Every evening in Hail, a Saudi city at the foot of a jagged mountain range, Mona heads out to her roadside tea stall, switches on the lights, and waits for customers to show up. She keeps a printed resume on hand, hoping one of them might offer her a better job.
“It’s worse now,” the former clerk said, despite widespread reforms and an oil price boom that will make Saudi Arabia the world’s fastest-growing economy this year.
Jobs in Hail, at least ones that Mona would consider, are few and far between. Government efforts to increase Saudi employment, and female employment in particular, were commendable, but have fallen short, she said. “They did support women. But all those jobs were quickly filled,” said Mona, who did not want her real name to be published.
Under day-to-day ruler Crown Prince Mohammed bin Salman, the kingdom has being going through a period of rapid reforms. Riyadh wants to overhaul the country’s economy by 2030 to reduce its reliance on oil, expand the private sector and whittle down subsidies that people have traditionally relied on. The stakes are high for the prince, who counts young Saudis — who want jobs and homes — as his support base. The risk is that poorer, less well-educated people, particularly those outside of major cities, fall behind as they compete for well-paid jobs, many of which are in the capital.
As a result of the reforms, Saudis who had relied on cradle-to-the-grave government support in the form of public sector jobs and subsidies are increasingly expected to compete for jobs in the private sector. The reforms are “rebalancing the social contract. It’s a necessary initiative, but it’s causing some pain along the way,” said Sanam Vakil, Chatham House’s deputy director for the Middle East and north Africa.
The economic reforms have been accompanied by social ones, including allowing women to drive and ending the role of religious police. Those have won Prince Mohammed praise among many young Saudis. But he has also been criticised for his crackdown on critics, including journalists and bloggers, that most recently saw a PhD student and mother of two jailed for decades over her tweets.
The reforms have affected much of the population. The government, which introduced VAT in 2018 and tripled it to 15 per cent during the coronavirus pandemic, has also cut electricity and fuel subsidies, raising living costs. Unemployment has fallen to 10.1 per cent this year, the lowest since 2008. Youth joblessness was 15 per cent in the first quarter of this year. More than 400,000 citizens entered the labour market last year as the government pushes for more citizens to join the private sector. Women’s participation in the workforce has shot up to an all-time high of 35 per cent.
“The issue of economic development and job creation and spurring investment throughout the country is the signature issue for the crown prince, and so that means that all citizens have to be in someway . . . touched by the transformation,” said Karen Young, senior research fellow at Columbia University’s Center on Global Energy Policy.
The IMF has praised the reforms and advised further tax adjustments while saying the kingdom should step up targeted social spending. Saudi Arabia’s GDP bounced from the pandemic to 3.2 per cent in 2021. Thanks to the oil boom, it is forecast to hit 7.6 per cent this year. While previous oil bonanzas were followed by a rise in government spending, Saudi Arabia this time plans to use the windfall to shore up its reserves and invest in its sovereign wealth fund, which is overseeing tens of billions of dollars’ worth of projects in the kingdom. Inflation this year was among the lowest in G20 countries, with the consumer price index rising to about 3 per cent last month.
Saudis with sought-after qualifications and experience are in high demand, but many other jobs cluster around the minimum wage of 4,000 riyals ($1,000) a month, according to a working paper published by Harvard’s Center for International Development. Although well above the wages paid to migrants in the same jobs, some Saudis complain that it is not enough, and some have taken on two jobs.
The mixed effects of the reforms can be seen in Hail, where new buildings have sprung up around the city as more Saudis purchased homes with government-supported mortgages in a housing drive that has increased home ownership rates from 47 per cent in 2016 to more than 60 per cent this year.
“There are plenty of opportunities, you just need to want to work,” said Ahmed, who drives an Uber and is saving up to start his own restaurant franchise.
But at a social gathering in Hail over coffee and dates, Omar, a socially conservative Saudi, could not hide his contempt for the changes.
It was not only the sight of men and women dancing together at Riyadh concerts — something unimaginable a few years ago — that upset him, but the tougher living conditions, he said. “You have three-quarters of the world’s oil, you have tourism. Where is the money going?” said Omar, who did not want his real name to be published. “I hire a Saudi and pay him the minimum 3,000 riyals. What is going to do with that? How can he live off it? The strong are eating the weak,” he said.
Government officials say they are aware that some people and regions could be left behind. They plan to fill the gaps with regional development projects, vocational training and support for families to set up businesses. It will also expand its Saudisation programme, which is enforcing the hire of Saudis across an increasing number of sectors. In June, the royal court directed about $2.8bn in direct payouts to people registered with social security and to the Citizen Account, a basic income programme.
Hundreds of billions of riyals have been invested or committed by the government and the private sector to the regions, an official said. This includes 60 bn riyals for the northern region, where Hail lies.
In the meantime, many in Hail are travelling to the capital for employment. Some have come back, dissatisfied with the opportunities there. A young man, illegally selling cigarettes from the boot of a car in Hail, said he had returned from Riyadh after he found only restaurant jobs there. “I was unlucky,” he said.