Focus on jobs at heart of Saudi Arabia’s reforms
The new reforms aim to increase enrolment in technical and vocational training colleges to 950,000 students a year from 104,000 now
Saudi Arabia plans to spend billions of riyals on technical training and other initiatives to boost the number of its citizens in private sector jobs, an economic reform plan released on Monday showed.
The world’s top oil exporter has been pushing labor reforms for years aimed at reducing the burden of employment on the state, but Monday’s plans spelled out new details of how this might be achieved in a range of economic sectors.
The National Transformation Program (NTP), announced by government ministers late on Monday, is part of the Vision 2030 reform scheme launched in April by Deputy Crown Prince Mohammed bin Salman to prepare for a future with lower oil revenue.
It aimed to increase the number of private-sector jobs by 450,000 by 2020 and to reduce public-sector salaries as a proportion of the state budget to 40 percent from 45 percent by the same date. Unemployment among Saudis is targeted to fall to 9 percent from 11.6 percent in the next five years.
“The average public sector employee is paid about 70 percent more than the private sector average. This wage gap is one of the highest in the world and goes a long way to explaining why so few Saudis are employed in the private sector,” said James Reeve, deputy chief economist at Samba Financial Group in London.
Previous labor reforms have focused on pushing companies to hire more Saudis instead of expatriates, with some effort also devoted to technical training schemes and other social tools to prompt young people to look for non-government jobs.
The new reforms aim to increase enrolment in technical and vocational training colleges to 950,000 students a year from 104,000 now, spending 1.5 billion riyals (about $400 million) to increase capacity, the NTP document showed.
The government will also spend 1.7 billion riyals on technical training facilities in schools and says it will target improvements in maths and science exam grades by 2020.
At the same time, the Civil Service Ministry has targets to decrease its payroll and spending on employee benefits by 20 percent by 2020, and to ensure that only 1 percent of new jobs by that date are in government service instead of 5 percent now.
Those reforms also carry a price tag. Restructuring civil service jobs will cost 52 million riyals by 2020 and a program to encourage government employees to become private sector entrepreneurs will cost 35 million riyals, the plan said.