Saudi Arabia’s efforts in formulating labour reforms that would help reduce the country’s jobless rate are proving to be effective.
The country’s stringent implementation of Nitaqat, a compulsory quota system, has raised Saudisation rate by 15 per cent, according to the Kingdom’s labour minister. The move also brought a marginal decline in the country’s unemployment rate from 12.4 per cent in 2011 to 11.8 per cent in the second quarter of 2013.
However Saudi Arabia’s nationalisation policies might not be able to have a long-term impact on raising employment unless accompanied by other reforms, especially in the private sector, say experts.
The success of such labour reforms will be heavily dependant on the skills training provided to the young Saudis.
Though the nationalisation policies have created a gap in the Kingdom’s job market, experts say that the majority of Saudi youth lack necessary skills required for the workplace.
“To compete in skills-intensive industries such as engineering, chemical processing or financial services, economies require access to a skilled workforce,” said Peter Beynon, ICAEW’s Middle East regional director.
“This means people with respected qualifications, either from high quality universities or internationally recognised professional qualifications.”
Beynon pointed out that weak academic performance in Saudi is a cause for concern.
“Only 41 per cent of Saudi Arabian youth currently go to college or university, compared to OECD states where 68 per cent of young people go on to tertiary education. This means a significant number of Saudis are entering the workforce at a disadvantage if measured internationally,” he said.
“Improvements to the education system at all levels, especially tertiary and vocational, would help provide the labour inputs needed for Saudi Arabia to compete at a global level in complex manufacturing, logistics and service provision.”
Mark Andrews, Pearson’s director of qualifications in the Middle East, agreed with Beynon, stating said that education and training should focus on preparing young people for the workforce.
“Pearson’s research in the Gulf region indicates many local employers believe that the education system does not always prepare school and university leavers with essential employability skills,” said Andrews.
“Employers tell us that they want candidates with skills such as communication, collaboration, responsibility and problem solving skills.”
Saudi Arabia has invested heavily in education in order to transform its youth bulge into an economic advantage. The Kingdom allocated around SR 204 billion from its 2013 budget for education, which amounts to about 25 per cent of the government’s annual spending and around 10 per cent of its GDP.
In addition, two Saudi universities have made their way into the Times Higher Education university rankings list.
“Saudi Arabia has invested significantly in state-of-the-art educational facilities, which provides a good basis,” said Beynon.
“Research suggests that the focus should now move to improving the quality of curricula, standards of the teaching profession and vocational development programmes. This will be the best way to ensure the Kingdom has a qualified local workforce capable of supporting future economic development.”
According to a Booz&Co study conducted among GCC students about the region’s education sector, Saudi students were the most dissatisfied with their school infrastructure and teachers’ competence.
“Transitioning from academia to the professional workplace is challenging in any market, but universities which recognise the value of incorporating work experience into their academic qualifications will be more likely to produce graduates that are ready for work,” he said.
Another alternative to Saudi Arabia’s growing unemployment rate would be to introduce part-time work among university students.
Introduction of such a law would be instrumental in helping young Saudi students transition to the work force and also help fill the labour gap in industries like retail.
A recent study conducted by recruitment firm Glowork among Saudi female students examined how the gap between the education sector and the employment sector can be bridged through a law, which allowed part-time work among female students in the Kingdom. The study found that 87 per cent of the women graduates wanted to work in order to gain work experience before stepping into the job market.
“The Kingdom’s unemployment challenges are largely a consequence of the lack of opportunity for high-level education,” said Beynon.
“While investments in educational resources are critical for developing future local talent, this is clearly a long-term solution; in the shorter term on-the-job training will need to continue in order to skill up current labour.”