Saudi Arabia Labor Market Report. G20 Labor and Employment Ministerial Meeting

Transcription

1 Saudi Arabia Labor Market Report G20 Labor and Employment Ministerial Meeting Ankara, September 2015

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3 In the Name of Allah The Most Gracious The Most Merciful

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5 Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud His Royal Highness Prince Muhammad bin Naif bin Abdulaziz Al Saud Crown Prince, First Deputy Prime Minister and Minister of the Interior His Royal Highness Prince Mohammad bin Salman Al Saud Deputy Crown Prince, Second Deputy Prime Minister and Minister of Defense

6 Contents 5 THE MINISTER S MESSAGE 7 EXECUTIVE SUMMARY 11 WELCOME TO SAUDI ARABIA 15 THE LABOR MARKET WHERE WE STAND 19 LABOR MARKET CHALLENGES 27 TRANSFORMING THE LABOR MARKET 33 IMPACT AND CASE STUDIES Inclusiveness Investment Implementation 47 FUTURE AND OUTLOOK 4 Saudi Arabia Labor Market Report for G20

7 The Minister s Message I t is with great pleasure that I introduce this year s report on Saudi Arabia s labor market to the G20 Group. Employment is one of the highest priorities for governments throughout developing, emerging, and developed countries. It provides the foundation for economic growth and is a key lever in building a successful nation. Despite increased global optimism about employment over the past year, underlying issues that have been present since the financial crisis remain for many countries. As a proud member of the G20, it is a great privilege for us to continually learn from fellow G2O countries, and share with them the practices and policies that we have found effective for addressing these labor issues. This report first reflects on the challenges that Saudi Arabia has faced. In many ways, our challenges are often unique. Our high reliance on foreign labor is an example of this. At the same time, there are many areas where we have issues and goals in common with countries across the globe; for example, high youth unemployment. With these challenges at the forefront of our concerns, we have developed and implemented a labor market strategy. This report presents the overall labor market strategy and delves into some of the highlights. The implementation of our strategy relies heavily on the use of modern technology paired with the agility of the private sector in executing the initiatives. The National Labor Gateway, our new online job marketplace, is just one example of the strides that we have taken forward in the regard. Leveraging technology to its maximum capabilities in order to leapfrog the development of other countries, is essential for countries that do not have a rich history in this respect. I strongly believe that the ability to generate innovative policies lies in cross-country collaboration. We welcome and value input from other G20 member countries and international organizations on how we can better proceed and address the prevailing challenges that many of our nations face today. I am confident we can benefit each other as we work together. I encourage you to share your comments and suggestions in response to this report, and look forward to hearing them in our meetings at the G20 group sessions. Dr. Muffarij Al-Haqbani, Minister of Labor, Kingdom of Saudi Arabia Ministry of Labor, Kingdom of Saudi Arabia 5

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9 Executive Summary O ver the past few decades, Saudi Arabia s impressive rate of economic development has given the country standing as a key G20 member state. The country, and more specifically, its labor market, is currently undergoing a large-scale transformation that will enhance its economic growth even more over the coming years. Year-on-year, there have been improvements in the labor market within the country. In 2014, the unemployment rate was 5.7 percent and the labor force participation rate was 54 percent. While these rates are comparable with other G20 nations, there is still more potential remaining in the economy to grow and improve these figures. While Saudi Arabia has benefitted substantially throughout this transformation, it has also encountered many obstacles on the path to shaping a healthy labor market with competitive and fulfilling jobs to support the Kingdom s future success. The Ministry of Labor in Saudi Arabia has prioritized five of the main challenges: There is a lack of competitive and fulfilling private sector jobs attractive to Saudi nationals There is an overreliance on expatriates in the private sector Youth unemployment is higher than the Saudi national average for unemployment as a whole The demand for labor is not efficiently being matched with the supply of labor Women s labor force participation continues to be lower than men s In response to these concerns, the Ministry of Labor, along with its sister entities, has built a defining strategy that will aid in advancing the labor market. Through significant investment and rigorous analysis, and from lessons learned from other countries, over 140 labor programs have been put in place. Each program has been designed as an important piece of the five main pillars, which together make the Labor Market Strategy: Creating competitive and fulfilling jobs in the private sector Developing the skills of the Saudi workforce Taking care of people through social protection Increasing the proportion of Saudis who work in the private sector Providing the fundamental mechanisms for a healthy labor market The successful implementation of this strategy cannot be done alone. To succeed, we continue to rely heavily on the use of technology to create online programs and to keep the population up to date with labor-market information. In addition, the implemented policies require active buy-in from the private sector, as this will be the sector that creates the jobs and absorbs an increasing number of Saudis into the labor force moving forward. Finally, and most importantly, this strategy relies on Saudi individuals themselves. They must take advantage of the programs on offer and spend the time investing in themselves in order to move the country forward. There are many initiatives that hold promise for Saudi Arabia and its labor market: The creation of six Economic Cities is diversifying the economy away from its reliance on oil and will create millions of new competitive and fulfilling jobs for Saudis The Career Education and Development program has already benefitted over 50,000 young people who have taken part in programs to prepare themselves for entry into the job market Ministry of Labor, Kingdom of Saudi Arabia 7

10 The National Labor Gateway will serve as an efficient online matching mechanism, helping job seekers find the right job Ma an, the online platform to engage the public on policymaking, has had over 228,000 unique visitors in the space of one year It must be noted that many of the programs are still in their early stages and their impact is expected to increase significantly in the future. The government is confident of a very positive outcome from its labor market strategy, but is aware that there remains much to be learned from the experience and knowledge of other countries, international organizations, and labor market experts. This report is an open invitation to you to give your feedback on our current and future plans and objectives. 8 Saudi Arabia Labor Market Report for G20

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13 Welcome to Saudi Arabia Introduction T The Kingdom of Saudi Arabia is the largest Middle Eastern Arab country, occupying 870,000 square miles, or 70 percent of the Arabian Peninsula. The modern state, established in 1932 by King Abdulaziz Al-Saud, has a rich history and vast resources. King Salman, the seventh King of Saudi Arabia, and the current Custodian of the Two Holy Mosques, ascended to the throne in January 2015 following the passing of his brother, the influential King Abdulla. This succession has led to several changes, including the naming of a new Crown Prince and Deputy Crown Prince. At the same time, two new entities were created to lie at the core of the new government: the Council of Economic and Development Affairs (CEDA) and the Council of Political and Security Affairs (CPSA), which were created in order to streamline efforts to develop and implement strategies that are essential for the Kingdom to prosper in the coming decades. Saudi Arabia is a multi-faceted country. In addition to being the cradle of Islam, it is the world s largest oil producer. The country has grasped the golden opportunity to embark on a journey of transformation with both social and economic dimensions. The labor market and its role in employing our young people and others is vitally important to the fulfillment of the country s goals. It has a huge part in shaping Saudi Arabia s future. Demographics and economics of Saudi Arabia Today Saudi Arabia has a population of 31 million people, compared with 7 million in 1975 and 20 million in 2000, as shown by Exhibit 1. It is not only a rapidly growing nation, but a young one, with 46 percent of the population below the age of 25. Saudi Arabia s population has increased at an average annual rate of 3 percent since This has largely been due to the growth in the expatriate population, which has outpaced the growth of Saudi Exhibit 1: Population growth in Saudi Arabia ( ) Number of people 40,000,000 30,000,000 20,000,000 10,000,000 Saudi nationals the number of expatriates has grown 4 percent per year since 2000 compared with a 2 percent annual increase in Saudi nationals. Expatriates have consequently become a strong pillar of Saudi Arabia s economy and account for a significant portion of the 11.3 million-strong labor force. They have helped to build the nation s economy over decades, and helped alleviate issues of workforce and skill shortages. Their growing number reflects the strong growth and attractiveness of the Saudi Arabian economy. +4% Non-Saudi Source: Saudi Arabia Monetary Agency (SAMA) Annual Statistics Year CAGR (00 14) 3% 6.5% Ministry of Labor, Kingdom of Saudi Arabia 11

