From greater car sales to an upturn in GDP, the decision to allow women to drive is sending all the right signals, analysts say
LONDON: One of the biggest benefits of allowing women in Saudi Arabia to drive is expected to be the positive effect it will have on the Kingdom’s economy.
That was a key finding of an Arab News/YouGov survey of the Saudi public, in which 42 percent said the main impact of lifting the driving ban is that it will enable more women to find employment, which should boost the overall economy.
A third said the most significant impact would be an increase in household income — presumably due to women being able to find new forms of employment, as well as families no longer having to pay for drivers.
The economic benefits of the move to allow women to drive — which comes into force in June — were viewed as more significant than women’s fight for greater equality. Just 28 percent of the poll respondents said the biggest impact would be ensuring women felt empowered and equal to men.
The initial economic effects of the decision will be felt by car producers, said analysts. “In the short term, the main discernible impact will probably be a temporary jump in car purchases as families buy additional vehicles, boosting consumer spending,” said Jason Tuvey, Middle East economist at Capital Economics.
Economists agree with the Arab News poll findings, which suggest that women driving could give a long-term economic boost. “The decision should make it easier for women to seek and acquire employment, which should help to boost the female labor force participation rate which, at around 20 percent, is among the lowest in the world,” said Tuvey.
As of the third quarter 2016, there were a total of 12,376,699 people employed in Saudi Arabia, including non-Saudis, according to government statistics. Women accounted for just 1,482,284 of those employed, of which 835,726 were Saudi nationals.
Hala Kudwah, Saudi Arabia financial services consulting leader at PwC, forecasts a change in consumption patterns in the Kingdom, such as diverting the salaries paid to drivers to other activities such as in retail, tourism and entertainment.
She sees women playing a greater role in the small- and medium-sized enterprises (SME) sector.
“Forty percent of startups launched in the Kingdom are owned by women and therefore there is potential for more engagement in this sector,” said Kudwah.
“The decision to lift the ban on women driving is an economic necessity triggered by the Kingdom’s transformation that is sweeping the nation economically and socially.”
The tangible economic benefits of the decision could go some way to making the new legislation more palatable among members of Saudi Arabia’s more conservative society, analysts suggest.
“The Saudi population is more accepting because it sees the strategic and economic relevance, it appreciates the incremental milestones leading to it,” Kudwah said.
However, there are plenty more “hurdles” for women in the Kingdom to overcome to gain greater equality, said Tuvey.
“In particular, the guardianship system means that a male guardian still has the authority to take a number of critical decisions on the behalf of women,” he said.