Saudi private sector workforce surges above 11.4m – official figures
Updated 04 July 2024
Miguel Hadchity
RIYADH: Private sector employment in Saudi Arabia reached 11.4 million by the end of June, marking a 1.24 percent increase from April.
The National Labor Observatory has released a detailed report on the state of the Kingdom’s labor market, highlighting the robust nature of the private sector and its ability to generate employment opportunities, making it a significant contributor to the national economy.
According to the NLO study, the total number of employees in the Kingdom’s private sector has reached 11,409,348, with the number of Saudi nationals standing at 2.34 million – an increase of 16,598 since April.
The increase in the Kingdom’s nationals working in private enterprises signifies the effectiveness of government policies aimed at encouraging local employment and reducing unemployment.
Of those Saudis working in the private sector, 1.38 million are male and 957,798 are female.
In an interview with Arab News before the latest figures were released, Saudi-based economist Talat Hafiz noted that one of the main goals of Saudi Vision 2030 is to reduce the unemployment rate in the Kingdom to 7 percent by 2030 and increase female participation in the labor market to 30 percent.
Hafiz added: “Government’s efforts to date are successful in reaching such goals, evidenced by the drop of the unemployment rate of Saudi nationals to 7.7 percent in 2023 from the base rate of 12.3 percent in 2016 and increased female participation in the labor market to 35 percent compared to the original target of 30 percent.”
The unemployment rate of females in Saudi Arabia dropped to 15.5 percent in 2023 compared to 33 percent in 2016, according to Hafiz.
In order to boost private sector employment numbers in the Kingdom, Saudi Arabia’s Human Resources Development Fund allocated approximately SR8.7 billion ($2.3 billion) in 2023 and an additional SR2.13 billion in the first quarter of this year to fund training, counseling, and empowerment programs.
These efforts are also aimed at strengthening private sector enterprises and ensuring sustained job stability.
In the first quarter alone, the fund helped nearly 74,000 Saudi nationals get jobs, while also providing advisory, training, and empowerment services to over 1.1 million individuals.
Furthermore, the organization extended its services to more than 72,000 private sector firms across various industries within Saudi Arabia. Approximately 88 percent of these businesses were categorized as small and medium-sized enterprises.
Saudi Re boosts capital by $71m in PIF subscription deal
Updated 12 sec ago
Arab News
RIYADH: Saudi Reinsurance Co. plans to increase its capital by SR267.3 million ($71 million) through a strategic subscription agreement with the Public Investment Fund, aimed at enhancing its financial position.
The binding subscription agreement, signed on July 4, will see the Kingdom’s first reinsurance company raise its capital from SR891 million to SR1.15 billion. This increase will be achieved through the issuance of 26.73 million new ordinary shares, each valued at SR10, according to a recent bourse filing.
The new shares, representing 30 percent of the company’s current capital, will be fully subscribed by PIF at a subscription price of SR16 per share, resulting in a total subscription amount of SR427.68 million.
This transaction will give PIF a 23.08 percent ownership stake in the company following the capital increase.
The agreement, initially outlined in a non-binding memorandum of understanding on Oct. 8, 2023, and extended on Dec. 25, 2023, for an additional six months, underscores the growing business environment within the Kingdom.
Saudi Re’s capital increase, supported by PIF’s subscription, enhances its financial strength and competitive position.
This capital increase aligns with Saudi Arabia’s Vision 2030 goals, promoting a robust investment climate, economic diversification, and bolstering the Kingdom’s insurance sector.
Finalization of the capital increase is subject to approvals from regulatory bodies including the Insurance Authority, Capital Market Authority, Saudi Stock Exchange, and the company’s Extraordinary General Assembly.
Upon completion, Saudi Re will appoint three PIF-nominated members to its board of directors. Al Rajhi Financial Co. is serving as the financial advisor to Saudi Reinsurance Co., while GIB Capital is advising PIF on the transaction.
Earlier this year, the Kingdom’s sovereign wealth fund raised its stake in Middle East Paper Co. to 23.08 percent through a similar capital infusion.
