A postcard from... Saudi Arabia
Rachel Sharp, October 05, 2018
Our 'postcard from' series keeps you updated on key HR areas in different countries
The Saudi Arabian economy is heavily dependent on oil, with 87% of its budget revenues, more than 40% of its GDP and 90% of its export earnings reliant on the sector. It possesses around 16% of the world’s petroleum reserves and is the world’s largest exporter of it. While it’s been trying to modernise and diversify its economy for some time, this has become more pressing in light of the crash in global oil prices since 2014, and the Paris climate agreement that has seen the world beginning to turn its back on fossil fuels. In 2016 the Saudi Vision 2030 was announced as a plan to turn the country into an investment hub, to promote growth of the private sector, and encourage businesses to hire Saudi nationals.
While unemployment stands at 5.8%, among 15- to 24-year-olds this is dramatically higher at 24.2%. For females in this age group it stands at 46.3%, indicative of poor female representation in the labour market. In 2018 the nation made the historic move of allowing women to drive, as part of modernisation efforts that include the liberalisation and empowerment of the female population. The nation relies heavily on expatriates, with an estimated six million foreign workers currently contributing to the economy. Through plans to employ more Saudi nationals (Saudization or ‘Nitaqat’ requires firms to hire Saudi nationals up to certain business seniority levels), it is hoped this reliance will fall.
According to Dima Dimashkieh, employee engagement consultant for Aon, Middle East and Africa, there is a lot of legal pressure on firms due to the Saudization trend. “The government’s Nitaqat programme is providing quotas to positively influence the employment of local talent, with higher fees levied on organisations employing expatriates,” she explains.
From the HR frontline
Vision 2030 is putting mounting pressure on HR to attract and develop the Saudi workforce “towards a more productive and agile organisational model”, points out Dimashkieh. “In return employees want to work for organisations that offer them a differentiated workplace experience, and provide progression and development opportunities to build new skills,” she says, adding that this means HR professionals in Saudi Arabia are focusing on “building more positive work environments, with a clearer focus on long-term career opportunities… and not just traditional HR systems”.