Saudi Arabia: Fault Lines
Back from the Brink concluded with a general review of current economic and political conditions in Saudi Arabia. Fault Lines takes a closer look at some of the socio-economic challenges facing Saudi Arabia.
Saudi Arabia's economy remains heavily dependent on oil and therefore on oil prices. While oil prices are likely to remain high in the short (and perhaps even medium) term, economic diversification is essential in the long run. The government pushed through a series of macroeconomic reforms as it prepared for accession to the WTO. It has also encouraged diversification through investment in infrastructure, favorable tax policies, and by encouraging private sector investment. A recent World Bank report named Saudi Arabia as having the best business environment in the region, ahead of UAE (and Dubai). Currently, though, the private sector accounts for only 40% of the GDP.
Unemployment and underemployment remain bigger concerns. Almost 40% of the Saudi population is 15 or younger. Official estimates put the rate of unemployment (only male) at about 13% but it is widely acknowledged that real unemployment rates are higher. Generous benefits and a cultural aversion to certain types of jobs (which are seen as being lowly) have reduced incentive to work. Instead, Saudis employ five and a half million foreign workers, mostly from South and South East Asia. Foreigners make up 60% of the kingdom’s 8.5 million strong workforce. The proportion of foreigners in the private sector is even higher. (The Economist, January 5, 2006) The government has introduced various measures to increase Saudi participation in the economy but most of these measures have been aimed at employers in the form of quotas. There has been little effort to address the deficiencies in the education system or to reduce welfare benefits for the terminally unemployed.
The unemployment figures do not even begin to factor in women. Saudi Arabia now graduates more women than men but women’s participation in the economy is restricted mostly to education and healthcare. Women form a measly 5% of the Saudi workforce. The sidelining of half of the population does not make much economic sense, even if we leave alone the issues of equality and human rights.
Women’s rights (or the lack thereof) are a glaring indicator of another, larger fault line – the lack of socio-political rights. In deference to the conservative clerics, Saudi Arabia has some of the most stringent regulations on social behavior and interaction, and women bear the brunt of these regulations. Religious rights are severely curtailed not just for Christians and those following other religions but also for Shias and other Islamic sects. Saudi Arabia is perhaps the only country in the world that officially prohibits the practice of any religion other than the state religion…
To be continued
Tags: Saudi Arabia, Middle East, Economy, Culture, Society, Energy, Religion, Islam, women's rights
Saudi Arabia's economy remains heavily dependent on oil and therefore on oil prices. While oil prices are likely to remain high in the short (and perhaps even medium) term, economic diversification is essential in the long run. The government pushed through a series of macroeconomic reforms as it prepared for accession to the WTO. It has also encouraged diversification through investment in infrastructure, favorable tax policies, and by encouraging private sector investment. A recent World Bank report named Saudi Arabia as having the best business environment in the region, ahead of UAE (and Dubai). Currently, though, the private sector accounts for only 40% of the GDP.
Unemployment and underemployment remain bigger concerns. Almost 40% of the Saudi population is 15 or younger. Official estimates put the rate of unemployment (only male) at about 13% but it is widely acknowledged that real unemployment rates are higher. Generous benefits and a cultural aversion to certain types of jobs (which are seen as being lowly) have reduced incentive to work. Instead, Saudis employ five and a half million foreign workers, mostly from South and South East Asia. Foreigners make up 60% of the kingdom’s 8.5 million strong workforce. The proportion of foreigners in the private sector is even higher. (The Economist, January 5, 2006) The government has introduced various measures to increase Saudi participation in the economy but most of these measures have been aimed at employers in the form of quotas. There has been little effort to address the deficiencies in the education system or to reduce welfare benefits for the terminally unemployed.
…Imported labour is, on average, 30% cheaper than Saudi manpower. Private employers have such a strong preference for foreigners that many resort to creating pretend jobs for Saudis to meet increasingly tough quotas. A law just passed that requires 75% "Saudisation" simply cannot be complied with in the short term, says one experienced consultant… (The Economist, January 5, 2006)
The unemployment figures do not even begin to factor in women. Saudi Arabia now graduates more women than men but women’s participation in the economy is restricted mostly to education and healthcare. Women form a measly 5% of the Saudi workforce. The sidelining of half of the population does not make much economic sense, even if we leave alone the issues of equality and human rights.
Women’s rights (or the lack thereof) are a glaring indicator of another, larger fault line – the lack of socio-political rights. In deference to the conservative clerics, Saudi Arabia has some of the most stringent regulations on social behavior and interaction, and women bear the brunt of these regulations. Religious rights are severely curtailed not just for Christians and those following other religions but also for Shias and other Islamic sects. Saudi Arabia is perhaps the only country in the world that officially prohibits the practice of any religion other than the state religion…
To be continued
Tags: Saudi Arabia, Middle East, Economy, Culture, Society, Energy, Religion, Islam, women's rights
posted by Sahil at 11:10 PM
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