In a press statement, PIF stated that the deal will empower MEPCO to expand its production, enhance operational efficiency, and contribute to environmental stability. This move aligns with PIF’s sustainability goals and reflects its commitment to fostering environmentally responsible practices in the acquired company.
World economic growth resilient in June despite PMI dip: S&P Global
Updated 48 min 40 sec ago
Nirmal Narayanan
RIYADH: International economic growth showed resilience in June, maintaining the second-highest level observed in the past 13 months, according to S&P Global’s latest report based on the Purchasing Managers’ Index.
The JP Morgan global composite PMI, compiled by S&P Global, edged down to 52.9 in June from 53.7 in May. This slight decrease reflects a slowdown in the expansion rates of manufacturing production and service sector business activities worldwide.
Amidst this global trend, Saudi Arabia’s non-oil private sector PMI stayed strong at 55 in June, fueled by rising demand, increased output levels, and a notable uptick in employment.
A PMI reading above 50 signifies economic expansion, while below 50 indicates contraction. It measures economic trends in manufacturing based on monthly surveys of supply chain managers covering upstream and downstream activities.
“The global all-industry output PMI stepped back 0.8 percentage points to 52.9 in June, with the decline fairly broad-based across sectors and regions. Although suggesting some momentum loss at midyear, the index is still consistent with a solid pace of expansion in global gross domestic product,” said Bennett Parrish, global economist at JP Morgan.
He added: “Declines in the new orders and future output PMIs may raise the risk of growth moderating further, but another move up in the employment PMI suggests that underlying fundamentals remain resilient.”
US and India growth accelerates
The report highlighted accelerated PMI growth rates in the US, India, and Brazil. In the US, output expanded at the fastest pace since April 2022, driven by robust services activity which offset subdued manufacturing growth.
India led the BRIC economies with strong growth momentum recovering from an election-related dip in May, marking one of its strongest performances in 14 years across goods and services sectors.
Similarly, Brazil sustained strong expansion throughout the year with both service and manufacturing sectors contributing positively after a near-stalled growth in May.
“June saw a further slight acceleration of growth in the US, bucking a broader developed world slowdown, while India continued to lead the emerging markets by a wide margin,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
In contrast, output fell in Canada, having risen briefly in May for the first time in a year, led by a weakened service sector.
“Japan also slipped back into decline. Although only marginal, the downturn was the first recorded for seven months. A first fall in services sector output for 22 months was partly countered by a rise in manufacturing output for the first time in 13 months,” added Williamson.
Russia reported a slight output contraction, marking its first decline in 17 months as a significant drop in services activity countered resilient manufacturing growth.
Growth also slowed in China, albeit merely paying back some of the substantial gains witnessed in May to still register one of the strongest expansions over the past year. However, robust growth in the Asian giant’s manufacturing sector helped counter a marked slowing in services activities in June.
Meanwhile, the UK reported an eighth successive monthly expansion. However, growth slowed in manufacturing and services to result in the weakest upturn this year, albeit partly blamed on a pause in spending ahead of the upcoming election, S&P Global added.
Global sub-sectors stable
The US-based firm noted that growth became more broad-based across all global sub-sectors amidst the slowing of expansion.
“All of the 25 sub-sectors covered by the PMI avoided contraction globally in June for the first time since July 2021. Expansions were reported across the board bar general industrials, which reported stable output,” said Williamson.
The report noted that output rose at the quickest pace in the financial services category, while solid expansions were also seen in the business services, consumer goods and intermediate goods sectors.
However, the rate of expansion was relatively mild in the consumer services sector.
“Other noteworthy developments include a two-year high for chemicals and plastics output and a 28-month high for forestry and paper products, while the autos and parts sector rounded off its best quarter since early 2021,” the analysis added.
Global employment increased for the second consecutive month in June, with the pace of job growth reaching its highest in a year across both manufacturing and service sectors.
“Stronger increases in staffing levels were initiated in both the manufacturing and service sectors, with the sharper increase again registered in the latter. Of the nations covered by the survey, only China and Germany saw reductions in staffing levels,” said S&P Global.
