Unemployment and Saudisation in the Saudi Economy

The labor force is a main factor for any economy. therefore, Unemployment is a big problem for the economy.
“An unemployed person is the one who is willing and able to work but unable to find a job”. This means those people who don’t work and don’t want to work are not considered as unemployed. Two decades ago, the Saudi government started to help Saudis to find jobs by Saudisation program, which aims to replace the non-Saudis workers by Saudis workers.. Thesis Statement Lack of the education system and the high cost of Saudi employee are the main reasons for the high rate of unemployment.The sharp increase in the population in Saudi Arabia compared to the available jobs shows dangerous signs of higher rates in unemployed Saudis. As known, unemployment has many bad effects on society and economy.
Therefore, the government must work hard to decrease that risk by applying Saudisation program and support the private sector to solve this problem. Lack of The Education System The education system has failed to prepare country’s youth for jobs which are required in the marketplace. Unfortunately, one of the biggest spending in the national budget goes to the education system.But this high expenditure doesn’t show good effects. There are many subjects are taught at the Saudi universities are not required in the marketplace. At the same time, many subjects are required in the private sector are not existing or exists in few universities such as, jobs requiring technical expertise and also the medical subjects. In fact, the education system is not the only guilty.

The Ministry of Economy and Planning and the Ministry of Labor also share that fail. So, there must be a cooperation between these ministries to avoid the problem of mismatching between the education output and the marketplace requirements.The High Cost of Hiring Saudi Worker The high cost of Saudi workers compared to the foreigner is also a main reason for the high rate of unemployment in Saudi Arabia. The companies in the private sector usually try to reduce the cost as much as they can, therefore, they prefer to bring non-Saudi workers. In fact, hiring more foreigner has a bad effect. Every year those foreigners send their money to their families. According to statistics department of Ministry of Economy & Planning, “remittances of expatriates amounted to SR 59.
45 billion in year 2002”.Since these huge amounts of money are spent out of our economy, this is so bad for the national economy. The Saudi workers feel shame The third reason is that some Saudis feel shame to work in services field as cleaners, taxi drivers or waiters. However, in the last few years, Saudis started giving up that shame. Especially, with the high rate of unemployment and the government efforts to educate people that, there is no shame to work in the services field. Unemployment Effects on the Economy and the Society The employment has a direct effect on the national economy as a main factor of any economy. he main cost of unemployment is to those who are unemployed.
There are many bad effects of unemployment on the economy and the society. Economically, the longer youth unemployed the more they may lose their skills and this is bad for the economy. The unemployed could be producing goods and services and if they aren’t, then total production is lower than it could be. This causes decrease in the national income which mean economic loses. Socially, unemployment also has bad effects on the society. If the unemployment keeps increasing for a long time, this will lead to increase the number of poor people which means more ills in the society.Some youth could work in bad things to find money such as, drugs and stealing.
Unemployment also increases the gab between the classes of the society. As we can see, as unemployment increases, as more bad effects happen to the economy and the society. Saudisation As a result of the continuous increase in youth unemployed, the government started the initiative termed as “Saudisation”. This program aims to fight unemployment and to help youth to find appropriate jobs. Saudisation is started about two decades ago and it is defined as “the replacement of the non-Saudi workers by Saudi workers “.This program considered as a main solution for the high rate of unemployment. Saudisation doesn’t aim only to reduce the unemployment, it aims also to decrease the huge amount of money going out by foreign workers.
Saudisation program has shown success in some fields such as the commercial bank, the medical field and also in services field. The Saudi government has succeeded in applying the Saudisation program in the banking sector. According to the ministry of labor, The number of Saudi worker has increased by 100% from 2000 to 2007, whereas the percentage of non-Saudi workers has decreased by 35%.At the same period. New Industrial Cities The current boom has brought the creation of six economic cities which will offer many opportunities for jobs. That of course will lead to a sharp decrease in unemployment. According to the Saudi Arabian General Investment Authority, SAGIA, these six economic cities will offer more than 1.
5 million jobs. The most important and largest city is King Abdullah Economic City. This city will offer about one million opportunities of jobs. The government really work hard to build these cities.However, the government also should work hard to prepare the Saudi youth to work in these cities. Conclusion Summary Unemployment is one of the biggest problems concerns the Saudi economy. The government has worried because the bad effects of unemployment, especially if the unemployment continues for long time.
The unemployment rate increased sharply during few years ago. This high rate caused mainly by lack of the education system and the high cost of hiring Saudi workers. Therefore, the government started applying the Saudisation program as a main solution for the high unemployment rate.Saudisation has been applied successfully in some fields especially in the banking sector. The government also has other solutions such as building the industrial cities which will solve the unemployment problem and develop the national economy as well. Prediction If the government works as hard as possible to apply the Saudisation program, support the private sector, and reform the education system, this will decrease unemployment, increase the national income, the standard of living of Saudis and create a strong national economy.In conclusion, the government must work harder to decrease the unemployment rate.
Especially, with the high rate of growth of population. The government also must exploit the current boom and the huge amount of revenues to increase the employment. Finally, I really hope the best for the Saudi economy, I hope to see in the near future more development and reforms in Saudi Arabia.Works Cited Al Farsy, Fouad. ” Saudisation ” King Fahd bin Abdulaziz site 1 January, 2006 [accessed 28 December 2008 http://www. ingfahdbinabdulaziz. com/main/j600.
htm >]. Robert, Looney. ” Saudisation and Sound Economic Reforms: Are the Two Compatible? ” Center for Contemporary Conflict February 2004 [accessed 27 December 2008 http://www. ccc. nps. navy. mil/si/2004/feb/looneyFeb04.
asp#references >]. Roberts, Lynne ” Saudisation quota to stay ” ARABIANBUSINESS. COM 24 July 2007 [accessed 28 December 2008 http://www. arabianbusiness. com/496542-saudization-quota-to-stay >].