14 Saudi Arabia is the world s nineteenth largest economy in terms of GDP and its represents 1.2 percent of the world s GDP. Its GDP per capita (based on purchasing power parity) in 2014 was approximately $52,200. In 2014, the economy grew by 3.6 percent in real terms, 1.1 percent higher than the preceding year. Additionally, welfare within the Kingdom has been improving. This is reflected in the United Nations Human Development Index where it rose from fiftyseventh to thirty-fourth position in 2014, increasing its rating from high to very high. Exhibit 2: GDP per capita (PPP) in Saudi Arabia GDP per capita $, (PPP) 55,000 50,000 45,000 40,000 35,000 +5% 30, Saudi Arabia recognizes the importance of diversifying the economy away from its historic reliance on oil. This sector remains the largest and by far the most productive sector generating 43 percent of real GDP. But other parts of the economy have kept pace in recent years, and their significance is increasing, as shown in Exhibit 2. Year Exhibit 3 shows that the non-oil Saudi Arabia private sector is increasingly Source: World Bank contributing to GDP and accounted for 41 percent of nominal GDP in This growth in private business has significantly contributed to the growth in the number of expatriates in demand, often because they supply skills which are not available locally. Conversely, Saudis dominate the large public sector, accounting for over 87 percent of the employed, while 83 percent of workers in the private sector are foreign. Two-thirds of employed Saudi nationals work in the public sector. Exhibit 3: GDP split for oil, private, and public sectors in Saudi Arabia ( ) GDP growth by sector, US $, current prices CAGR (00 14) % 16% 17% 9% % 15% % 38% 41% % 41% 37% % 41% 37% % 38% 41% % 38% 43% % 34% 50% % 33% 51% % 34% 50% % 32% 55% % 41% 41% % 38% 45% % 51% % 50% % 47% % 43% % 11% Oil Sector Private sector Gov t sector Source: CDSI 12 Saudi Arabia Labor Market Report for G20

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17 The Labor Market Where We Stand T his chapter explains the present state of affairs in the Saudi labor market and examines the main challenges it faces. A major economic transformation has been occurring in Saudi Arabia, bringing with it prosperity and the increased demand for labor that prosperity brings. Recently, Saudi Arabia has satisfied this demand by welcoming an influx of expatriates, who currently make up 33 percent of its 31 million residents. Despite the contribution of this expatriate workforce, Saudi Arabia s overall labor force participation rate in 2014 was among the lowest for the G20 nations, at only 54 percent compared with an average of 60 percent. The most prominent reason for this is that of the 10.3 million Saudi women, only 1.8 million are part of the labor force, a mere 18 percent, compared with 78 percent for males high by international standards. Exhibit 4 shows a basic overview of the Saudi Arabian labor market. The overall unemployment rate currently stands at 5.7 percent, but this figure rises to 12 percent when considering only Saudi nationals, indicating that the low overall unemployment figure in the country is driven by non-saudi labor. This is relatively high by international standards, and so has been addressed by the government with programs such as Nitaqat that aims to increase the number of Saudi nationals working in the private sector. How have other countries determined what drives their participation rate? Exhibit 4: The Saudi labor market at a glance Total Population : 30.7 million 31% Expatriates (9.6 million) 29% Not in working age (8.4 million) 54% In the labor force (7.3 million) 94% of Saudi male labor force employed (4.0 million) 66% of Saudi female labor force employed (0.8 million) 5.7% Unemployed (0.7 million) Source: CDSI Ministry of Labor, Kingdom of Saudi Arabia 15

18 Saudi Arabia has been successful in engaging the public and increasing the workforce participation rate within the country, which currently stands at 54 percent. But despite a large number of jobs being created, young people have not been absorbed into the private sector in adequate numbers, and therefore the number of unemployed people has risen slightly. Taking this into consideration, creating attractive and rewarding jobs is a priority for the government. Where and how have governments successfully tailored their policies to specific regions? As in many other G20 nations, the young and women have higher than average unemployment rates. Both groups are a priority for the government, which recognizes that inspiring and training youth, and increasing female participation, are essential to sustainable economic success for a young and rapidly growing nation. Each of the 13 regions of Saudi Arabia is different from the others, and are therefore at different stages of maturity in the job market. As Exhibit 5 shows, the employment rate varies from 4 percent to 20 percent across the country. Al-Jouf, in the north of the country, is the region with the lowest overall unemployment rate, whereas the highest regional unemployment rate is in the Northern Frontier. Exhibit 5: Unemployment rate for Saudis by region (2014) Hafizians in the region (% of working age population) 2 Tabuk 1 Al-Jouf Hail Northern Frontier 1 2 Average: 4% Male: 3% Female: 9% Average: 10% Male: 5% Female: 29% 7 8 Average: 9% Male: 6% Female: 27% Average: 15% Male: 10% Female: 34% Ai Madinah 3 4 Makkah 11 Al-Qassim Al-Riyadh 10 Eastern Region Average: 15% Male: 6% Female: 45% Average: 10% Male: 5% Female: 27% Average: 11% Male: 3% Female: 34% Average: 9% Male: 5% Female: 26% Average: 16% Male: 8% Female: 39% Average: 12% Male: 7% Female: 32% Al-Baha 5 Asir 6 Jizan 7 Najran 8 6 Average: 9% Male: 5% Female: 27% Average: 13% Male: 5% Female: 45% Average: 20% Male: 9% Female: 45% Region with higher than country-level unemployment rate Region with lower than country-level unemployment rate Both genders above average composition Female above average composition Both gender below average composition Source: CDSI As Exhibit 6 shows, government sectors education, public administration, and defense are important employers for Saudis. Since the public sector will not be able to grow indefinitely, most of the jobs needed for the expanding Saudi population will have to be created in the country s private sector, where there are comparatively few Saudi workers. Of the few Saudis in the private sector, the majority are employed in trade, construction, agriculture, and manufacturing. 16 Saudi Arabia Labor Market Report for G20

19 Exhibit 6: Private sector Saudi employment by economic activity (2014) (k) % 14% 11% 11% 130 8% 106 6% 100 6% 76 5% 66 4% 64 4% 59 4% 51 3% 36 2% 35 2% 34 2% 9 1% Wholesale and retail trade Agriculture, forestry and fishing Manufacturing Transportation and storage Construction Financial and insurance activities Mining and quarrying Administrative and support service activities Real estate activities Information and communication Electricity, gas, steam, and air conditioning supply Other service activities Professional, scientific, And technical activities Accommodation and food service activities Professional, scientific, & technical activities Arts, entertainment, and recreation Source: CDSI Ministry of Labor, Kingdom of Saudi Arabia 17

