2023-07-15 15:53:47
The plan to reduce unemployment in Saudi Arabia collides with a reduction in oil production
While the Kingdom of Saudi Arabia continues to implement a plan to increase the rate of localization of many economic sectors, with the aim of reducing the unemployment rate among Saudis, recent official statistics indicated an increase in that percentage, amid a state of uncertainty surrounding the prospects for oil prices in the coming period.
After the Kingdom announced a second voluntary cut in oil production, and bore the brunt of the production cuts of the “OPEC +” bloc, the price fluctuation between ups and downs cast doubts on the future of the unemployment rate in the Kingdom, especially since the government aims, in its future vision 2030, to reduce The unemployment rate among its citizens will reach 7% by the end of the reform program.
According to Saudi Arabia’s commitment to voluntary reduction, the Kingdom’s oil production in August 2023 is scheduled to reach approximately 9 million barrels per day, according to official data.
Among pessimistic expectations regarding the future of oil prices, Saudi Aramco announced the official prices for the sale of shipments of Arab Light crude during the month of August (2023), to its customers in Asia, Europe and the United States, with an increase of 20 US cents to $ 3.2 a barrel above the average prices of the Sultanate of Oman. / Dubai, according to the pricing document, which was reviewed by The New Arab.
The Saudi decision to raise prices came once morest the expectations of many analysts, in light of the oil prices continuing to trade in a range between 70 and 75 dollars per barrel during the recent period.
natural decline
The economist, Suleiman Al-Assaf, indicates in statements to Al-Araby Al-Jadeed that knowing the reasons for the high unemployment rate in Saudi Arabia from 8 to 8.5% calls for a return to the period of the Corona pandemic, in which the unemployment rate reached 11.5%, indicating that the investment revolution in The past two years have resulted in a dramatic decline in unemployment, reaching 8%.
Al-Assaf explains that the significant decrease in the unemployment rate is linked to opening the door to heavy employment following the pandemic and ending the hasty closures of many economic establishments.
However, following the end of the pandemic, the return of the economy, and the reconsideration of the restructuring of some private sectors, it was normal for the unemployment rate to rise slightly, according to Al-Assaf, indicating that this slight rise is normal, and is likely to return to decline soon.
The return of employment rates to their normal levels, the revision of some sectors to the employment of some establishments, and the re-closure and reopening of some other sectors, are all factors that led to the return of the unemployment index to some rise, but it is a temporary rise that is not likely to continue, according to Al-Assaf.
oil effect
As for the economic expert, Amer Al-Shobaki, he believes in statements to Al-Araby Al-Jadeed that the unemployment rate in Saudi Arabia, even following its rise, remains low compared to the period of the Corona pandemic, on the one hand, and the rate of last year, indicating the association of the relative increase in unemployment in the Kingdom in the second quarter of This year, the effect of reducing production in some sectors on economic activity.
Al-Shobaki draws attention to the impact of the voluntary reduction of oil production in Saudi Arabia by approximately two million barrels, bringing the Kingdom’s production to only 9 million barrels of oil, which had an impact on revenues, and therefore on employment opportunities, especially since Saudi Arabia still relies heavily on oil production in its domestic product. Total.
This effect is reinforced by the fact that half of the production cuts by the Organization of the Petroleum Exporting Countries and its allies (OPEC +) are borne by Saudi Arabia alone, according to Al-Shobaki.
In this context, the unemployment rate in Saudi Arabia increased from 8% in the first quarter of this year to 8.5% in the second quarter, and expectations indicate a decrease in the economic growth rate in the Kingdom from 8% last year to only 3% this year, according to Al-Shobaki, pointing out that Optimistic estimates, including that of the World Bank, indicate a growth rate that does not exceed 5%.
This means that the Saudi economy as a whole is heading towards a relative decline in growth and GDP, and addressing this requires accelerating the shift towards a non-oil economy, according to Saudi Vision 2030, according to Al-Shobaki.
High unemployment
The Saudi General Authority for Statistics had announced, at the end of last June, that the increase in the unemployment rate in the Kingdom to 8.5% in the first quarter of 2023 compared to 8% in the last quarter of 2022, came in parallel with the increase in the total unemployment rate in the Kingdom, which includes Saudis. And non-Saudis, to 5.1% in the first quarter of this year, compared to 4.8% in the last quarter of 2022.
According to the authority, the unemployment rate among males increased by 4.6%, while the rates among females increased by 16.1%. According to the data, the rate of participation of Saudis in the labor force decreased by 0.1%, reaching 52.45%.
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