The Status of Saudi Arabia’s Labor Market Compared to G20 Countries

The labor market in the Kingdom of Saudi Arabia holds a prominent position when compared to the economies of other G20 countries. This is evident through various significant economic indicators that have been extensively researched and studied, reflecting the tangible economic progress achieved by the Kingdom over the past years.

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Saudi Arabia has recorded growth in the annual labor force rate, encompassing both local and expatriate workers. The economic participation of the labor force has also increased, contributing to the continuous growth of the Saudi economy in recent years. This increase is driven by multiple factors, notably the significant rise in the number of young people entering the labor market, as indicated by the high percentage of youth in the Kingdom’s population. The Saudi economy’s ability to accommodate them and provide suitable job opportunities adds a crucial economic advantage, emphasizing the importance of specialized education and training to align with the labor market’s requirements. Official statistics indicate that the number of youth under 30 years old in the Kingdom has reached approximately 18 million, contrary to the trends in other G20 countries where youth employment opportunities are declining due to factors such as the aging population and slower population growth, especially in Europe.

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Saudi Arabia ranks ninth among G20 countries in labor force participation rates, according to the latest comparative statistics for 2021. This growth results from the strategies implemented by the Ministry of Human Resources and Social Development, various related institutions, and the ambitious goals of Vision 2030 and its major developmental projects.

The labor market in the Kingdom has shown significant growth in female employment, reaching 5.5% between 2016 and 2021. This is exceptional, especially compared to Australia, which ranks second with a 2.1% growth rate, less than half of Saudi Arabia’s rate.

However, there are areas that require improvement, particularly concerning the gender gap in employment. Issues related to female employment stem from various factors, including challenges in finding suitable working environments, transportation issues, and family care requirements. Despite the progress, the gender gap in employment persists, with relatively high unemployment rates among women.

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Saudi Arabia leads the G20 in labor force growth rates from 2012 to 2021. Nonetheless, there is a notable concern regarding the rate of individuals not engaged in education, employment, or training (NEET), which remains high.

Additionally, Saudi Arabia ranks second among G20 countries for male labor force participation rates. However, more efforts are needed to enhance youth participation (ages 15-24) in education, training, and employment. In this age group, Saudi Arabia ranks sixth in terms of youth unemployment but fares better than countries like South Africa.

The COVID-19 pandemic negatively impacted all G20 economies, but Saudi Arabia managed to mitigate these effects through effective policies and measures, performing better than countries such as Australia and Canada.

The overall unemployment rate in Saudi Arabia was 6.6% in 2021, lower than several other G20 countries like Italy, Argentina, and France. For those over 25, the unemployment rate was approximately 5.5%, positioning Saudi Arabia ahead of nations like Canada, Italy, and South Africa.

To combat youth unemployment, several recommendations include adopting efficient educational systems to reduce dropout rates, diversifying policies to enhance youth education and training, and ensuring job security and employment continuity. The transition from education to employment should be prioritized, with increased involvement from the private sector and incentives to improve the educational system. This includes integrating practical experience into the curriculum through vocational training courses, which can facilitate a smooth transition into the labor market.

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