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21 Labor Market Challenges A gainst a backdrop of rapid economic growth, cultural tradition, and an extremely young population, very specific challenges for the Saudi Arabian labor market have emerged. The country is now at the stage where those born during the population boom of the 1980s and 1990s are entering the workforce in exceptionally large numbers and will continue to do so over the coming years. In this section, we select some of the key figures highlighted above, and describe the five main challenges that have been identified and investigated by the government of Saudi Arabia, namely the lack of competitive and fulfilling private sector jobs, the reliance on foreign labor, youth unemployment, inefficient job matching, and female unemployment. These form the basis of the Labor Market Strategy, which will be examined in the next chapter. Overcoming these challenges represents a huge opportunity for Saudi Arabia to unlock its potential and create sustainable economic growth in the mid to long run. For this reason, the government has highlighted the labor market as a key area of development in building a prosperous nation. How have other countries absorbed large numbers entering the labor market? The private sector lacks the competitive and fulfilling jobs to offer attractive opportunities to Saudis The private sector has grown immensely over recent decades, but it is the public sector that has absorbed the large number of Saudis entering the workforce. This has resulted in a significant divide in levels of Saudi employment, with two-thirds of employed Saudis working in the public sector (as shown in Exhibit 7). Saudi nationals find public sector work to be their most attractive option as it is perceived to be more prestigious than working for private employers. Small and mediumsized enterprises (SMEs), in particular, are not as attractive due to a perceived lack of professionalism in their working conditions and working practices. Especially at the early stages of a Exhibit 7: Segmented labor market in KSA (2014) Millions employed Public 3.4 million 67% 1.7 million 33% person s career, the public sector offers better pay, hours, and working conditions than most jobs in the private sector. Saudi Private 0.5 million 5% 8.6 million 95% Expats Source: CDSI Manpower Survey million 27% 10.3 million 73% Total Ministry of Labor, Kingdom of Saudi Arabia 19

22 Exhibit 8: Public vs. private sector wage gap ( ) Average wage (SAR/month) 8,000 6,000 4,000 2, % 2.5% CAGR (%) ( , %) As shown in Exhibit 8, average wages in the public sector tend to be higher than in the private sector, and this gap has widened over time. Exhibit 9 shows that many public sector jobs require 40 hours of work or fewer, while private sector jobs often demand six days and over 50 working hours per week. Only the most qualified applicants, Public sector wages (total) Private sector wages (Saudis) usually college graduates, are likely Source: World Bank to find better entry-level pay and conditions in the private sector. The private sector also does not offer the same level of job security as the public sector, and many private companies do not provide sufficient opportunities for personal development through training and mentoring. +5.8% 4.1% Exhibit 9: Majority of Saudis work in public sector Weekly working hours 70 Private sector 60 Wholesale and retail trade Manufacturing Administrative and support service activities 50 Construction Human health and social work activities Mining and quarrying Public sector 40 Other service activities Information and communication Arts, entertainment, and recreation Share of Saudis (in %) Private Public Domestic Relative sector size Source: CDSI The low participation of Saudis in the private sector is not only driven by job-seeker preferences. Employers also do not actively seek out Saudi nationals when filling positions, and often claim that the lack of proper preparation and skills makes it more convenient to find alternative sources of employees abroad. Fueling growth in this way, instead of investing in training and mentoring of Saudis, inhibits the creation of mid- to high-skill-level jobs for which these nationals would be suited. What can Saudi Arabia learn from the productivity trajectory of other countries? The importance of family and community role models is also a factor in the public-private career choice. Family traditions of working in the public sector, the higher social prestige of government jobs, and a decided preference for white-collar employment all reinforce the preference. As a result, younger workers often prefer to stay jobless and wait for a public sector vacancy. It is clear that formulating programs that create attractive private sector jobs is of key importance. This can be done by improving job security and working conditions, and changing the reputation of the sector. Furthermore, initiatives that create competitive and fulfilling jobs 20 Saudi Arabia Labor Market Report for G20

23 will result in higher wages, further heightening the attractiveness of the private economy for Saudis. Saudi/expatriate employment divide In recent years, the private sector has relied heavily on the foreign workers, or expatriates, who currently make up 83 percent of the private sector workforce. Although the number of Saudis in the private sector has been increasing, a large gap between Saudis and expatriates remains. Expatriates come to Saudi Arabia to benefit from its economic growth and strong job prospects. Their skills and experience have enabled rapid economic development. The 5.7 percent unemployment figure in Saudi Arabia, as mentioned previously, is promising on the surface, but a closer look at the underlying figures indicates a clear divide. It is actually primarily Saudis who are unemployed. For Saudis alone, the unemployment rate is 12 percent (see Exhibit 10). How can Saudi Arabia accelerate the growth of its private sector employment of nationals? Exhibit 10: Benchmark of unemployment rates, G20 countries (2014) (%) National (Saudis only) 15 Overall KSA (Saudis & non-saudis) G20 average Source: ILO Within the workforce, Saudis and expatriates differ on two key Exhibit 11: Saudi - expats skills divide (2014) dimensions: skills and salaries. As % of employed people can be seen in Exhibit 11, Saudis 100 outnumber expatriates only in 80 medium-skill jobs. For low-skill 60 jobs, expatriates command lower salaries than Saudis, and in general, few Saudis are willing to work in 43 these positions. For high-skill jobs there is often a shortage of suitably 0 15 Low skilled jobs Medium skilled jobs Saudis Expats skilled Saudi labor, leading to a high Source: CDSI Manpower Survey reliance on skilled expatriates. All of these factors mean that expatriates tend to be more competitive for most jobs in the private sector. High skilled jobs With the private sector continuously growing, the onus is on Saudi Arabia to augment the skill set of their young people, which will, in turn, decrease the reliance on foreign workers. Ministry of Labor, Kingdom of Saudi Arabia 21

24 Youth unemployment Saudi Arabia is a country blessed with an exceptionally young population. Seventeen million Saudi nationals 55 percent of the population are under age 29. Every year, approximately 400,000 Saudis enter the labor market, but these young people face a very high unemployment rate roughly 42 percent in 2014 (See Exhibit 12). Exhibit 12: Youth (15-24) unemployment in selected countries (2014) 42% Saudis only 53% 51% 30% 19 Selected counties average 23% 23% 19% 17% 15% 13% 14% 13% 11% 10% 9% 8% 7% 3% Source: ILOSTAT This high unemployment rate is due largely to the significant mismatch between the skill set of Saudi youth and the specific skills demanded by the private sector. The lack of job-relevant skills is a common challenge even among those holding Bachelor s or Master s degrees, and increases the difficulty of a smooth transition from school to work. In the 20- to 24-year-old group, almost one Saudi out of three is classified as NEET (Not in Education, Employment, or Training), highlighting the difficulty of entering the labor market and the school-to-work transition. Which countries have implemented effective policies and programs to address youth unemployment, and what were they? Compounding this, as described earlier, young Saudis have high expectations of employment, resulting in them being selective in choosing and considering jobs, which usually end up being in the public sector. These are not the only factors contributing to the situation. For example, youths in Saudi Arabia have reported that not having the right connections is one of the main barriers to getting a job. This suggests that the Saudi labor market still relies relatively heavily on personal networks. Managing the expectations of the young and promoting their up-skilling are therefore critical areas for government intervention and support. This can be done in two steps, by first providing support, such as training and guidance, and then by managing expectations so that the youth have realistic ambitions once they enter the job market. Job placement and matching Saudi GDP has grown at a compounded average of 11 percent over the last ten years. This means new jobs arise on a continuous basis and employers are continuously seeking new candidates, both among Saudis and expatriates. New opportunities on one side and jobless, skilled Saudis on the other side is not enough to ensure the full optimization of the hiring of a skilled workforce. Between this demand and supply, there is often one insurmountable issue imperfect information. 22 Saudi Arabia Labor Market Report for G20

