ECONOMIC TRENDS

WOMEN REDEFINING SAUDI’S LABOUR MARKET

Saudi Arabia’s labour market is seeing strong growth, with women leading the drive

The General Authority for Statistics’ (GASTAT) latest labour force survey shows unemployment rate among Saudis was 10.1% in the first quarter of 2022, down 0.9 percentage points (pp) from the fourth quarter of 2021. When compared with the first quarter of last year, this figure is 1.6 pp lower.

Among Saudis, there were declines in both the participation rate (down 1.4 pp to 50.1%), and the employment-to-population ratio (down 0.7 pp to 45.1%).

“Compared to a year ago in Q1/2021, all three primary labour market indicators have improved, with the participation rate up 0.6 pp, the employment-to-population ratio up 1.3 pp, and the unemployment rate lower by 1.6 pp. The overall unemployment rate in KSA dropped to 6.0%, down 0.9 pp from Q4/2021 and down 0.5 pp from a year ago,” GASTAT said in its latest report.

  

The quarter also saw the largest expansion in labour market participation by Saudi females over the past three years.

“Recent years have seen strong growth in the labour force participation of Saudi females,” GASTAT noted.  

In the first quarter of 2019, participation rate of Saudi women stood at 20.5%, but has since risen sharply by 13.1 pp to 33.6% by the first quarter of 2022.

Over the past three years, growth in employment of Saudi females has kept pace with the expansion of labour market participation. In the first quarter of 2019, the employment-to-population ratio of Saudi females stood at 14%, but a short three years later, the employmentto-population ratio had risen by 12.8 pp to 26.8% by the first quarter of 2022. Over the past year, the percentage of Saudi women with jobs has continued to trend upwards up 1.4 pp to 26.8%.

“The unprecedented rate of entry of Saudi women into the labour force— accompanied by strong growth in employment, has led to a decrease in the unemployment rate of Saudi women from 31.7% three years ago, to 21.2% a year ago, to 20.2% in Q1/2022,” GASTAT noted.

During the past three years, the participation rate for Saudi males also rose 2.7 pp from the first quarter of 2019 to 66% by the end of the first quarter of 2022.

 

YOUTH UNEMPLOYEMNT FALLS

In another positive development, unemployment rate has fallen among Saudi youth. Unemployment rate stood at 15%, down 0.9 pp compared to the last quarter.

“The drop in the unemployment rate coincided with decreases in both the participation rate (down 1.0 pp), and the employment-to-population ratio (down 0.7 pp).”

The survey also highlighted Saudi citizens’ willingness to work in the private sector. As many as 93.1% of unemployed Saudis indicated a willingness to work in the private sector.

SAUDI ECONOMY

Saudi business sentiment improved to its highest level in 17 months. The latest S&P Global Market Intelligence purchasing managers’ index (PMI) saw the new orders rise at their fastest rate since last October.

"Saudi Arabia's non-oil economy continued to go from strength to strength in June, with the PMI picking up to an eight-month high of 57.0 and posting well above the 50.0 no-change mark,” according to David Owen, economist at S&P. “The upturn was underlined by a robust increase in new business levels, which encouraged firms to expand their output sharply and make greater input purchases.”

However, much like the rest of the world, input price pressures in the Saudi Arabian non-oil economy picked up for the second consecutive month, with businesses registering the fastest rise in costs since August 2020 and one of the most marked in the last eight years, S&P noted.

“Several firms highlighted a further rise in raw material and fuel prices due to constraints in global supply, while wage costs increased slightly. Firms largely passed these cost rises onto their customers, as output charges continued to rise at a solid pace.”

Indeed, average prices of a number of food, meat, and dairy products rose in May, according to latest data from GASTAT. The Consumer Price Index (CPI) increased by 2.2% as against May 2021, slightly below April’s inflation rate of 2.3%.The main driver of CPI inflation in May were the higher prices of food and beverages (+4.2%), and transport (+4.0%).

“Food and beverage prices increased by 4.2%, mainly due to food prices and in particular meat prices.” GASTAT noted. “Food and beverages prices were the main driver of the inflation rate in May 2022 due to their high relative importance in the Saudi consumer basket (with a weight of 18.8%).”