Future outlook
Looking ahead, S&P Global warned of darkening near-term global prospects in June, with business expectations for the year ahead reaching a seven-month low, particularly affected by post-election uncertainties in India and Europe, including the UK and France.
“However, sentiment was also pulled lower by concern over the demand environment going forward, as reflected in a pull-back in new orders growth from May’s one-year high, which left backlogs of work largely unchanged again during the month. The latter is typically a sign of current capacity being sufficient to meet existing demand,” the agency concluded.
Oman’s non-oil sector drives GDP to $27bn in Q1 2024
Updated 07 July 2024
Arab News
RIYADH: A rise in Oman’s non-oil activities boosted the country’s gross domestic product by 0.8 percent year-on-year to 10.45 billion Omani rials ($27.15 billion) in the first quarter of 2024.
Preliminary data from the National Centre for Statistics and Information showed that non-oil activities recorded a value of 7.18 billion rials at the end of the first quarter, reflecting a 3.9 percent surge compared to the same period in 2023.
This aligns with Oman’s economic outlook, which remains favorable, with real growth expected to reach 1.5 percent in 2024, driven by increased gas production and diversification efforts.
Additionally, it supports the government’s efforts to advance governance and efficiency reforms, such as the plan announced in January to boost the economy through the launch of the Future Fund Oman by the Oman Investment Authority. This plan aims to attract foreign investment and bolster investments in local small and medium-sized enterprises.
However, the data also revealed that crude oil activities amounted to 2.99 billion rials, a decrease of 4.4 percent compared to the same period last year.
Similarly, natural gas activities dropped 0.1 percent year-on-year to 524.4 million rials in the first three months of 2024.
Furthermore, total industrial activities recorded 2.18 billion rials, compared to 1.91 billion rials at the end of the first quarter of 2023.
Saudi banks’ aggregate profit reaches 14-month high of $2bn
Updated 07 July 2024
Dayan Abou Tine
RIYADH: Saudi banks aggregate profit reached a 14-month high of SR7.33 billion ($1.96 billion) in May, marking an annual 16 percent rise, newly released data has revealed.
According to the Saudi Central Bank, also known as SAMA, these figures represent profits before zakat and taxes.
Cumulatively, from the beginning of the year to the end of May, banks recorded a total profit of SR34.78 billion, compared to SR31.12 billion during the same period last year.
In June, a McKinsey report highlighted that high hydrocarbon prices, rapid economic expansion, and low unemployment, along with favorable demographics, ambitious public investments, and moderate inflation, have collectively bolstered robust balance sheets and strong margins among Saudi banks.
This region has been enjoying an evolving regulatory environment marked by greater openness, new frameworks for innovation, and measures to improve the ease of doing business.
All Gulf Cooperation Council countries maintain their currencies pegged to the US dollar, causing regional interest rates to closely mirror movements in Washington. In 2023, as the Federal Reserve’s monetary policy increased financing costs in the GCC, both local and global bank profits surged.
Concurrently, headline inflation was moderate, estimated at 2.6 percent in 2023 and projected to decrease to 2.3 percent in 2024 according to McKinsey.
According to the firm, all GCC banks outperformed their counterparts in developed and many emerging markets, remaining on a rapid growth trajectory. They primarily rely on stable domestic deposits, which have proven resilient during economic downturns.
In comparison to April, banks’ profits before zakat and tax rose by 9 percent, marking the highest monthly increase in the past five months.
McKinsey nevertheless highlighted the potential risk to the GCC banking sector if interest rates were to fall and bank managers were to be complacent.
This complacency might deter them from pursuing ambitious transformation initiatives that are crucial for long-term sustainability and growth.
The firm warned that the current high-interest-rate environment, which has bolstered bank profitability, may not persist indefinitely.
If inflationary pressures in the US ease, the Federal Reserve could adjust its monetary policy, potentially lowering interest rates, and thus reduce bank profits.
The advice is for bank executives to not assume that high profits are the new norm and instead prepare for potential future declines in profitability.