25 Employers need continuously updated information about what skills are available in the market, and job seekers need to know who might be interested in their skills. The goal is to find the perfect match between demand and supply. National labor markets have historically relied on personal connections and networks, resulting in an opaque marketplace with a low rate of connection between workers needed and workers hired. The link between Saudi job seekers and private employers is clearly not functioning effectively. Future growth in Saudi Arabia s employment will be buoyed by the private sector. Enabling job seekers and employers to find a common path through integrated virtual marketplaces will help increase productivity and national satisfaction, and will be essential for reducing unemployment across the country. Female participation and unemployment Saudi Arabia s women represent a wealth of untapped potential for the economy. Many of them have yet to join the labor force, despite being highly educated and motivated. Among the 6.8 million Saudi women of working age, only 18 percent participate in the labor force. The participation rate among Saudi men is 65 percent, almost four times that of women. Addressing this discrepancy will go a long way toward increasing growth and creating a more inclusive economy. In addition to low participation, females are challenged by high unemployment rates for those who actually seek employment. Just under 33 percent of women in the labor force are jobless, a rate almost three times higher than the Saudi average (12 percent), showing that it is not the preferences of Saudi women driving low female employment many women are looking for work and are unable to find it. Where have women-specific accelerated job-creation efforts been successful? In what industries and occupations? Low participation rates and high unemployment have two main causes. First, there is a mismatch between the skills obtained by Saudi women and those that are demanded by the private sector. Secondly, there are significant practical barriers to female employment in the Saudi economy. Notwithstanding the low female employment level, Saudi women are highly educated, as shown in Exhibit 13. But Saudi women tend to focus on skills that are not in high demand by Exhibit 13: Education of 25+ year-old Saudi women % CAGR ( ) Primary 4% Secondary Tertiary 6% 6% Year Females 25+ who completed primary school Source: CDSI Females 25+ who completed secondary school Females 25+ who completed tertiary school Ministry of Labor, Kingdom of Saudi Arabia 23

26 private sector employers. This, coupled with the attractive aspects of public sector work (higher investment in infrastructure, more flexible working hours, more woman-friendly environments) pushes Saudi women to consider almost exclusively public sector employment. Other barriers to female employment are more practical. Traditionally, many workplaces were not designed to accommodate women, which discourages them from applying for these roles. Furthermore, the number of jobs available is restricted to those where direct interaction with men is not required, and therefore companies must undetake investment for separate spaces in which women can work, which not all are able to afford. Transportation is also a major issue for Saudi women, as well as daycare for children when they are at work. 24 Saudi Arabia Labor Market Report for G20

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29 Transforming the Labor Market Labor Market Strategy T he challenges detailed in the previous chapter represent a unique opportunity for Saudi Arabia to fulfill its great potential. It is the vision of the Ministry of Labor and its related entities to shape a healthy labor market with competitive and fulfilling jobs to support the Kingdom s future success. This entails making the country s resource-use sustainable and using the labor at its disposal efficiently. Exhibit 14: Five strategic pillars of KSA s labor market strategy Sustainable job creation Skill development Saudi / Expat Labor market efficienc Social protection Create productive jobs in the private sector Develop skills of the Saudi workforce Manage Saudi vs. Expat balance Provide fundamental mechanisms for a healthy labor market Take care of our people through social protection In order to fulfill the potential at hand, the Saudi Arabian government and related entities have formulated a strategy that is centered on five main pillars, as shown in Exhibit 14. The strategy directly addresses the challenges described previously. This chapter takes a deep dive into the strategy by describing the components that make up the five pillars, and what they aim to tackle. Within each pillar, we have identified focus topics to be acted upon as shown in Exhibit 15. In the upcoming chapters, we will then provide some specific case studies along the dimensions of the Turkish G20 Presidency s three I s: inclusiveness, investment, and implementation. Exhibit 15: Focus topics of the labor market strategy Sustainable job creation Skill development Saudi / Expat Labor market efficienc Social protection Job creation and entrepreneurship Career education Access to Expats Matching mechanisms Social insurance Private sector productivity Vocational training Expat vs. Saudi cost disparity Market support mechanisms Support for job seekers SME professionalization Career readiness Domestic labor Social dialogue and engagement Support for people with special needs Attractive workplaces On-the-job Training Expat work conditions Protection and legislation Careers for women Employment flexibility Ministry of Labor, Kingdom of Saudi Arabia 27

30 Currently, more than 140 initiatives have been implemented or are in progress across the pillars. We have highlighted some these in the Impact and Case Studies section. Pillar 1: Sustainable job creation Creating competitive and fulfilling jobs in the private sector How do countries balance the objectives of the private sector with the broader national objectives? This pillar addresses the issue of the private sector not offering the types of jobs that Saudi nationals find attractive. Increasing employment opportunities and their attractiveness will go far in tackling youth and female unemployment in the Kingdom. A large number of jobs must be created to accommodate the growing labor force. These jobs must be of a standard that can provide job satisfaction for Saudi nationals. This means we must identify the needs of different groups of workers, such as women and youths, and make sure that the workplace into which they enter is responsive to their needs and satisfies their ambitions. SMEs, which account for 49 percent of total employment in Saudi Arabia, make up the largest portion of private sector employers, and are therefore a key target area under this pillar. If SMEs can professionalize and improve their working conditions, Saudis will become more inclined to work in this sector. The important task of attracting women to the workplace can be achieved by reducing the barriers to employment from the employer side and the barriers perceived by the prospective employee. On the employer side, women are perceived to be costly to hire as it requires adapting the workplace and sometimes allowing for maternity leave. On the employee side, women are aware that some workplaces have not been adapted to their requirements. This, along with the high costs of travelling to work and paying for daycare for their children, acts as a barrier. The government s responsibility is therefore twofold. It must first ensure that the cost of employing women is minimized where possible by assisting in making transportation more accessible, equalizing daycare costs across men and women, and assisting in making workplaces women-friendly. The second responsibility is to generate awareness among employers and change the bias against employing women. Helping Saudi entrepreneurs to start new businesses that will employ Saudis would also help increase the size of the private sector workforce. This can be done by adapting legislation to become more pro-business and pro-employment. For example, business-friendly regulatory environments have been put in place across the new Economic Cities in Saudi Arabia, which are competitive to other free zones globally. Relevant case studies in next chapter: Tawafuq, Women in retail, Economic Cities Pillar 2: Skill development Develop skills of the Saudi workforce The purpose of this pillar is to help Saudi youth and women to live up to their potential. It also seeks to shift Saudi individuals into the high-skilled category in order to decrease reliance on expatriates in the economy. Saudi young people must develop the skills and capabilities that are demanded by the private sector. This can be facilitated by investment by the government, the private sector, and the young people themselves. The result will be a competitive advantage for Saudi Arabia and a prospering economy. 28 Saudi Arabia Labor Market Report for G20

