Human capital and education are key to Saudi success
One of the major challenges of Saudi Arabia is an acute shortage of Saudi workers. However, the country has been making intense efforts to address human capital development challenges to match the needs of the labor market. This gradual transition from an oil-based to a knowledge-based economy calls for a radical increase in the country’s human capital in a short space of time.
To a layman, the relationship between education and economic growth is relatively straightforward. An educated population is a productive workforce, and higher productivity equals higher economic gains. Therefore, a country should invest in education to develop its “human capital” — the ability of a population to perform labor to produce economic value.
Economies in Asia such as Japan and Taiwan posted stellar growth records during the 19th and 20th centuries, countries that lacked the natural resources and political power traditionally required for a competent economy. These countries have mostly built global economic powerhouses on the back of human capital alone.
Human capital development will play a major role in Saudi Vision 2030. The Saudi labor force will reach about 8.6 million by 2030 with a 44 percent participation rate. An average of 203,000 jobs will need to be created each year for Saudis entering the labor market. Saudi Vision 2030 seeks to reduce the overall unemployment rate from 11.6 to 7 percent, overhaul the education system and increase the female participation rate from 22 percent of the labor force to 30.
Vision 2030 aims to identify and put into effect the best practices that would ensure that public sector employees have the right skills for the future. By 2020, the Saudi government aims to have trained, through distance learning, 500,000 government employees. All ministries and government institutions will be required to adopt best practices in human capital development. The government will continue to hire individuals according to merit and work toward building a broad talent base, so they may become leaders of the future.
As such, a royal decree was issued to create a new center of excellence called the Human Capital Center (HCC). The HCC is at the heart of human capital management for the government. It has a central role when it comes to ensuring required human capital aspects are being fully addressed as per the initiatives’ requirements.
These centers will work to raise the productivity of employees to the highest levels possible, by implementing proper performance management standards, providing continuous training for professional development, and sharing knowledge.
According to the World Bank, one of the reasons for the growing returns on education is the race between technology and education as labor markets adjust to automation.
I believe that the ability of workers to compete in the marketplace is limited by the performance of the education system. Technological changes and global competition demand the mastery of competencies and the acquisition of new skills for many. To achieve success in today’s labor market, we need to ensure that our investments in human capital are placed in the relevant skills from an early stage.
Basil M.K. Al-Ghalayini is the Chairman and CEO of BMG Financial Group.