It suggests that banks should use their current strong financial position to invest in transformative changes and cost reductions. By doing so, they can enhance efficiency and resilience, ensuring they remain competitive even when interest rates decrease.
The International Monetary Fund praised SAMA’s efforts to safeguard the Kingdom’s financial stability in a June report. It has emphasized that the central bank continues to advance the modernization of regulatory and supervisory frameworks.
Significant progress has been made in developing its financial safety net framework, encompassing bank resolution, emergency liquidity assistance arrangements, and deposit protection fund.
Saudi Arabia keen to get more women in the workforce
Saudi women in tourism and hospitality sectors underline power of workforce diversity, experts explain
Updated 06 July 2024
Reem Walid
RIYADH: Tourism and hospitality in Saudi Arabia are experiencing a remarkable transformation driven by the increased participation of women, thanks to inspirational leaders and strong government action.
This shift is significant considering that tourism is one of the few global industries where women already constitute the majority of the workforce.
Saudi Arabia is keen to get more women in the workforce, and the Kingdom has already surpassed its Vision 2030 ambition of achieving 30 percent female participation in the labor market.
Indeed, the goal has now been upscaled to 40 percent — double the rate seen in 2010, according to World Bank figures.
Tourism and hospitality is seen as a sector where women can thrive, and the Kingdom is working hard to create more opportunities in this area.
According to EHL Insights, just five years ago, Saudi females faced significant barriers when it came to working in hospitality companies, and women had to go to great lengths to convince their families to allow them to pursue education or employment opportunities in this industry.
This has changed thanks to the economic and cultural shifts spearheaded by the Vision 2030 initiative, and according to data issued by R Consultancy Group in March, 45 percent of the sector’s workforce now comprises female professionals – 925,000 workers.
“There are several inspirational female leaders that have helped to strategically shape both the Saudi tourism sector and the regional tourism sector more broadly such as Princess Haifa bint Mohammed Al-Saud, vice minister of tourism, and Basmah Al-Mayman, regional director of the UN World Tourism Organization,” Anne-Laure Malauzat, partner at Bain & Co. in the Middle East, told Arab News.
She went on to stress that on the ground in Saudi Arabia, there is a massive presence of women across different parts of the tourism and hospitality sectors, from the architects designing the Kingdom’s key airports, passport control officers, and cab drivers as well as hospitality leaders and tourist guides.
“Examples of these success stories include Sarah Gasim, senior vice president — head of KSA Hotels and Hospitality at JLL — who managed hotel complexes in the past. (She) is a published author and lectured on hospitality, helping to shape future generations in the sector,” Malauzat said.
From Red Sea Global’s point of view, spokesperson Zainab Hamidaddin Al-Hanoof Al-Hazzani told Arab News that women bring unique perspectives, skills, and insights to roles such as hospitality management, customer service, marketing, and event planning, which significantly enhance the overall quality of service and customer satisfaction.
Tourism and hospitality is seen as a sector where women can thrive, and the Kingdom is working hard to create more opportunities in this area. (SPA)
“Their diverse perspectives, enhanced service delivery, and inclusive workplace contributions are driving innovation and economic growth, making them indispensable to its success,” she said.
Al-Hazzani claimed that women are actively shaping the future of the tourism and hospitality industry in Saudi Arabia, adding: “This is particularly true at RSG where women play a pivotal role in elevating guest experiences, fostering cultural diversity, and contributing to the overarching success of our projects.
For example, our Elite Graduate Program has provided employment opportunities for 250 individuals, with 30 women advancing to management positions.”
Opportunities and challenges for women in the tourism and hospitality sector
The tourism and hospitality sector in Saudi Arabia is undergoing a significant transformation, with a growing focus on cultural tourism, luxury experiences, and heritage preservation which presents a wealth of opportunities for women.
Laila Kuznezov, director, Implementation Practice at management consulting firm Oliver Wyman told Arab News that from leadership roles in hotel management to careers in event planning, cultural tourism experiences, and hospitality education, women can leverage their “unique skills and perspectives” to shape the future of Saudi tourism.
