Saudi unemployment falls to 5-year low as economic recovery takes hold

RIYADH: Unemployment in Saudi Arabia fell to the lowest level in almost five years in the first quarter as the economy began to rebound from the coronavirus pandemic and women joined the workforce in record numbers.

The unemployment rate slid to 11.7 percent in the three months through March, from 12.6 percent in the fourth quarter of 2020, according to estimates from the General Authority for Statistics. That compares with 11.8 percent in the first quarter of 2020 as restrictions related to COVID-19 began to be introduced, and is the lowest since an 11.6 percent rate in the second quarter of 2016.

The decline in the unemployment rate was helped by an increase in female participation in the workforce to 33.6 percent from 32.1 percent in the previous quarter, even as male participation slipped to 79.7 percent from 80.6 percent.

The Kingdom’s economy is benefiting from a surge of investment as Crown Prince Mohammed Bin Salman seeks to loosen its dependence on crude oil exports under his Vision 2030 plan, which includes a 7 percent unemployment rate by the end of the decade.

Saudi Arabia’s non-oil economy grew 4.9 percent quarter-on-quarter in the first three months of the year, as the private sector expanded 6.3 percent. Real GDP shrank 0.5 percent as oil output was voluntarily curtailed to help support prices.

Goldman analyst Farouk Soussa said this month that real GDP growth would reach 4.5 percent this year and 7 percent in 2022 — higher than most forecasts — with overall economic activity notably accelerating in manufacturing, finance and construction.

At the start of the year, the Kingdom’s Ministry of Finance said that it expected 3.2 percent growth this year — reversing the pandemic-driven downturn of 2020. The International Monetary Fund forecast just 2.1 percent growth two months ago.

The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) rose for the second month in a row in May, to 56.4 from 55.2 in April. A score above 50 indicates expansion, while below 50 points to contraction.

While activity is recovering from the pandemic slump, the impact has not yet been felt in recruitment; hiring increased for the second month in a row, but the pace slowed. 

As pandemic restrictions begin to loosen, 30 percent of companies said they had seen an increase in business activity, and export orders increased at the fastest rate since 2015.