October 18, 2018 / 4:58 PM / a month ago

Saudi unemployment stays at record high as companies struggle

DUBAI, Oct 18 (Reuters) - Unemployment among Saudi Arabian citizens stayed at a record high of 12.9 percent in the second quarter of this year, as private companies remained reluctant to hire despite rising oil prices, according to official figures released on Thursday.

The data suggest Saudi economic reforms, launched more than two years ago, are still having little success in creating jobs or developing non-oil industries.

In an effort to persuade foreign capital to back the reforms, authorities plan an international investment conference in Riyadh next week, but the furore over the disappearance of Saudi dissident Jamal Khashoggi has caused dozens of Western executives and officials to cancel their participation.

The jobless rate first hit 12.9 percent, the highest level recorded by the statistics agency in data going back to 1999, in the first quarter of 2018 as private employers were hit by a new sales tax and a domestic fuel price hike.

Economic growth picked up in the second quarter to its highest level in over a year as oil prices rose and the government increased its spending.

But the number of Saudis in employment actually fell slightly in the second quarter, to 3.13 million from 3.15 million in the first quarter, Thursday’s data showed.

Meanwhile, the number of foreign workers in the kingdom dropped to 9.89 million, down by more than 290,000 from the first quarter. The foreign workforce has shrunk by about a million people since early 2017.

Foreign workers are being pushed out not only by the slow economy but by increasingly tight restrictions imposed by the government to make companies hire Saudis.

Although this could help solve the Saudi unemployment problem in the long run, at present the exodus of foreigners is hurting consumer demand so much that many companies find it hard to hire local citizens. (Reporting by Andrew Torchia Editing by Andrew Heavens)

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