The state-run media outlets have been praising Saudi Arabia’s declining unemployment rate for some time now. They point to this as proof of Crown Prince Mohamed bin Salman’s (MBS) Vision 2030 plan, which aims to save and diversify the country’s economy, and they market to the populace figures purportedly from local and international organisations that highlight the reality of employment and work in the Kingdom.
Surprisingly, however, a government study released by the AGSIW Institute in Washington revealed a fall in labour force participation rather than an increase in employment.
According to the study, it is challenging to reach firm conclusions about the employment situation and real unemployment rates in the Kingdom, as well as how to measure poverty rates in the country, due to the significant fluctuations and ambiguity in labour market data in Saudi Arabia.
The study showed that, contrary to what the state claims, the decrease in unemployment rates that occurred last year was caused by a decrease in labour force participation rather than an increase in employment rates.
The unemployment rate for Saudi men remained unchanged at 4.6% between the third and fourth quarters of 2023, still above the 4.2% rate in the fourth quarter of 2022. The overall unemployment rates for Saudi women and all Saudis are at their lowest levels since the kingdom began collecting statistics.
Scratching below the surface, however, not everything is positive. The labor force participation rate of Saudis – the share of the working-age population that is employed or actively looking for work – fell again, the fourth consecutive quarterly decline.
Though the Saudi Crown Prince has promised through Vision 2030 to lower unemployment rates, the truth is that the percentage of young people in the age group eligible for the labour market who were not in school, employed, or receiving training increased from 16.1% in 2015 to 25% in mid-2021, leaving young people’s expectations dashed by MBS’s vision’s false claims.
The King Khalid Research Foundation found in its study that Saudi youth aspire to go from school to seats in the labour market, despite the fact that the foundation is among those supporting MBS’s vision and developing the human capabilities development program within it. It also highlighted how young people’s prospects for employment and education are declining, which has discouraged many from entering the labour force in the Kingdom.
Based on estimates from other studies, one out of four young people (15–24 years old) drops out of school and training option to join the labour market.
Thus, one million young people out of 3.92 do not receive any educational or training opportunities to be able to integrate into the labor market.
According to the data, 25% of Saudi young people do not complete their education and training, which means that an estimated 45 billion riyals are annually lost including unearned wages, unrealized social insurance contributions, and unpaid tax revenues.
