RIYADH: Finding jobs for the growing Saudi Arabian workforce is one of the most challenging issues the Kingdom faces, a senior policymaker told the Euromoney conference in Riyadh on Thursday.
Abdulaziz Al-Rasheed, deputy minister for economic affairs, said that the issue of employment was as important as the drive to diversify the economy away from oil dependency.
“Economic growth is an important factor, but there are also huge structural issues in the labor market that we need to address,” he said.
The most pressing challenges lay in the Kingdom’s reliance on cheap foreign labor, the gap between pay levels between government and the private sector, and getting more women into the workforce.
“The challenge is to create jobs while there are more people coming onto the jobs market,” he added.
His comments come as global experts focus on the employment aspects of the Vision 2030 strategy to diversify the economy. The International Monetary Fund this week highlighted structural problems in Saudi Arabia and other Middle East markets as one of the region’s biggest challenges.
Official figures showed that nearly half a million foreign workers canceled their visas in Saudi Arabia in the final quarter of 2017, while around 100,000 Saudis joined the workforce
Al-Rasheed said: “The levy of foreign workers is having an effect, on the fiscal balance program, but it also addresses the structural issue. Lots of low skilled, low wage labor translates into low productivity. The question is not less or more foreign labor, but less or more productive labor.”
Levels of foreign direct investment, which could generate jobs in the Kingdom, have slowed over the past year, he said. The Kingdom had to be more selective in marketing its attractions, rather than focusing on cheap energy, cheap labor and a big population.
“We should try to improve the quality of the FDI coming in. We should not measure it just by dollars, but by how much know-how and skills it will bring in,” he said.
On the removal of government subsidies to fuel and utility bills, he said that it was important to distinguish between those who needed assistance and those who were not eligible.
“With energy price reform, the government has mitigated the effects and protected the lower half of society by making it a direct cash transfer. He said that in future, the Citizens’ Account — the national scheme to channel funds to lower said citizens — would eventually become the single platform for all government subsidies.
He added that there had been some limited resistance in government departments to the big initiatives that have been launched over the past couple of years. “There has been some level of resistance, but that will always be the case in any organization that is going through transformation. But the commitment of the leadership has made it easier to go forward.”
