Structure of the labour market in Saudi Arabia

Before the discovery of oil, the country was dominated by a nomadic and semi-nomadic way of life, known as the Bedouin lifestyle. The wandering and semi-nomadic population was estimated at 50% of the total population. This population began to decline, reaching about 46.2% in 1966 and gradually reaching 7% in 1992.

Considerable efforts were made, from 1910 to 1968, to establish nomads and transform them into agricultural societies. Some public departments were also created in 1915. The manufacturers did not exist until 1927. The craft industry, craft companies, fishing, and scuba diving were sources of employment in the most significant cities from the country. The workers involved in these types of work were few due to the country’s low income and the limited resources of the time.

In recent times, Saudi Arabia is undergoing a significant economic transformation, generating prosperity, and the resulting increased demand for labor. The country has met this demand by welcoming an influx of expatriate workers, whose labor force participation increased from 6.1 million a year earlier to 6.3 million in 2015, exceeding the number of Saudis. In the labor force, the overall participation rate of the country is 53.6%, compared with an average of 53.8% in the G20 countries.  But it is interesting to note that there is no correlation between production and rate of participation.

Saudi GDP increased to a 5.3% average between 2010 and 2015. This means that employers are continually adding jobs and looking for candidates for filling them, both among Saudis and expatriates. However, new opportunities on a qualified Saudian’s on the other side are not enough to ensure all skilled workers find jobs. The mismatch between supply and demand – connecting the Saudis opportunities that most effectively match their skills – is another barrier to sustainable economic growth.