Saudi eyes 50pc drop in jobless rate
Jeddah, August 11, 2010
Saudi Arabia aims to cut unemployment in the Kingdom to 5.5 per cent, from 9.6 per cent at the end of last year under a new five-year development plan. In June, the Labour Ministry put the 2009 jobless rate at 10.5 per cent.
The Saudi cabinet, chaired by Custodian of the Two Holy Mosques King Abdullah on Monday, has approved a mammoth SR1.44-trillion ($385 billion) spending on schools, hospitals and other infrastructure projects.
This plan exceeds its previous development plan by 67 per cent, said the Economy and Planning Ministry.
The previous scheme aimed at cutting jobless rate to 2.8 per cent by the end of 2009, from seven per cent in 2004, economists said.
Diversification of the economy, among other goals, was one of the priorities that the previous government spending plans looked at but has not achieved, they added.
'There are many goals in the previous plans, most of which were not achieved, such as diversification of resources,' said Abdulhamid al-Amry, member of the Saudi Economic Association.
'Since 1970 until the end of 2009 the contribution of the non-oil sector to the GDP did not exceed 11.5 per cent and curbing of unemployment which was a priority in the previous plan increased instead of decreasing,' he said.
The new plan expects the gross domestic product per capita to rise to SR53,200 ($14,190) by 2014, from SR46,200 at the end of 2009. The 2009 figure is lower than the previously planned SR48,200.
'This plan is outlining the priorities the government is setting based on the revenues they are expecting to have. It is not an additional $400 billion, but a continuation of the spending,' said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh.
Ageing King Abdullah is under pressure to create jobs and build housing as the population grows and unemployment rises in the biggest Arab economy and the world's top oil exporter.
Two-thirds of Saudi nationals are under 30-year and the kingdom has struggled to create jobs for them, partly because of a state education system focused more on religion than job skills and partly because local firms often decide to hire non-Saudis at lower wages.
Offering young Saudis a bright future is important because without jobs they could be drawn to Islamist militancy. It was mainly Saudis who were behind the Sept.11 attacks on US cities and some young Saudis joined militant groups in Iraq.
A Finance Ministry official said the new plan would be funded from the government's budgets for the period.
The monarchy needs to invest in education as the country seeks to diversify the oil-based economy, the experts said.
Just over half the spending is devoted to manpower, education and training. That includes plans to build technology colleges and vocational schools, they added.-Reuters