Saudi Arabia has a population of 24 million citizens and the highest number of unemployed youth in North Africa and the Middle East. More than 30 percent of the population is made up of men and women under 30 years of age, with a large number of them unemployed, for the most part unable or unwilling to compete for jobs.
Some experts estimate that as many as 5 million foreign laborers in Saudi Arabia send home to India, Pakistan, Bangladesh, Indonesia, the Philippines and some Western countries more than $28 billion in Saudi earnings each year, the highest such amount in the world. A financial expert in Riyadh recently called this the “striking paradox in Saudi Arabia’s labor market.”
The bare statistics of unemployment woes in Saudi Arabia were identified more 13 years ago by King Abdullah bin Abdulaziz al-Saud – at the time a prince – when he called the jobless rate “the number one national security problem” in the nation.
A jobless youth
An alarmingly high rate of unemployed youth has been a kind of tinder for the social and political revolutions that swept through the Middle East over the past year. The Kingdom of Saudi Arabia, which rests on the eastern edge of the uprisings that have shaken the Arab world, did not escape public protests. But the government of the royal house of Saud handily survived them all.
In late January of 2011 in Jeddah, about 30 demonstrators protested the deaths of 11 people in a flood caused by the government’s failure to repair flood control equipment destroyed two years ago in another calamity. In Qatif and other communities in Eastern Province, Shia Muslims protested government corruption and a warrant issued against a local imam. They also demanded the release of three political prisoners.
With the help of social media, the protests grew into a petition revolution that spread throughout the country, peaking in Riyadh when hundreds gathered for a Day of Rage. They called for major changes in Saudi life, including basic women’s rights, a constitutional monarchy and labor rights.
Since then, sporadic protests have continued throughout the kingdom. But these events have drawn smaller crowds than those that assembled in neighboring Change Square in Sana’a or Tahrir Square in Cairo.
Security forces successfully contained the demonstrations in Riyadh, the government arrested the leaders of a political opposition party, King Abdullah offered $39 billion in social reforms and the grand mufti in Riyadh issued a fatwa against protests.
“Saudi Arabia was the least affected by the Arab revolts in 2011,” said Gregory Gause, a University of Vermont political science professor and Saudi Arabia expert who wrote a special report on Saudi Arabia published by the Council on Foreign Relations in New York.
While the kingdom was spared the political turmoil of its neighbors, youth unemployment continues to plague the nation, according to Saudi Youth: Unveiling the Force for Change, published as a Gulf Analysis Paper by the Center for Strategies & International Studies in Washington, D.C.. The report is based on two years of interviews with 4,500 university students in Riyadh. Authored by Vienna-based Women Without Borders, it says “the challenges may be greater than many in the kingdom are currently imagining.”
The government remains the major employer in the country, so the new and growing private sector is where the ruling family has looked for employment options. A first effort to force private employers to hire more Saudis failed, and has been replaced by the Nitaqat system, which color codes private employers based on how successful they are at increasing the percentages of Saudis on their payrolls. The punishment is a reduction in visas available to companies that don’t improve their record.
“Remedying the disparity between the recruitment of expatriate workers and nationals in the private sector is one of the biggest challenges facing Saudi Arabia’s labor market” says John Sfakianakis, the chief economist for Banque Saudi Fransi in Riyadh.
[Unemployment] is one of the most serious long-term issues the Saudi regime faces – Gregory Gause, Saudi Arabia expert
The price of remittances to the Saudi economy
The large foreign labor force limits job possibilities for some Saudis, but the national economic loss has another impact. “The most recent figures I’ve seen,” said Gause, “is $28 billion a year, based on remittances of the second quarter for 2011. “That’s five percent of the gross domestic product. You lose five percent of your domestic product that exits your economy. It doesn’t stay in your economy to buy food or make investments.
“This is one of the most serious long-term issues the Saudi regime faces,” said Gause. With oil prices at $100 a barrel, that’s not a big deal, but oil prices could go down. I’m not sure the regime can count on that level of oil prices in perpetuity.”
