Some Saudis fear being left behind despite soaring oil prices

Every evening in Hail, a Saudi town at the foot of a jagged mountain range, Mona heads to her roadside tea stall, turns on the lights and waits for customers to show up. She keeps a printed resume handy, hoping one might offer her a better job.

“It’s worse now,” the former clerk said, despite widespread reforms and a spike in oil prices that will make Saudi Arabia the fastest growing economy in the world this year.

Jobs in Hail, at least the ones Mona would consider, are few and far between. The government’s efforts to increase Saudi employment, and women’s employment in particular, were laudable but failed, she said. “They supported women. But all of those jobs were quickly filled,” said Mona, who did not want her real name published.

Under the daily leadership of Crown Prince Mohammed bin Salman, the kingdom is going through a period of rapid reform. Riyadh wants to restructure the country’s economy by 2030 to reduce its dependence on oil, develop the private sector and reduce the subsidies people have traditionally relied on. The stakes are high for the prince, who counts young Saudis – who want jobs and homes – as a base of support. The risk is that poorer and less educated people, especially those living outside major cities, will fall behind as they compete for well-paying jobs, many of which are in the capital.

As a result of the reforms, Saudis who relied on cradle-to-grave government support in the form of public sector jobs and subsidies would increasingly have to compete for private sector jobs. The reforms “rebalance the social contract. It’s a necessary initiative, but one that causes problems along the way,” said Sanam Vakil, Chatham House’s deputy director for the Middle East and North Africa.

Economic reforms were accompanied by social reforms, including allowing women to drive and ending the role of religious police. These have earned Prince Mohammed praise from many young Saudis. But it has also been criticized for its crackdown on critics, including journalists and bloggers, who recently saw a doctoral student and mother of two jailed for decades for her tweets.

The reforms affected a large part of the population. The government, which introduced VAT in 2018 and tripled it to 15% during the coronavirus pandemic, has also cut electricity and fuel subsidies, raising the cost of living. Unemployment fell to 10.1 percent this year, the lowest since 2008. Youth unemployment was 15 percent in the first quarter of this year. More than 400,000 citizens entered the labor market last year as the government pushes for more citizens to join the private sector. Women’s participation in the labor market has reached a record high of 35%.

“The issue of economic development and creating jobs and stimulating investment across the country is the signature issue for the Crown Prince, and so that means all citizens must be in one way or another. another one. . . impacted by transformation,” said Karen Young, a senior fellow at Columbia University’s Center for Global Energy Policy.

The IMF welcomed the reforms and advised further tax adjustments while saying the kingdom should increase targeted social spending. Saudi Arabia’s GDP rebounded from the pandemic to 3.2% in 2021. Thanks to the oil boom, it is expected to reach 7.6% this year. While previous oil windfalls have been followed by increased government spending, Saudi Arabia this time plans to use the windfall to shore up its reserves and invest in its sovereign wealth fund, which oversees tens of billions of dollars of projects in the kingdom. . Inflation this year has been among the lowest of the G20 countries, with the consumer price index hitting around 3% last month.

Saudis with sought-after qualifications and experience are in high demand, but many other jobs cluster around the minimum wage of 4,000 riyals ($1,000) a month, according to a working paper released by Harvard’s Center for International Development. . Although well above the wages paid to migrants in the same jobs, some Saudis complain that it is not enough, and some have taken two jobs.

The mixed effects of the reforms can be seen in Hail, where new buildings have sprung up around the city as more Saudis have bought homes with government-backed mortgages as part of a campaign to housing which has driven homeownership rates from 47% in 2016 to over 60% this year.

“There are lots of opportunities, you just have to want to work,” said Ahmed, who drives an Uber and is saving up to start his own restaurant franchise.

But at a social gathering in Hail over coffee and dates, Omar, a socially conservative Saudi, could not hide his contempt for the changes.

It was not just the sight of men and women dancing together at concerts in Riyadh – something unimaginable a few years ago – that upset him, but the harsher living conditions, he said. -he declares. “You have three-quarters of the world’s oil, you have tourism. Where is the money going? said Omar, who did not want his real name published. “I hire a Saudi and pay him the minimum of 3,000 riyals. What is it going to do with that? How can he live off it? The strong eat the weak,” he said.

Government officials say they are aware that some people and regions could be left behind. They plan to fill the gaps with regional development projects, vocational training and support for families to start businesses. It will also expand its Saudiization program, which mandates the hiring of Saudis in a growing number of sectors. In June, the royal court paid around $2.8 billion in direct payments to people registered with Social Security and the Citizen Account, a basic income program.

Hundreds of billions of riyals have been invested or committed by government and the private sector in the regions, an official said. This includes 60 billion riyals for the northern region, where Hail is located.

In the meantime, many Hail travel to the capital for work. Some have returned, dissatisfied with the opportunities available to them. A young man, illegally selling cigarettes from the trunk of a car in Hail, said he had returned from Riyadh after finding only restaurant jobs there. “I was unlucky,” he said.

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