31 Currently, many young Saudis are unaware of the career options available to them and therefore do not begin at a young age to build the relevant skill set. Because of this, career education is an important element of this pillar. Saudi Arabia will strive to empower youth by helping them make educated career decisions. Initiatives are currently being put in place at every stage of education: primary, secondary, and through to university, to assist them in widening their horizons and honing their skills for the careers they wish to pursue. Career education can involve networking with professionals, taking online courses, and practicing interview techniques. Another area of focus, on-the-job training, aims to promote the upskilling of the Saudi workforce and facilitate access to the labor market. It functions as a structured mechanism that smooths the transition from school to work. This will be achieved by organizing subsidized trainings that will be provided in the service sectors where large numbers of expatriates are currently employed. How do countries encourage their populations to up-skill themselves? One further element of the pillar, job readiness, allows the unemployed, or those who are getting ready to enter the labor market, to take online courses in order to learn practical skills that can be used in the labor market. Relevant case studies in the next chapter: Economic Cities, Doroob, Career Education and Development Pillar 3: Saudi/expatriate Manage the Saudi-expatriate balance This pillar directly seeks to alleviate the overreliance on foreign workers in the private sector. Expatriates are currently a more attractive proposition for private sector employers due to the lower costs involved in hiring them and their generally higher skill levels. Both parties, Saudis and expatriates, must therefore be considered in any policy made to reduce this gap and incentivize the employment of Saudi nationals. Saudi Arabia has already implemented a range of initiatives to increase the number of Saudi nationals (Saudization) in the private sector. These include Nitaqat, which rewards employers based on their relative Saudization level. Companies with high Saudization rates are rewarded through access to additional visas, ability to transfer visas from other firms, grace periods on certain administrative licenses, additional salary subsidies, and access to additional government services. How have countries increased companies desire to hire their own nationals? Furthermore, by possessing the skills demanded by the market, Saudis will naturally become a growing part of the private sector. As mentioned in the previous pillar, training and guidance is essential to be sure Saudis target their learning and become better equipped to have these jobs, and this in turn will decrease the reliance on foreign labor. Saudi Arabia is aware that quotas alone are not enough, and sustainable Saudization needs to address the underlying wage and working conditions gaps that make it attractive to employ expatriates. Relevant case studies in the next chapter: Doroob Pillar 4: Labor market efficiency Provide the fundamental mechanisms for a healthy labor market This pillar directly aims to match the supply of labor and the demand for jobs in the most efficient way possible. Ministry of Labor, Kingdom of Saudi Arabia 29

32 Once Saudis have acquired the appropriate skills for private employment, it is crucial to place them in the jobs that fit these skills. The Saudi Arabian government and related entities are investing in the tools and platforms to create an efficient mechanism to match employers with potential workers. This will ensure that market participants find an efficient framework for employment to happen, resulting in increased growth for Saudi Arabia. How can the supply and demand of labor be matched more efficiently? A particular priority is assigning job seekers from the Hafiz (unemployment assistance) program, especially Saudi youth, to the right channel for finding a job. These channels offer assistance ranging from intense support such as job placement centers and job schools, to lighter-touch programs such as an online job-matching engine and employment portals. Labor market efficiency and satisfaction can also be increased with dialogue from key stakeholders. Reaching out to key stakeholders during the policymaking process ensures that more ideas are generated and more people are involved in shaping the country s future. Saudi Arabia has built a framework where the government, workers, and employers can discuss labor market issues and policies. Relevant case studies in the next chapter: Ma an, HRMS for SME s, Social Dialogue, National Labor Gateway Pillar 5: Improving social protection Guard the well being of our people The introduction of a program to stop working in extreme heat This pillar aims to improve all aspects of working life of all members of the population. It is a fundamental goal of the Ministry of Labor to support those who are looking for work or have special needs in order to help them become productive members of the workforce. The Ministry s programs provide income protection to the unemployed, protect workers against injury or disability, provide systems for private sector retirement benefits, support Saudis while they seek employment, and provide extra care to groups with special needs to ensure their inclusion in the workplace. Relevant case studies in the next chapter: Tawafuq 30 Saudi Arabia Labor Market Report for G20

33 Introduction to MoLplus The Ministry of Labor is the entity in Saudi Arabia that defines and implements the country s labor market. It has been enthusiastic in shaping Saudi Arabian economic development by undertaking significant investment and defining creative policies. The main challenges in the Saudi Arabian labor market have been identified, investigated, and acted upon by the Ministry of Labor and its sister agencies which are outlined in Exhibit 16 below. These entities are responsible for the creation of the five pillars and the implementation of the corresponding policies, and are collectively known as MoLplus: Which countries have successfully introduced unemployment protection programs while encouraging employment? Exhibit 16: MoLplus structure Ministry of Labor (MoL) Responsible for labor law, policy development, labor market regulation, compliance, inspections, international labor affairs, communication, and social dialogue. General Organization for Social Insurance (GOSI) Agency of the state concerned with social insurance Implements social insurance rules, collects contributions from employers and pays benefits to entitled insured persons Human Resources Development Fund (HRDF) Focused on human capital development in Saudi Arabia Supporting the efforts to up-skill the national workforce and providing employment support and unemployment assistance Serving both employees and employers Technical & Vocational Training Corporation (TVTC) Provides technical and vocational training for youth, preparatory training, vocational preparation, and on-the-job training Falls under the jurisdiction of MoL and Ministry of Social Affairs The Ministry of Labor itself, which is responsible for labor law, policy development, labor market regulation, compliance, inspections, international labor affairs, communication, and social dialogue. The General Organization for Social Insurance (GOSI) is responsible for social insurance, which includes private sector pensions, occupational hazard insurance, and unemployment insurance. GOSI administers the social insurance law, implements social insurance rules and regulations, collects contributions from employers, and pays benefits to entitled insured persons and their family members. The Human Resources Development Fund (HRDF) focuses on human capital development in the Kingdom of Saudi Arabia, especially in the private sector. It runs numerous programs that concern up-skilling the workforce, as well as providing grants to those involved in the training and employment of workers in the private sector. They also run unemployment assistance programs such as Hafiz. The Technical & Vocational Training Corporation (TVTC) provides technical and vocational training for youth, including preparatory training, vocational preparation, and on-the-job training. Ministry of Labor, Kingdom of Saudi Arabia 31

