It is indisputable that Saudi faces problems when it comes to employment and Foreign workers. According to the General Authority for Statistics, Quarter 3 for 2016 the reported unemployment rate is 5.7%. But before we take that seriously, we need to first be clear on what does unemployment actually mean? it sounds trivial, but it’s not.
Unemployment is reported only for those who have been actively looking for work, in other words it only captures those, who for the past 4 weeks, have been actively seeking work.
Therefore, the unemployment rate becomes this limited view of what true unemployment is. This is not something that only Saudis do, most countries around the world report unemployment rate this way. Discouraged workers are not reported in the unemployment rate. The General Authority for Statistics reports roughly 10.6 million individuals outside the labor force 7.8 mil for Saudis and 2.7 mil for Non-Saudis. Around a third of the population is outside the labor force, this includes elderly and children. Therefore, a population breakdown will be helpful in explaining some of this contrast.
A population pyramid, is a graphical illustration that shows the distribution of various age groups in a population(typically that of a country or region of the world), which forms the shape of a pyramid when the population is growing.
Now let us look at the population pyramid for Saudi’s in Saudi Arabia (below). I repeat this is only for Saudis. We can see that pyramid looks normal and growing, equally divided between Males and Females. Most of the population is concentrated at lower three age brackets, that is (0-4), (4-5), and (20-24).
We can say that Saudi is a young population, which also means that there will be a continuous rise for employment needs to satisfy a younger demographic.
This shape is usually considered normal for most growing countries, because it translates that there is a large, young, and able to work population. That can support the elderly in the form of retirement and pension programs. Problems occur for countries when they have a shrinking young population and growing elder population. In such a case, not enough taxes is being collected to support programs to sustain the elderly. This is not the case for Saudi, but check out the pyramid for Japan (Below Pyramid).
Lets focus our attention to Saudi again, but this time on the Non-Saudi population pyramid below , it tells us something about the 12.1 million foreigners in Saudi. We see a completely different shape and dynamic of the population for Non-Saudis. Males are the largest population, and the concentration of age groups exists in ages (35-39) and (40-44). The Non-Saudi population is highly concentrated in the middle, which distorts the image of pyramid. Does this image have any implications for employment?
Well if you look closer, you will begin to realize that some of the concentration in age groups by foreigners exceeds that of Saudis. I mean look at the graph above, for the (35-39) age group for Males there is about 1.4 million foreigners, compared to 0.7 million Saudis in that age group, almost double. The table below gives a clearer picture, it has three columns. The first is age groups, second is foreign population for every 1000 Saudis (males) and the third column is foreign population for every 1000 female Saudis.
They are computed as follows:
The above computation above is to be interpreted as, for every 1000 Male Saudi’s in ages 0-4 there are approx. 259 Non-Saudis in that age group. I do this for all age groups and the table above are the numbers. Now after examining the table we see a red highlight for certain age groups. I do that because in these age groups Foreigner population exceeds Saudis. For example, for ages (40-44) there are 2041 Male foreigners for every 1000 Male Saudis in that age group, more than double.
Here is the total population pyramid for both Saudis and Non-Saudis.
What does this mean? Well it means that Saudis face high competition now and in the future in the labor market. However, not only from themselves but also from foreigners. Ironically, it also means that Foreigners are more employed than Saudis in Saudi Arabia. As of Quarter 3 2016, there are approximately 5 million Saudis employed and 7 millions Non-Saudis employed. In other words, for every 1000 Saudis employed there is 1,465 Non-Saudi’s employed in Saudi Arabia.