The solution is to rely less on foreign labor and provide more work for unemployed Saudis. Quotas have proven difficult to manage. Gause suggests that some form of taxation would be more effective.
I don’t see the government taking those kinds of steps in the short term.
“The issue is not unemployment,” says Thomas Lippman, adjunct scholar at the Middle East Institute and author of a new book, Saudi Arabia on the Edge, published by the Council of Foreign Relations. “There are far more foreign workers in the country than there are unemployed Saudis. There are plenty of jobs to be done in Saudi Arabia.
“The issue is a mismatch in the job market between the skills and capabilities and salary demands the Saudis bring to the labor market and what the needs of the employers are.
There are far too many Saudis whose education is heavily skewed in favor of religious subjects which have no applicability to the jobs that need to be done,” says Lippman.
The issue is not unemployment… The issue is a mismatch in the job market between the skills and capabilities and salary demands the Saudis bring to the labor market and what the needs of the employers are. – Thomas Lippman, Middle East Institute
Will unemployment unravel the kingdom?
“It would be a mistake to think of this as some kind of festering bed of antipathy to the government just waiting to break out,” said Lippman. In spite of major problems of public health, public safety, crime, addiction, spousal and child abuse, Saudis have economic opportunities not available in Tunisia and Egypt.
“You should not overestimate the extent of the protest sentiment in the Saudi population. They are not in an insurrectionary mood. The people not prone to violence.”
“You have a population that is fundamentally very conservative and very hostile to foreign ideas, and throughout the modern history of Saudi Arabia the rulers have been out in front of the people rather than the other way around as it was in Iran. The royal family is almost universally accepted, Lippman said.
The royal family remains very much in control, he said. “This king has created the institutions that give the appearance of participation but not the reality,” says Lippman. He said that Abdullah has given Saudis a larger personal space, but he and the royal family are not likely to give away any political space anytime soon.
The king’s initial $39 billion gave state employees a 15 percent pay raise, small business loans to entrepreneurs, and offered loans to young people who want to get married and buy a home. Another $93 billion raised the minimum wage, and opened new positions in state employment.
Abdullah the reformer is 83 years old and recently returned from three months of medical care in the United States and Morocco. The new heir apparent, Nayef bin Abdul Aziz Al Saud, is the Interior Minister. Will reforms then take a back seat when he ascends?
“There will not be a change in government. There will be a change in the king,” says Lippman.
An Arab Spring that fails to ignite
While Saudis have not been troubled by political warfare for much of their history, Gause is reminded that hundreds died in clashes between an al Qaeda movement and Saudi security between 2003 and 2007.
The protests in Egypt, Libya and Tunisia succeeded because disparate regions, sects and ideologies were able to unite long enough to overthrow their autocrats, Gause said. “Egypt, Libya and Tunisia put aside their differences.” Saudi activists apparently failed to unite, in part because the Saudi protest movements of 2011 covered a broad agenda.
“If you get a street protest in other parts of Saudi Arabia,” said Gause, “it will be driven by some local event that leads people to action, an event that says to the people that the government is not doing its job.”
Gause was surprised when in late January in Jeddah, the massive flood and drownings did not ignite a larger public outcry. “If ever there was a time for people in Saudi Arabia to come out on the streets, I thought ‘This would be it.’ But they didn’t.”
The Arab Spring uprisings often started with a single event that ignited greater public passions. Regime change in Tunisia began with the self-immolation of a young street vendor who was frustrated when low-level bureaucrats continually confiscated his wheelbarrow of produce in a town far from the capital. Whether such a cause sends Saudis into the streets again is an open question. Certainly there are causes to rally around and problems to solve in the kingdom. Larger questions remain, such as, whether the royal family will continue to finance modest changes along the way, and whether the high per-barrel price of their oil will continue to allow them to offer these benefits.
David Arnold coordinates the Syria Witness project at Middle East Voices and reports on Middle East and North Africa affairs for both Voice of America and MEV. The Syria Witness project publishes on-the-ground citizen reporting, giving Syrians the opportunity to offer to a global audience their first-person narratives of life on the streets of their war-torn country.