34 32 Saudi Arabia Labor Market Report for G20

35 Impact and Case Studies T he real challenge in transforming the labor market lies in the implementation of the Labor Market Strategy. The strategy, detailed in the previous chapter, has laid the foundations for MoLplus to implement more than 140 initiatives within the Kingdom. Each initiative is specifically designed to act on the target areas within each pillar. In this chapter, we set out case studies of the initiatives that have been put in place. These case studies will demonstrate which segment of the population is targeted, what issue the initiative seeks to solve, the details of the project, and what the impact has been. This year s Turkish G20 presidency has outlined three distinct priorities in order to ensure inclusive and robust growth through collective action. In many ways, these priorities, which are inclusiveness, investment, and implementation, are similar to Saudi Arabia s targets and successfully capture the essence of the Saudi Arabian Labor Market Strategy. These case studies also fit into the three groups. Inclusiveness The G20 understanding of inclusiveness is ensuring that the benefits of growth and prosperity are shared by all segments of society. This not only means increasing the ranks of the employed worldwide, but also ensuring that the benefits of high employment rates trickle down to every member of society. Within the inclusiveness priority, the G20 countries have highlighted the importance of tackling the issues particular to SME s, increasing female participation, and addressing youth unemployment. For Saudi Arabia, inclusiveness means involving members of society who have been underrepresented in the workforce and helping them achieve productive employment. As we have mentioned throughout this report, this is especially true for women, who have a high unemployment rate in Saudi Arabia compared with other G20 countries. It also includes the young, who represent a large portion of the economy, as well as the disabled. The vision of inclusiveness applies also to the wider public and different regions such as the Northern Border, where unemployment is above the country average. Recent years should be celebrated as a time when economic prosperity and advancements in technology have facilitated the inclusion of different segments of the population. Since 2011, the female labor participation rate has increased by 22 percent and numerous training programs have been put in place to better prepare the young for work. Case study: Ma an It is important that different parties work together on different topics and policies in order to create a harmonious labor market. Creating an online platform for this allows a wide range of Saudis to weigh in with their opinions. Ministry of Labor, Kingdom of Saudi Arabia 33

36 Ma an ( together in Arabic) is an online initiative that seeks to involve a greater number of citizens in labor market policymaking. It comes in the form of a user-friendly and intuitive web portal generated by the Ministry of Labor that is designed to engage people and business owners in making better strategic decisions relating to regulation in the labor market. How have other countries used online engagement tools like Ma an? Policies are put on the platform for a period of two months during which time citizens can voice their opinions. Ma an users then rate and comment on specific sections of the overall regulation. A committee then filters the comments and presents the findings to the policy lead. Finally, users receive a feedback report containing all of the analysis undertaken. Ma an has four main objectives: To learn from the capabilities of the people in order to implement or provide solutions To involve and engage the public with the policies and decisions that affect them To strengthen transparency and engagement with the public To develop a culture of open government and open dialogue The portal has been in operation since early 2014, and is already bearing fruit in measurable ways: 36 draft policies reviews 24,472 votes received 11 policies passed, 6 policies updated, and 25 policies being revised 228,099 unique visitors to the website 7802 comments received 14,405 users participating Case study: Tawafuq Tawafuq marketing campaign Tawafuq (Working Together) is a program that encompasses many projects carried out by the Ministry of Labor and its sister organizations the Human Resources Development Fund, the Technical Vocational Training Cooperation, and the General Office of Social Insurance. It aims 34 Saudi Arabia Labor Market Report for G20

37 to promote and support the sustainable employment of able-to-work persons with disabilities in Saudi Arabia. Most importantly, it gives the disabled population an opportunity to participate in working life and to pursue their personal career goals. Various projects accomplish this by embracing the importance of people with disabilities who seek jobs, while also educating their families. The projects also inform employers of the procedures for employing people with disabilities and policies surrounding their right to work. It increases the awareness of policies and legislation to ensure that the rights of the different stakeholders in the employment relationship are upheld. What effective ways have other countries found of involving the vulnerable in the labor force? A six-pronged approach, outlined in Exhibit 17, was developed by the Tawafuq team at the Ministry of Labor and the Human Resource Development Fund in order to fulfill their mission. Exhibit 17: Six projects in the Tawafuq program Employment channels Disability and work card (Kudra) Preparing workplaces for the disabled Establishment of a certification system (Mowa ama) Reviewing and developing legislation Business Disability Network (Qaderoon) We will take a deeper look at the first project under the Tawafuq umbrella, the Business Disability Network (Qaderoon), whose slogan is, Together, we are able. Qaderoon network is a not-for-profit network, established in Its general mission is to provide consultations and advice to employers regarding retrofitting workplaces to support the employment of people with disabilities. Qaderoon membership allows companies to benefit from practical mentoring and guidance, and learn from the best practices of other businesses on how to facilitate the employment of disabled people. Presentations are also provided for companies on how they can provide suitable work environments for people with disabilities. To date, 14 large companies have joined the network and 45 other companies have applied for membership. Three programs were held for HR managers on employing people with disabilities, giving awareness training to over 80 individuals; and six educational training programs were held on preparing the work environment for the disabled. Through their membership in Qaderoon, seven companies were able to increase the number of employees with disabilities and they consequently worked on adjustments to the workplace. For further information and inquiries on the Tawafuq program projects, please contact the general supervisor of the program Dr. Mervat Tashkandi at mtashkandi@mol.gov.sa Ministry of Labor, Kingdom of Saudi Arabia 35

38 Case study: Social Dialogue A citizen voicing his opinions on proposed initiatives Policies in a system as connected as the labor market should be cooperatively designed, with the impacts on every party being weighed. Social Dialogue is the exchange of visions among the three most important and responsible groups that are affected by work issues and labor affairs. The stage has been set for these three groups, known as the tripartite, to exchange information and reconcile differences and create a balance among the interests of three stakeholders in the labor market, namely employers, workers, and the government. The social dialogue among the partners aims to drive economic growth and fight unemployment while analyzing social disputes and looking after the wider social aspects of employment, such as the minimum wage. Where have policies been successful in creating dialogue between different groups of society? The King Abdul Aziz Center for National Dialogue is the platform underlying the discussions. The themes differ from meeting to meeting and are chosen from a survey of the Saudi Arabian public. Members from the Ministry of Labor represent the government, while the workers are represented by the National Committee for Labor Unions. Employers are hand picked from some of Saudi Arabia s most successful businesses. Each of the forum themes is discussed, with each party allotted a certain amount of time to discuss, express opinions, and contribute suggestions concerning the theme. In-depth studies and success stories from Saudi Arabia ensure each theme is analyzed in a scientific and neutral way. A recent Social Dialogue forum concerned inspection policies and regulations which ensures that businesses comply with labor market regulations. Presentations on topics such as selfassessment and audit and work inspection from an international perspective were given to all parties, and discussions centered around the policies themselves and alternative solutions to what was already in place. Since this forum, the inspection process has been reviewed and optimized to become more professional. For example, inspectors now show their ID s when inspecting to show they are representing MoL, putting the businesses more at ease. 36 Saudi Arabia Labor Market Report for G20

