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Saudi Arabia: jobless on the rise

The kingdom is struggling to meet its private-sector job-creation targets

Saudi Arabia's cabinet, at its weekly meeting chaired by King Salman, announced the creation of a new body within the labour ministry to encourage the creation and take-up of jobs for Saudi citizens within the private sector. The need for such an organisation appears to confirm circumstantial evidence that Saudis are still reluctant to take up posts outside the civil service.

The expansion of the private sector's contribution to the national economy is one of the key aims of the kingdom's economic reform programme, Vision 2030 and its 2020 National Transformation Programme. The idea, announced in 2016, was to create 450,000 new jobs for young Saudi men and women in non-state firms by 2020. This target is unlikely to be met.

Another goal was to decrease overall unemployment between 2016 and 2020, from 11.5% to 9%. But the influential daily al-Riyadh newspaper has published a chart showing that, instead of falling, the percentage of jobless has risen every quarter since early 2016, reaching 12.8% by the end of last year. The prospect of this figure dropping to 9% within the next two years is remote. The al-Riyadh report says that today no fewer than 1.2m young Saudi men and women are looking for work.

Saudi Arabia, along with many of its Gulf neighbours, faces a range of challenges—not least rivalry with Iran for regional influence, a bogged-down conflict in Yemen and threats from jihadist Islamist groups. But the combination of a high birth rate and an annual increase in the number of young Saudis without work is presenting an equally tough challenge.

It remains to be seen how the new labour ministry authority will motivate Saudis to apply for jobs in the private sector, where wages are lower and job security is not assured. As a first step it's likely to create a database of private-sector openings across the country and persuade those without work to apply. In any event, by creating the new department and acknowledging that unemployment is still on the rise, the authorities are sending out a signal that the problem has been identified and steps are being taken to remedy it.

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