Saudi unemployment rate to drop to 7.8%, Jadwa says
Unemployment among Saudis is expected to fall to 7.8 per cent by the end of December after a sharp drop in 2022, as the kingdom’s non-oil sector continues to expand, according to estimates by Jadwa Investment.
Joblessness fell to 8 per cent in the fourth quarter of 2022, from 9.9 per cent in the third, the General Authority for Statistics (Gastat) said last month.
The overall unemployment rate in the Arab world’s largest economy, for Saudis and non-Saudis, was at 4.8 per cent in the fourth quarter, down from 5.8 per cent in the previous quarter and 6.9 per cent a year ago, Gastat said. The kingdom’s overall improvement of the labour market in 2022 was “better than our expectations” and reflects growth in the Saudi economy, Jadwa said in its latest report.
“Unemployment dropped by 3 percentage points during 2022, and we believe this improving trend will continue during the coming years.
“We expect unemployment to further decline and reach 7.8 per cent by end of 2023,” the Saudi investment bank said.
Saudi Arabia’s gross domestic product exceeded $1 trillion for the first time in 2022 as its economy grew 8.7 per cent, driven by oil and non-oil sector growth.
Its non-oil economy has continued to expand this year and business activity remained robust in March on increasing output and new business, according to the Riyad Bank purchasing managers’ index.
The country’s PMI reading, which hit 58.7 in March, signalled an improvement in operating conditions, and one that was among the strongest reported since early-2015.
As part of Saudi Arabia’s Vision 2030 agenda, aimed at diversifying its economy away from oil, the kingdom plans to lower the unemployment rate to 7 per cent, from a high of 11.6 per cent, while increasing the participation of women in the workforce to 30 per cent from 22 per cent.
Last year, the number of Saudi workers in the private sector rose by 15 per cent annually to 2.2 million, Jadwa said. Labour force participation also rose during the year to 52.5 per cent from 51.5 per cent in 2021, with higher participation among both genders and the youth.
Female representation in the labour force increased to 36 per cent over the past three years from 20 per cent, according to Jadwa.
That was spurred by expanding childcare and transport services, which added to the job opportunities in developing sectors such as tourism, leading to more women joining the labour market, it said.
“We expect female participation rate to continue rising in the years ahead,” it said.
Meanwhile, the number of foreign workers in the kingdom’s labour market also rebounded in 2022 to pre-pandemic levels to reach 7.3 million, up from 6.4 million at the end of 2020, Gastat said.
The majority (55 per cent) of new non-Saudi recruitments on a net basis were in two sectors – construction and agriculture, which grew because of developments in giga-projects and the Vision 2030 initiatives.
Meanwhile, the wholesale and retail sector recorded the largest departure of foreign workers during the year, “which is likely affected by the Ministry of Human Resources localisation initiatives in recent years”, Jadwa said.
Overall, the “significant improvement” in the labour market for Saudis is associated with strong economic growth, particularly in the non-oil sector, the report said.