39 Case study: Women in Retail Government official carrying out a workplace inspection Although it has been slowly increasing in recent years, the rate of women in the workforce in Saudi Arabia has historically been low in comparison with that of men. Upon entering the labor market, women have traditionally chosen to work in education. The retail industry, on the other hand, has generally remained closed to women because such work usually requires interaction with men. However, thanks to the Women in Retail initiative undertaken by the Ministry of Labor, the role of women is expanding and evolving. Women in Retail specifically aims to not only increase the number of employed women, but also to diversify the sectors in which women work. This initiative fits into a broader series of initiatives that have helped Saudi Arabia boost the employment of women over the past few years, especially in the private sector where female employment growth is significantly outpacing male employment growth. Added to this, economic policymakers have recognized that if women are going to be How does intelligent policymaking support equal treatment of men and women? educated at public expense, as they now are in increasing numbers, they will expect to work, and the country will need their economic output. The Women in Retail program was implemented in 2012 as the Ministry of Labor enforced a Royal Decree ordering that sales personnel in shops selling garments and other goods such as cosmetics, which are only for women, must be female. After being issued first for lingerie shops, the decree was extended in a second phase to female dress, abayas, and accessory shops. Moreover, the Ministry began intensive inspections in 2013 in order to check the implementation status of the policy. In March 2014, the implementation of the third phase of the feminization of shops started, extending the decree also to more shops selling women s items including perfume, jalabiyas, bags, shoes, socks, all other types of women s clothes, and fabrics for women s clothes, as well as shops selling maternity products and pharmacies in malls selling beauty products and accessories. These initiatives, along with the others implemented so far, helped raise female employment in private sector jobs from 55,000 Saudi women in 2010 to 450,000 in 2014, approximately a Ministry of Labor, Kingdom of Saudi Arabia 37

40 seven-fold increase. Female employment has now branched out from the health and education sectors. Investment In recent years, one of the global economy s biggest shortcomings has been a lack of investment, which is fundamental in driving sustainable growth and helping the global economy recover to pre-crisis levels. It is for this reason that the G20 have stressed that the lack of global investment is being addressed via the use of carefully formulated strategies and have made this a priority. Throughout the tough global economic climate, Saudi Arabia has led the way internationally by investing in many large-scale initiatives that have transformed cities and the working lives of their residents. More specifically, MoLplus, has invested significant capabilities in strategy development, performance management, program management, and talent development. Case Study: SMEs Official launch of an SME initiative SMEs are not a popular employment choice among skilled Saudi Arabians, but they have the potential to contribute significantly to job creation for Saudi nationals and to advance the Saudi economy in its drive for diversification and expansion. How has strengthening the link between nationalization and SME professionalization been successful? The Ministry of Labor has developed SME support measures under a framework covering four distinct areas: business environment, business professionalization, SME training and capabilities, and funding and financing. One specific initiative is HRMS (Human Resources Management Systems ) for SMEs, which is part of the business professionalization topic. HMRS is a software application that combines many human resources functions, including performance analysis training and payroll. Under this measure, this service will be made available to SMEs at a low cost. HRMS assists in the SME professionalization process by 38 Saudi Arabia Labor Market Report for G20

41 decreasing the cost of managing administrative HR tasks for small businesses by creating a more efficient process. This allows SMEs to focus on other tasks and potentially manage more people. The program is currently in a pilot phase to gauge the viability of a countrywide rollout. Case Study: Economic Cities (King Abdulla Economic City) The OECD forecasts that in 2020, $150 billion of new economic activity will occur in Saudi Arabia. That is a substantial increase in GDP, and it will be thanks to the new six Economic Cities located around Saudi Arabia (shown in Exhibit 18). On the Red Sea, where East meets West, the largest Economic City is emerging. King Abdulla Economic City is a megaproject undertaken by the government with the aim of creating a city of the future, which will become a sought-after place to live and work for many Saudis and other talented individuals. Exhibit 18: The location of the six Economic Cities TEC PABMEC Eastern Province The city will provide many highquality new jobs in Saudi Arabia and help the economy diversify away from its reliance on natural resources. The city is due to be completed in 2020 with a projected investment of $56 billion, and is expected to create 1 million jobs for Saudi youths. Madinah KAEC Under development Source: OECD JEC Planned Less than an hour by rail from three large cities in Saudi Arabia Jeddah, Medina, and Makkah, the new city is strategically placed in the Makkah region, which currently has an unemployment rate of 10 percent. There are four main locations for the KAEC project: King Abdullah Port, based on the Red Sea, where 24 percent of global trade takes place Industrial Valley, where over 80 global, regional, and local manufacturing and logistical companies are based Coastal communities, where there are seven residential communities offering high quality housing Hijaz Downtown, where 8.5 million people are connected through high-speed rail Many programs operated in KAEC, which are supported by the Ministry of Labor, are already developing the skills of the workforce. The Tomouh (Ambition) program is one of these that aims to bridge the gap between the skills that young Saudis gain at university and the actual needs of the labor market. The program was launched in 2012 and provides services such as computer training and English language courses to Saudi students, both male and female, and helps them compete for jobs at some of the most internationally recognized companies operating in KAEC. Since 2012, 700 Saudi students have benefitted from these training courses. Ministry of Labor, Kingdom of Saudi Arabia 39

42 Exhibit 19: Bird s-eye view of King Abdallah Economic City Source: WAGT, deigners of KAEC In July 2015, KAEC expanded this program by signing a contract with King Abdulaziz University to train 1,000 male and female students from Rabigh and nearby towns. The training is six hours a week over four months. Case study: Investing in previously existing technical colleges The Minister of Labor giving guidance for vocational training programs Investment in Human Capital has been highlighted as a key focus area in 2015 by the Turkish Presidency. While many young people in Saudi Arabia are still in school, it is important to build 40 Saudi Arabia Labor Market Report for G20

43 upon this, and invest further to ensure they are given the required skills for the jobs they wish to pursue. Under the MoLplus umbrella, the Technical & Vocational Training Corporation (TVTC) is the key facilitator of occupation-specific skill development in Saudi Arabia. It provides technical and vocational training for the young, preparatory training, and on-the-job training. TVTC has three main objectives: Increase capacity to suit the demands of the job market Improve the quality of the teachers and curriculum Which countries have been successful in establishing vocational training as an inspiring and fulfilling career? How? Learn from and adopt the best international practices of technical and vocational training Many initiatives to up-skill Saudi youth have been put in place by TVTC. We will focus on their program to invest in previously existing technical colleges. Alongside Saudi Skills Standards (an entity responsible for ensuring that teaching standards in Saudi Arabia are met), and the colleges themselves, TVTC has identified and invested heavily in technical colleges that have not been running to their maximum capabilities. This capabilities-building project takes aim at three key areas within each college: Developing the capabilities of teachers Developing administrative operations Developing training curricula for the colleges This project has already been launched and will continue in a number of phases in the future. Currently, the first phase of the project is underway. Ten colleges around Saudi Arabia have been selected to undergo large-scale investment. The teaching methods, operations, and curricula of these selected colleges will be transformed and the expectation is that each college will attract thousands of young Saudi nationals, who will be up-skilled and readied to enter the world of work. Once the investment has been made in each college, TVTC will act as a supervisor of the colleges, and the colleges will operate independently in a system much like the already successful College of Excellence system in Saudi Arabia. Implementation A key element of this year s G20 meeting will be analyzing whether countries have implemented what was outlined in the Brisbane Action Plan. The Brisbane Action Plan outlined the individual and collective actions that should be taken in pursuit of strong, sustainable, and balanced growth. Against the backdrop of a tough financial climate, the emphasis for the G20 countries last year was on creating quality jobs and more employment opportunities. Saudi Arabia was asked to report back on progress in reducing youth unemployment, reducing gaps in labor force participation, and the further development and implementation of our country s employment plans. Throughout this report, we have documented our progress on these topics. In order for the Saudi Arabian lessons to be of value outside of the country, it is important to detail and show examples of how these policies were implemented in Saudi Arabia and which enablers were key in implementing them. We will focus on technology and PPP (private-public partnerships). Ministry of Labor, Kingdom of Saudi Arabia 41

