Saudi Arabia says job-creation policy bears fruit

RIYADH Mon Sep 17, 2012 10:11am EDT

Jobseekers stand in line to talk with a recruiter at a booth at a job fair in Riyadh, January 29, 2012. REUTERS/Fahad Shadeed

Jobseekers stand in line to talk with a recruiter at a booth at a job fair in Riyadh, January 29, 2012.

Credit: Reuters/Fahad Shadeed

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RIYADH (Reuters) - Saudi Arabia, grappling with chronic youth unemployment, has created 380,000 new jobs in 10 months by requiring private firms to employ Saudis, Labor Minister Adel al-Fakeih said, the Saudi Gazette reported on Monday.

"This figure is 20 times what had been previously achieved over the past five years before Nitaqat (the main jobs program) was introduced," the English-language daily quoted him as saying.

In January, Fakeih said the Middle East's largest economy needed to create 3 million jobs for Saudi nationals by 2015 and 6 million by 2030, partly through "Saudi-ising" work now done by foreigners.

Youth unemployment was seen as one of the main drivers of last year's unrest which shook much of the Arab world, but bypassed Saudi Arabia, where King Abdullah announced a $110 billion package of benefits to defuse any potential discontent.

Nitaqat is a quota system imposing minimum numbers of Saudi employees on companies depending on their size and sector.

It is part of wider reforms aimed at getting more Saudis into private-sector jobs in a country where nine in 10 private company employees are expatriates, while 90 percent of Saudi workers are employed by the state.

Some employers have criticized Nitaqat, saying it could raise their costs or disrupt their operations, and that qualified Saudi workers are not always readily available.

Fakir's comments suggested the government remained committed to the scheme.

Officially the kingdom's unemployment rate is 10.5 percent, but that figure does not include the large numbers of working-age Saudis not counted as part of the labor force.

According to recent government figures, the labor force participation rate, meaning people who are in jobs or who say they are looking for work, is 36.4 percent, about half the global average, economists have said.

The world's top oil exporter announced last year it was introducing an unemployment benefit of 2,000 rials ($535) a month, payable for up to a year, for applicants who showed they were looking for jobs or undergoing training. In March the government said over 1 million people were receiving it.

Fakeih was quoted on Monday as saying that people who failed to hold down successive jobs or did not pass the training would instead receive a monthly incapacity benefit.

"Youths who fail the training and employment program will be transferred to the category of unable to work, and will qualify for the 800 rial incapacity benefit," the paper quoted him as saying. In Saudi Arabia, incapacity benefit is for life.

(Reporting By Angus McDowall and Marwa Rashad; Editing by Alistair Lyon)

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