‘Saudisation’ creates 500,000 jobs for home nationals

Reuters

• Saudisation policy requires companies to hire Saudi citizens
• 500,000 private sector jobs created since 2019
• Quotas up to 70%, and 100% for aviation

Saudi Arabia has created half a million new jobs in the last four years as part of its “Saudisation” policy of requiring companies to hire Saudi nationals, helping the kingdom’s unemployment rate fall to its lowest for six years.

Ahmad Al-Rajhi, the minister of human resources and social development, speaking this week at an event by the Saudi Economic Association, said the Saudisation process has been “instrumental in creating jobs for more than 500,000 male and female citizens in the private sector” since 2019.

The minister said in October that the government’s policies had resulted in the number of young Saudis working in the private sector rising to 2.12 million.

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Under the Nitaqat programme, Saudisation efforts focused on specific professions such as legal and retail services, where national statistics show high numbers of Saudi graduates in relevant subjects. 

Saudisation quotas typically go up to 70 percent for the private sector – and as much as 100 percent for certain jobs such as aviation – with adjustment periods tailored to specific companies. 

Private sector companies are incentivised to hire more Saudi nationals as those that recruit and train a high proportion of local citizens may acquire a coveted “platinum” status, which gives them an advantage when bidding for government contracts.

The success of the Saudisation policy has helped the unemployment rate in the kingdom fall to 8 percent, its lowest level for six years.

The rate dropped by 3 percentage points in 2022, the General Authority for Statistics said last month, and analysts expect it to fall further this year.

More opportunities

“As we expect higher growth rates in the coming years and more sectors are expanding, more job opportunities should be available for Saudis,” said James Reeve, chief economist at Jadwa Investment.

Reeve expects the unemployment rate to dip to 7.8 percent by the end of 2023. Economic growth is also forecast to slow after hitting record levels in 2022.

The number of jobs for Saudi nationals in the private sector has risen by 15 percent, according to official statistics, from 1.9 million in 2021 to 2.2 million in 2022. 

Reeve told AGBI: “The rise of Saudis in the private sector is driven by the economic diversification efforts in line with Vision 2030, which aims to create new sectors and expand relatively smaller ones. 

“For example tourism, which is mostly run by private companies either in accommodation or entertainment services, has attracted many young Saudis to work in the past few years – and the potential is still high for more.”

However, unemployment among young people aged 15 to 24 edged up to 16.8 percent in 2022. 

Total labour force participation rose to 52.5 percent in 2022.