44 Technology Case study: Doroob experience Online education increases the opportunities available to those in Saudi Arabia for whom traditional education presents challenges. Doroob, meaning roads in Arabic, is designed to provide students with an ecosystem of content, support, and certification, and pave the way to upgrading their skills and becoming more employable. Doroob makes use of MOOC s (massive open online courses) to provide easy-to-use and easyto-follow learning programs on the internet. Its main objective is to assist employers, employees, and job seekers in meeting the demands of the Saudi labor market. This helps to alleviate youth and female unemployment as well as up-skill all Saudi nationals. How have countries used MOOCs to up-skill youth? The Doroob program is supported by the Ministry of Labor and sponsored by HRDF, and is built on three key services: on-the-job training (OJT), training courses, and certification. Up-skilling the Saudi workforce is key to enabling employers in Saudi Arabia to meet their recruitment needs. On-the-job training provides employers with the a framework, guidance, and support in developing a structured training program in the workplace to train employees and further cultivate the talent pool in the Saudi labor market. The Doroob platform offers a wide selection of online training courses conveniently accessible to interested students anytime and anywhere, which also corresponds to the demands of the labor market. To improve the users basic skills, the courses include interpersonal training, English language, and computer skills. Job-specific training courses such as for retail sales assistants, hotel front-desk clerks, and IT support assistants are available as well. Finally, Doroob issues official certification that is recognized countrywide. Companies in the Saudi labor market often face difficulties in properly assessing the educational and professional background of both employees and candidates. This inefficiency can be expensive and HR departments are often asked to find alternative ways of ensuring that employees or job seekers are well armed with the relevant skills. Case study: National Labor Gateway With so many programs and so much information for prospective job seekers, locating the appropriate program from among these vast resources becomes an issue. Aiming to solve this issue and eliminate the inefficiencies that exist in matching workers with employers, The National Labor Gateway is the new onestop shop for all programs and job opportunities in Saudi Arabia. The introduction of NLG is expected to bring immense benefits to the Saudi labor market. A more transparent job marketplace will benefit both job seekers and employers, matching job requirements with employee skills, and providing a wider choice to both parties. The net expected effect is better matching and optimization of the hiring process, and, as a result, higher retention through career development plans and through better job fit. NLG compiles vast amounts of labor market data (shown in Exhibit 20) and will bring employment, career, and financial support under one roof. Anybody, whether eligible for financial support or not, will be able to register and create a profile to immediately benefit from employment support. It will be continuously updated and will support individuals throughout their lives, from school to retirement. NLG will be implemented in three phases. In terms of benefits for job seekers, in the first phase 42 Saudi Arabia Labor Market Report for G20

45 NLG will represent a one-stop shop for all career or labor-related needs, such as publishing job vacancies, providing referrals to tailored career advice and support, providing financial support, procuring unemployment insurance. Exhibit 20: NLG labor market data The National Labor Gateway will contain the following information: Job seeker profiles Employment history Eligibility & evidence In the second phase, the focus will be on providing tailored lifetime career support. NLG will be the place to find the best advice about which courses to take, which diploma to obtain, which internship to pursue, and which company and position to apply for. It will also provide retirement benefits counseling. Students profiles Matching/ referral statistics Employer profiles Financial benefits records Training catalog Job vacancies/ interview results Service providers information Individuals survey results Training records Fraud records Career preferences In the third and final phase, NLG will become a nationwide platform supported by the top employers in KSA and backed by government entities providing accurate data, creating an unprecedented number of diverse training offerings. How can technology be leveraged further to create an efficient job market? To aid employers, in the first phase NLG will provide faster and more efficient talent searches by creating a single place to find all the job seekers in the country whose information has been verified, with an embedded matchingengine to find the right talent faster. In its second phase, NLG will support employers in retaining their employees, by providing better information about what employees seek and what competitors offer, and by helping employers put in place advanced career management systems to help keep employees from leaving. Finally, in the third and last phase, NLG will provide employers with advanced and tailored support, offering a wide catalog of programs to employers tailored by NLG agents to employers specific needs, to help them make the most of the programs offered. Case study: Career Education and Development As the years progress, many more youths will be entering the workforce in Saudi Arabia. It is imperative that they, along with all other segments of the population, make their career choices based on sound and complete rationales. This was the motivation behind developing the Career Education and Development (CED) program which is sponsored by HRDF. The CED program aims to empower all Saudis to make better learning and work choices by creating a harmonious career development ecosystem delivered by accredited professionals, supported by emerging technology, and based on shared public-private sector responsibility, all underpinned by a robust governing body. Where has career education been implemented successfully worldwide? The high-level objective of the CED program is to change the mindset and behavior of Saudi nationals over time by doing the following: Empower Saudis to equally consider all sectors of the job market (not just the public sector) Ministry of Labor, Kingdom of Saudi Arabia 43

46 A Career Education and Development workshop Instill the value of a productive, lifelong career Encourage the principle that all jobs are valued Engender realistic expectations about entry-level jobs Enable Saudis to plan their careers according to personal aspirations and market needs Exhibit 21: Number of program beneficiaries across different segments # of program beneficiaries Secondary education University and vocational training Job seekers The CED program is split into two distinct parts the fast track and the strategy track. The fast track brings together initiatives that can give immediate and tangible results on the ground. It can also serve as a learning device for future initiatives. The strategy track aims to develop activities for job seekers from a young age and as they progress well into their careers. While the strategy track is still being implemented, the fast track has already blossomed, with over 55 thousand beneficiaries over four segments. Today, the fast track program is being run with eight national career education and development providers (shown in Exhibit 22), putting the program on track to accomplish the following targets by the time the program ends in late 2015: 21,000 visitors to career exhibitions 5,000 app downloads Employees ~15 K ~21 K ~18 K ~1 K 230 trainers trained to conduct career education activities Within the strategy track, different segments have been targeted with tailored programs and activities. These segments are primary schools students, secondary school students, those in tertiary education, and adults who are changing jobs or are unemployed. Within each segment, activities, tools, and programs have been divided into three main parts: Things to do at home, things to do at school/university, and things to do in your free time. Exhibit 23 is an example of the learning journey that is planned for secondary school students. 44 Saudi Arabia Labor Market Report for G20

47 Exhibit 22: Fast Track Programs Rawabi Holding Mentors KSA Glowork Warif/Prince Alanood CSR branch of Rawabi Holding (retail, industrial goods, etc.) Connecting successful KSA professionals to youth Recruitment and support dedicated to the employment of women Private Saudi foundation enabling youth development Al Nahda Lumink Etree Ithraa Group NPO dedicated to empowering women socially and economically Media company dedicated to produce animated videos Technology/media company creating mobile applications Foundation dedicated to youth studies, online content, and events CSR organizations NPOs Commercial Companies Exhibit 23: Secondary school students CED journey Home CED online portal: Massive open online courses Career stars videos Career information, including: Key infographics Psychometric tests Professional tweets CED student journey School Free time Guest lectures Field visits Career days Workshops (for students and influencers) Individual Guidance Employability skills courses Summer career camps Career exhibition Career road shows Mini-jobs Ministry of Labor, Kingdom of Saudi Arabia 45

48 46 Saudi Arabia Labor Market Report for G20