Saudi Vision 2030 reforms cut unemployment, boosted job creation: Analysts

The unemployment rate among Saudis fell to an all-time low of 7.1% in Q2 2024, from 7.6% in Q1 2024, based on data available since 1999, the General Authority for Statistics (GASTAT) Labor Force Survey showed.

Analysts surveyed by Argaam attributed this downtrend to several factors driven by the Saudi Vision 2030’s goals. They said the vision-related programs helped achieve the goal of reducing unemployment six years ahead of schedule, in addition to the intense labor market reforms undertaken by the government.

The analysts also explained that the localization programs and reforms led by the Ministry of Human Resources and Social Development (HRSD), alongside growth of non-oil sectors as their contribution to GDP rose to 50%, played a key role in creating more job opportunities for Saudis.

Key drivers of lower unemployment:

Suleiman Al-Khalidi, an economic expert, financial market analyst and member of the Saudi Economic Association (SEA), said that one of the key drivers of curbing unemployment among Saudis is the strategic plans developed by the Kingdom to minimize the jobless to reach the Saudi Vision 2030-related goal.

Suleiman Al-Khalidi, an economic expert, financial market analyst and member of the Saudi Economic Association (SEA)

Moreover, the tourism sector’s rebound helped create more than three million new jobs, while also diversifying the economy and moving away from oil dependence to become a non-oil economy, he added, indicating that non-oil activities hit their highest contribution to GDP.

The analyst also pointed out that the non-oil economy contributed SAR 1.7 trillion, translating into new job opportunities. He added that attracting foreign investments to Saudi Arabia supported job creation and undermined unemployment rates.

Al-Khalidi also stated that foreign direct investments (FDIs) recorded net flows of more than SAR 13 billion in Q2 2024, an increase of more than SAR 2 billion, or 16%, from the previous quarter.

He added that the total balance of FDIs in Saudi Arabia amounted to SAR 123 billion. Moreover, the Public Investment Fund (PIF) took the fifth place among the world’s largest sovereign funds with assets worth $925 billion.

Elsewhere, Fadl Al-Buainain, member of the Saudi Shura Council, said the Saudi Vision 2030’s programs supported the reduction of the unemployment rate six years ahead of schedule, paired with the intense government efforts that fueled several positive results, especially in the labor market.

Fadl Al-Buainain, member of the Saudi Shura Council

The labor market reforms, localization programs, and other programs carried out by the HRSD Ministry had a significant impact on yielding favorable outcomes, he further stated.

Al-Buainain pointed out that the growth of non-oil sectors, whose contribution to the GDP advanced to 50%, has bolstered job creation for Saudis.

For his part, Bandar Shmailan, an economic analyst and writer, said that the goals of Saudi Vision 2030 and its programs focus primarily on curbing unemployment. He indicated that the focus of economic planning under this vision helped cut the number of those unemployed and lure more foreign investments that created new jobs for Saudi youth and prompted their integration into the local labor market. He also highlighted the role of privatization in sector development and advancement.

Bandar Shmailan, an economic analyst and writer

According to Shmailan, among drivers of lower unemployment was the creation of new resources and the generation of promising opportunities suitable for the national workforce. This was aimed at achieving the target goals through lowering unemployment while training and qualifying human capital as the foundation of Saudi Vision 2030.

Sectors contributing to job creation:

Al-Khaldi highlighted that among the key sectors that managed to create new jobs and employment opportunities are digital transformation and modern technology across various industries. These sectors have also boosted employment amid increased job creation.

He pointed out that the sectors that witnessed the most significant decline in unemployment rates include tourism, entertainment, religious seasons, wholesale and retail trade, and vehicle repair. He emphasized the importance of four key sectors: wholesale and retail trade, vehicle repair, construction, manufacturing industries, and administrative services.

The analyst added that the Kingdom’s plans and strategies have also contributed to developing domestic industries and establishing various factories, including automotive plants and high-level infrastructure development. Moreover, Saudi Arabia is working to produce 300 electric vehicles (EVs) annually under the Lucid brand.

He noted that localization programs in various sectors have significantly reduced unemployment by targeting job opportunities for citizens and stimulating the business sector. Additionally, companies have contributed to hiring nationals.

Among the prominent regions in the localization program are Madinah, Jazan, and Western Province and Central Province, where jobs have been localized in areas such as optics, consulting, dentistry, retail sales, insurance, procurement, and project management.

Meanwhile, the Hadaf program, implemented by the HRSD Ministry, also supported job creation, which helped rein in unemployment and lift the ratio of private-sector employees. Saudi women now account for no less than 37% of the total private-sector workforce.

According to Shmailan, there has also been an expansion under Saudi Vision 2030 to support, empower, and boost female participation in the national workforce, leading to a historically unprecedented reduction in the unemployment rate among Saudi women. This has played a significant role in diversifying the Kingdom's income sources and attracting foreign investments.

According to the statistics issued earlier this year, 511 foreign companies were transferred to Riyadh, which enhances the role of human cadre development, training and qualification as per the vision’s planning and sustainable development, he stated. He also noted that the ongoing projects will play a key role in attracting national cadres that could drive lower unemployment.

Meanwhile, Al-Buainain stressed that the growth of the tourism sector and the industrial and mining, as well as the diversification of the economy’s sources, contributed to the creation of more jobs while lowering unemployment.

Furthermore, he indicated that the expansionary government spending helped stimulate the private sector, hence supporting the absorption of job seekers from Saudis, in addition to other jobs related to foreign employment.

He explained that, in general, the government's organized work and its intense efforts bolstered the reduction of those unemployed. This also contributed to achieving positive results for the different economic sectors.

Unemployment rates forecasts:

Al-Khaldi expected that unemployment would slightly decrease to a range of 4% and 5% in the coming years, thanks to the Kingdom’s plans, strategies and vision programs.

For his part, Shmailan anticipated future indicators to bode well for lowering the unemployment rate that would reach 5% in 2030.

He underlined that the Saudi economy has contributed to the development and growth of all sectors, playing a very important role in reducing joblessness, in addition to the participation of the private sector in achieving the Saudi Vision 2030 goals.

On the other hand, Al-Buainain sees that the unemployment rate will decline further in the medium to long-term as a result of the economic transformations and planned megaprojects. This is in addition to luring foreign investments and international companies whose regional headquarters will be based in the Kingdom.

He pointed out that such factors raise optimism that the unemployment rate will record additional drops in the future, being part of the leadership’s direction that will transform the 7% target into a basis for ambitious future goals.