Saudi Arabia aims to complete a study on setting a minimum wage for private sector workers within four months, local media quoted the labour minister as saying.

The move is part of a government drive to make jobs more appealing to nationals and cut unemployment.

The jobless rate in the world's top oil exporter is now running at 10 per cent and is a potential source of discontent as private companies prefer to hire foreigners, mainly from Asian countries such as Pakistan, who agree to work for wages as low as SR1,800 ($480) a month. That is less than the monthly unemployment benefit of SR2,000.

Saudis have favoured government jobs, which offer security and higher salaries.

"There was a royal order for the labor ministry to study this issue in collaboration with the private sector," Labour Minister Adel Faqih was quoted as saying in daily Okaz newspaper on Monday.

"We are now in the final stages of this study, which will be announced within the next four months," he said.

Media reports have suggested the government could set a minimum wage of SR2,000-3,000.

Last year the government tightened rules introduced in the mid-1990s to try to increase the employment of locals through a "Saudization" scheme that set quotas for the number of Saudis each company must hire.

Foreign workers, including labourers and expatriate professionals, account for a third of the desert kingdom's population of 27 million and Saudi nationals account for only 10 per cent of the private sector workforce.

Saudi Arabia has not seen the mass uprisings that rocked other parts of the Arab world last year, facing only small protests in its oil-producing Eastern Province.

Still, last year hundreds of university graduates and teachers staged rare protests in Jeddah and Riyadh to demand jobs and better wages and vowed to continue demonstrating until the government produces jobs.

The groups later dispersed after government officials pledged to deal with the complaints.

King Abdullah promised last year to spend about SR400 billion ($110 billion), or more than 18 per cent of gross domestic product, on housing, new jobs, health care, salary bonuses and other benefits.

The kingdom's deputy labour minister said last week the largest Arab economy will start licensing expatriate labour firms within a month in a first move away from a sponsorship system, whereby employers bring in foreigners on a work visa for a certain job only.

Authorities hope that shifting from the sponsorship system will help more Saudi citizens fill jobs previously filled by foreigners.

Thanks to a decades-long population boom, the Saudi government can no longer afford to reduce unemployment by creating public sector jobs. Last year's revolutions in Egypt, Tunisia, Libya, Yemen and Syria were blamed by some on high youth unemployment.-Reuters