Securing Saudi Arabia’s future in a competitive global economy

With low oil prices, public expenditure pressures, deepening foreign expenditure commitments, and structural risks, King Salman’s government moved this week to address a critical challenge exacerbated by this unfavorable regional economic climate: youth unemployment.

Prior to the recent economic slowdown, the unemployment rate in the Kingdom for youth between the ages of 15 and 25 was 29.43% in 2013 and almost 1.9 million Saudis under the age of 14 will enter the job market by 2025. With over two-thirds of the Saudi population under 30, youth unemployment cannot be ignored.

A new initiative

The Saudi Cabinet, chaired by King Salman on October 12, importantly established a new Commission for Job Generation and Anti-Unemployment to be under the supervision of Prince Mohammad bin Salman, the Deputy Crown Prince and President of the Council of Economic and Development Affairs (CEDA), which oversees the Kingdom’s economy, energy policy, and finances.

Falling in line with CEDA’s goals to reduce bureaucratic red tape and deepen inter-agency cooperation to more effectively support the sustained prosperity of the Kingdom, the Cabinet is optimistic that this initiative will address this important challenge at a time of increasing economic pressures. Importantly, as well, this new Commission is under the supervision and support of Deputy Crown Prince Mohammad bin Salman.

As the architect of this new initiative, Prince Mohammad has shown both vision and leadership in pro-actively addressing the challenges the labor market faces in creating new jobs at a time when Saudi Arabia’s public expenditures are being tightened due to declining government revenues linked to lower oil prices. Organizationally, as well, the Deputy Crown Prince has brought focus to this challenge by empowering one agency to take the governmental lead to both formulate policies and at the same time, to coordinate with the other governmental agencies -- which partially address this issue separately -- to effectively implement these initiatives.

An important mandate

As a new cornerstone of CEDA’s work, the Cabinet has mandated the Commission to formulate and introduce economic policies, reforms, and programs to increase employment through creating jobs, with a large emphasis on addressing youth unemployment. The Commission will importantly focus on supporting the economic and industrial sectors that can generate the most new job growth.

Beyond creating new jobs, Prince Mohammad has tasked the Commission with expanding the number of Saudis in the work force and increasing their productivity. King Salman’s government hopes that such initiatives will increase economic growth, deepen competition in the Saudi economy, and lead to higher salaries at a time when subsidies are being curtailed and standard of living costs are rising.

Recognizing the important link between the public and private sectors, the Commission’s Board of Directors will consist of both government and non-governmental members and will coordinate with the private sector in rejuvenating the labor market and in encouraging economic growth.

A public and private partnership

The initiative is an important step forward to create a vibrant and sustainable labor market which addresses socioeconomic disparities and responds to the changing economic environment.

This initiative also underwrites the Kingdom’s future by ensuring that Saudi youth are given better training, new jobs, and more opportunities. By partnering with non-governmental organizations and the private sector, this Commission enables the Saudi government to be pro-active in preparing Saudi youth entering the job market in the next decade to have the skills to succeed in an increasingly competitive global economy.

At a time when global oil prices are changing the global economic landscape, CEDA has better positioned the Kingdom to address these challenges with innovative economic initiatives.
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Andrew J. Bowen, Ph.D., is a Senior Fellow and the Director of Middle East Studies at the Center for the National Interest in Washington, DC.