“By empowering women in tourism and hospitality, they are not only creating a more inclusive workforce, but also sending a powerful message to the world. With a diverse pool of talent contributing to the industry, they can create a world-class visitor experience that reflects the Kingdom’s rich heritage, culture tapestry, and forward-thinking vision for the future,” Kuznezov added.
Speaking on the key constraints women face in entering the labor force and securing employment, Kuznezov shed light on how many of the barriers in Saudi Arabia are similar to those faced globally.
By empowering women in tourism and hospitality, they are not only creating a more inclusive workforce, but also sending a powerful message to the world.
Laila Kuznezov, director, Implementation Practice at Oliver Wyman
“A gender wage gap persists, and women at certain education levels, particularly those with only a secondary school leaver’s certificate, have much lower participation rates than men. A huge opportunity lies in capitalizing on the highly skilled female workforce in Saudi Arabia,” she explained.
The director also noted that: “We need to see more women as CEOs, CFOs, and senior managers across all industries, particularly in highly productive sectors driven by technology and knowledge. Encouraging female entrepreneurship is also crucial. The talent and ambition are there – it’s about providing continued support and fostering a culture that actively supports and promotes women in transformative roles.”
She continued to clarify that the recent rise in female labor force participation is a positive indicator, but the next step is ensuring these women secure high-quality jobs that leverage their full capabilities.
“It is also important to support gains for women at all levels and geographic areas. A key focus in Saudi Arabia is ensuring access to the training and childcare options needed for success, especially for women who have been out of the workforce for long periods of time, are first-time job holders, or have lower education levels,” Kuznezov emphasized.
“Since Saudi women tend to stay closer to their hometowns, geographically dispersed training programs and readily available childcare are crucial to expanding regional employment opportunities,” the director further said.
According to Kuznezov, Saudi Arabia is embracing a progressive approach by developing and enabling regulations to promote new forms of work, such as freelancing, part-time work, platform and gig economy work, and remote working.
“These models offer women increased flexibility and more channels to enter and participate in the workforce, which should contribute to continuing the positive trends of increased participation and reduced unemployment for women,” she said.
Women participation’s impact on Vision 2030
Female participation in the tourism and hospitality sector has helped support the Vision 2030 agenda on multiple fronts, believes Bain & Co.’s Malauzat.
“From a talent perspective, enabling the sector transformation through their leadership, skills, and contribution across all parts of the tourism and hospitality lifecycle,” she said.
FASTFACT
In Saudi Arabia, there is a massive presence of women across different parts of the tourism and hospitality sectors, from the architects designing the Kingdom’s key airports, passport control officers, and cab drivers as well as hospitality leaders and tourist guides.
“From a consumer understanding perspective, women globally take an estimated 80 percent of consumer-related decisions so having women represented in the sector is critical to ensure a real understanding of consumers in this space,” the partner affirmed.
She concluded: “From a gender equity perspective, this has been an important contributing factor to helping the Kingdom achieve its overall aspirations for female participation in the labor market nationally.”
From RSG’s lens, according to Al-Hazzani, by actively promoting gender diversity in the workforce within the tourism and hospitality sector, the firm is taking significant strides towards realizing the vision outlined in Vision 2030.
“This initiative aligns seamlessly with the broader objective of cultivating a vibrant and inclusive economy that harnesses the full spectrum of talent and capabilities within the nation,” Al-Hazzani said.
“Recognized as a fundamental driver of economic diversification, the tourism and hospitality sector in particular benefits immensely from the integration of female talent. Their presence not only fuels the sector’s growth but also enhances its competitive edge and long-term viability through delivering an enriched tourism experience and driving innovation,” she added.
The spokesperson justified that by prioritizing gender diversity in the tourism and hospitality workforce, RSG is not only embracing Vision 2030’s ideals but also paving the way for other sectors to do the same.
“Our dedication to inclusivity not only strengthens our economy but also reaffirms our collective commitment of creating a more prosperous and equitable society,” Al-Hazzani concluded.
