April 25, 2018 / 11:06 AM / 8 months ago

Saudi Arabia needs 1.2 million jobs by 2022 to hit unemployment target: official

RIYADH (Reuters) - Saudi Arabia aims to create 1.2 million jobs by 2022 by focusing on the retail sector in order to reduce unemployment to 9 percent, a senior labor ministry official told Reuters.

Getting hundreds of thousands of unemployed Saudis into the workforce is a major challenge for Crown Prince Mohammed bin Salman, who oversees economic policy for the world’s top oil exporter, where unemployment currently stands at 12.8 percent.

The kingdom has struggled for years to create jobs for Saudi nationals, as private sector companies relied on cheap foreign labor and the state education system prepared students poorly for the market. Many Saudis also prefer higher-paying public sector jobs.

“In total we need 1.2 million jobs but I believe now that has come down a because we started in 2017, so we have already made some headway,” Ahmed Kattan, deputy minister of labor for labor policies, said in an interview on Tuesday.

“We are focusing on the retail sector, because retail is labor-intensive, a sector that requires medium skills which is aligned with the unemployment supply, so it means we are not pushing the private sector where they cannot find demand.”

Some 10 million foreigners are working in Saudi Arabia, doing many of the strenuous, dangerous and lower-paid jobs largely shunned by the 20 million nationals.

Kattan said 47 percent of unemployed Saudis have only been educated to high school level or less, making them suitable for retail jobs.

The labor ministry plans to restrict employment in 12 retail sub-sectors to Saudi nationals, including in furniture, car spare parts, watches, eyeglasses and sweets shops, with implementation starting in September, he said.

Cutting the jobless rate to 7 percent by 2030 and raising women’s participation in the workforce to 30 percent from 22 percent are among a raft of ambitious targets in a program to diversify Saudi Arabia’s economy and reduce its dependence on oil exports.

With two-thirds of Saudi workers employed by the public sector, the government is targeting job creation in the private sector as it streamlines spending following a sharp fall in global oil prices.

Kattan said the authorities were trying to make hiring Saudis more attractive by reducing the wage gap between them and foreigners and limiting employers’ control over foreign workers’ residency permits, which often locks them into long-term contracts.

“These (reforms) together will help the business sector to change their business model from labor-intensive to capital and automation-intensive,” he said.

Editing by Ghaida Ghantous and Gareth Jones

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