Saudi’s employment rate rose 51.2% in Q4 2020 as more women, youth entered labor force

By Amirtha P S, Desk Reporter
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Saudi Arabia
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The last quarter of 2020 saw a 51.2 percent rise in labor force participation in Saudi Arabia with higher involvement by both genders, up from 49 percent in Q3 2020.

The job market of the Kingdom witnessed more women and youth participation during the Q4, pushing overall unemployment numbers further. As per the latest data from the General Authority for Statistics (GaStat), the unemployment rate declined to 12.6 percent in the last quarter of 2020, down from 14.9 percent in Q3.

The fall in unemployment figures in the Kingdom was mostly due to a drop in female unemployment, which declined to 24.4 percent from 30.2 percent in Q3, Jadwa Investment, Saudi Arabia-based capital market firm, said in an analysis.

“The recovery in the labor market has proceeded quicker than we anticipated, with Saudi unemployment at 12.6 percent at the end of 2020, versus our forecast of 14 percent. At the same time, however, the swift recovery reinforces our view that Saudi unemployment will decline to 12.1 percent by the end of 2021,” Jadwa Investment said.

In Q4 the youth unemployment rate fell to 28 percent from 34.2 percent in the previous quarter of 2020. Male unemployment also declined in Q4, although at a slower pace.

According to GaStat’s data, however, the number of expatriates in the labor market declined by 121,000 quarter-on-quarter in Q4, 200,000 new private sector expatriate work visas were issued in the last quarter of 2020. The sharp rise was primarily due to a massive jump in visas for female expats, which jumped to 181,000 in Q4 from 4,000 in Q3.

Substitution of expatriates with Saudis slowed during Q4, especially in wholesale and retail and manufacturing. On a sectoral basis, public administration and accommodation and food services saw the largest rises in employment for both Saudi and expat workers in Q4.

The structural changes that are being implemented as a result of the new labor reforms are also expected to improve job mobility and flexibility for expats in the private sector, which, in turn, will help reduce the wage gap between Saudis and expats.

The kingdom’s Vision 2030 which seeks to diversify the economy and move away from oil dependency, has set a target to create millions of jobs and reduce unemployment to 7 percent by 2030.

Related: Saudi Arabia initiates wage subsidy program to localize industrial sector


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