gulf women as compared to men.

The share of women with at least an undergraduate degree has almost doubled from 15 percent in 2001 to nearly 30 percent. But the demographic dividend this promises is not being fully reaped. The International Labor Organization estimated in 2017 that the global gross domestic product could grow by $5.8 trillion if the gender gap in labor force participation was reduced by 25 percent by 2025.

Much progress has been made in recent years in economically empowering Gulf women. Regulatory restrictions on female economic participation have been largely lifted. The 2018 Saudi decision to allow women to drive was in no small measure motivated by the desire to improve their access to job opportunities.

Female participation in the Gulf Cooperation Council now broadly matches the emerging markets average, although the share of women in managerial positions remains low at 16 percent. The change in Saudi Arabia has been particularly striking. Female labor force participation, having stood at just 17.7 percent in 1996 reached a new record of 34.1 percent in Q3 of 2021. Female unemployment has drifted down from 30.2 percent in Q3 of 2020 to 21.9 percent a year later.

The appetite for further progress is palpable. The media last week reported that an ad for 30 female train driver vacancies in Saudi Arabia attracted an extraordinary 28,000 applications. But it is also evident that a number of cultural, regulatory, and economic factors are still complicating the way forward. Globally, such factors leave women 27 percentage points less likely to become economically active than men.

While Saudi Arabia has seen significant structural changes in its labor market, the road from a reduced reliance on expatriates to increased national, let alone female, employment is far from straight. In 2017-2020, admittedly an unusual period, the number of new Saudi jobs created was equivalent to just 7.4 percent of the number of expatriate jobs eliminated.

Over 97 percent of the expatriate departures were in construction while Saudi jobs, led by women, rose most in retail trade. But even there, new Saudi entrants only totaled less than 6 percent of the expatriate exits. The sharp drop in the lowest-paid expatriate jobs suggests that automation is one of the forces at play along with broader business model changes. This is likely pushing businesses to become more productive which in turn should improve their ability to recruit and retain nationals.

But it is also increasingly evident that for more women to work, private sector employment must better meet their needs. Regional employment practices are still — at least de facto — deeply anchored in the long-standing norm of full-time employment at a physical location. But this is not ideal for many job seekers or companies.

Many women (and not only women) would like to see more flexible arrangements because of family commitments or different preferences regarding work-life balance. Having easily available options for part- and flexi-time work can drive greater participation while also making it easier for younger people to gain some income and work experience. In sectors such as retail and hospitality work is inherently concentrated around certain daily peaks or seasonal in nature.

Having more options for on-demand employment solutions could become a win-win for many people and companies. The success of various employment agencies in the West attests to the appeal and cost-effectiveness of such solutions.

Just as importantly, economic participation need not always involve formal employment. Globally, the “gig economy” has gained popularity and, for instance, in the US, a majority of gig workers are women. This is a solution that can offer many advantages to people not interested in “the usual 9-to-5” but keen to remain economically active and generate an income.

Such working practices are likely to increase in popularity given the technological and social changes brought on by COVID-19. More people now prefer to work from home and, by doing so, they have identified they no longer need to be tied to a single employer or job.

The result may well be a growing fluid fringe of the labor market, which is no longer job placements but matching human capital needs with talent on a more seamless basis. Such arrangements can help significantly lower the threshold for economic participation.

Accelerating digitalization has likely triggered transformative change in businesses and jobs. Adapting regulations to reflect these evolving realities is likely to be an important part for the next stage of moving toward greater economic inclusion. But regulation must also protect the interests of these gig workers as well as of existing jobs.

• Jarmo Kotilaine is an economist and strategist focusing on the Gulf region. He writes on issues ranging from economic development to changes within the corporate sector