Abstract
The primary objective of this paper is to propose an alternative solution for unemployment among Saudi youth. This paper seeks to address the problem of unemployment in Saudi Arabia from a different perspective: productivity aspect. Substantially, this paper proposes solutions for the Saudi youth unemployment problem by increasing the non-oil private sector's productivity. It evaluates the macroeconomic gains of the proposed solutions, such as the number of new jobs for Saudi citizens and additional value-added. The research's main hypothesis is that increasing the non-oil private sector's productivity would significantly reduce unemployment among Saudi citizens. There are two methodologies for evaluating the expected economic benefits of increasing productivity in local economic activities. The first methodology, which is the Saudization of local gas stations by transforming the local gas stations into self-service ones (with one cashier every 8 hours for each gas station), finds that there would be more than 28,000 new jobs with reasonable salaries (at least SAR 3000 instead of SAR 1000 for at least 5 low-skilled foreign laborers) for unemployed Saudi citizens, which are socially accepted and at no additional cost to the government. The second methodology uses Leontief’s IO model to estimate the macroeconomic effects of increasing productivity in the non-oil private sector. It finds that the Saudi gross domestic product (GDP) is expected to record an additional growth rate of around 2.7 percentage points (Note 1) and to create more than 96,000 sustainable jobs for Saudi citizens within the period from 2021 to 2025.
Highlights
Before the discovery of oil, the occupations available to the Saudi population were related to their geographical locations
It finds that the Saudi gross domestic product (GDP) is expected to record an additional growth rate of around 2.7 percentage points (Note 1) and to create more than 96,000 sustainable jobs for Saudi citizens within the period from 2021 to 2025
Leontief IO (2017) table for Saudi Arabia shows that an increased investment of SAR 34 billion each year for five years would expand the domestic production system by around 1 percent in 2021 and by over 2 percent for the following year
Summary
Before the discovery of oil, the occupations available to the Saudi population were related to their geographical locations. Occupations of people who lived in the middle of Saudi Arabia were significantly different. Since this region is far from the sea and lacks fresh water, people were dependent on cattle rearing as a leading source of income. People in the north and south of Saudi Arabia engaged mainly in the same economic activities as of those lived in the middle region. The Saudi non-oil private sector has relied for decades on low-skilled/low-wage foreign workers. This sector could not offer suitable jobs for Saudi citizens with a high standard of living and education
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