Saudi employment and gender gap

Last month, the Central Department of Statistics and Information (CDSI) published Saudi labor statistics for 2012. The figures led to heated discussions about the true picture of the labor market, especially when it came to numbers of unemployed Saudi nationals. Some questioned the accuracy of its estimates, others differed on their significance.
According to CDSI, the unemployment rate exceeded 12 percent in the second half of 2012, up from 10.5 percent in 2009, when it last published labor market statistics. The number of the unemployed was put at (603,000) Saudis, up 34 percent from 2009, when their numbers were just short of (450,000).
Most commentators drew the right conclusions. The steep rise in the numbers and rate of unemployment raised serious concerns about labor market policies. Between 2009 and 2012, the Saudi economy doubled in size, creating about a million new jobs, but those jobs did not succeed in taming the unemployment crisis of young Saudis. During the same period, several initiatives were launched to increase employment of nationals, but to little avail apparently.
Although the new unemployment estimates were quite high, some commentators questioned them as too low, because the Ministry of Labor had earlier estimated the number of the unemployed at two million, more than three times CDSI’s estimates. The Ministry of Labor’s estimates were based on information from “Hafiz,” the program of incentives for job seekers.
Official reactions were mixed. While on the one hand they defended the new figures as authoritative, having been issued by the department in charge of statistics, they tried to minimize their impact. They pointed out that employment of Saudi men had been on the rise, compared to women. The rising rate of unemployment among women, they argued, caused the overall rate of unemployment to rise.
In fact, unemployment estimates are hotly debated everywhere, although probably not as much as in Saudi Arabia. Official estimates usually err on the side of caution, restricting the inclusion into the unemployment category to those “actively” searching for work during the week or month before the data are collected. This qualification excludes many who may have stopped searching for work, temporarily or permanently, for whatever reason, even if they remain unemployed.
Because unemployment statistics are sensitive to such subjective factors, economists rely on other, more accurate measures. One especially useful indicator is the “rate of employment,” or the ratio of those employed to the total number of working-age population. As CDSI does not calculate this rate, let us see how this indicator evolved in Saudi Arabia over the period in question (2009-2012) to get a more accurate picture of the Saudi labor market.
In 2009, there were (3.8) million Saudis who were employed. That translated into an overall rate of employment of (32 percent). In 2012, the number of employed Saudis was put at (4.4) million, and the rate of employment, accordingly, was (34 percent).
As such, there appears to be slight improvement in the employment rate for Saudis over the past three years, but this is no cause for celebration, because it remains extremely low by international standards. For comparison, the OECD put the rate of employment among its membership of industrialized countries at (65 percent) on average in 2011, despite the global financial crisis. The rate of employment in the UK was (70 percent) and in the US (67 percent). The rate reached as high as (79 percent) in Switzerland and Iceland, (75 percent) in Norway, and dipped as low as (48 percent) in Turkey.
Considering that Saudi Arabia has been going through an unprecedented boom during the past three years, the employment rate should have increased more dramatically. GDP nearly doubled from 2009 to 2011. But the employment rate rose to only 34 percent, almost half the average rate for industrialized countries.
The main reason for rising unemployment rates in Saudi Arabia can be found in the difficulties women find job seekers face in securing work. Between 2009 and 2012, women’s rate of unemployment increased from (28 percent) to (36 percent). Let us see if the rate of employment is any different.
In fact, we find out that chances for Saudi women in finding work have slightly improved since 2009, but that improvement has been quite limited and their employment rates are still extremely low. In 2009, there were (505,000) employed Saudi women, compared to (647,000) in 2012. Accordingly, their employment rate rose from (8.5 percent) to just (10 percent). The new rate is still miniscule by international standards — less than one fifth of the comparable rate for industrialized countries. According to OECD data, employment rate for women among its members averaged 57 percent in 2011. It reached as high as (73 percent) in Iceland, and dipped as low as (28 percent) in Turkey.
It is not clear where Saudi Arabia would fit on this spectrum, if impediments to women’s employment were eased, but it clear that there are hundreds of thousands of women who are looking for employment but unable to secure it. CDSI put the number at (359,000) in 2012, Hafiz figures suggest that their numbers have exceeded one million. A rate of employment of only (10 percent) indicates that there are millions more of women in working age who are not employed.
It is clear, then, that the most daunting challenge for Saudi Arabia in the coming decades is how to find appropriate jobs for women, to help them get their fair share in the development of their country and make better use of their increasingly high levels of education.

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