A Policy Recommendation on the Middle East
The government cannot totally get away with regional problems, but can only reduce the impact that the problem poses. Unemployment, for instance, has been a regional problem that has been a concern in most developing countries. Policy makers face the problems of trying to negate the effects of regional problems because of the repercussions that these problems have on a country. For unemployment, for instance, policy makers will have to balance between unemployment, inflation and costs of living (Cordesman 2003).
The reason is that one directly or indirectly affects the other. High levels of unemployment, for example, reduce the rates of inflation and vice versa. Regional problems have been obstacles that deter the growth of an economy in every country. This paper will focus on unemployment in Saudi Arabia, which is a Middle East country.
Despite being one of the main oil producers in the globe, Saudi Arabia has been having difficulties in providing ample employment opportunities for its young population. Unemployment in Saudi Arabia is due to systematic and fundamental shortcomings, such as a stagnant private sector. The sector solely depends on a foreign labor force and a lack of proper education (Gause & Council on Foreign Relations 2011). Nevertheless, the Saudi Arabian government has been in the quest for establishing policies that boost the economic activities that will in turn increase more opportunities in the labor market despite the shortcomings.
There has also been an issue in religious conservatism that has a problem with the integration of Saudi Arabian women in the labor workforce.
Statistics graphs Retrieved from HYPERLINK “http://www.tradingeconomics.com/saudi-arabia/unemployment-rate”http://www.tradingeconomics.com/saudi-arabia/unemployment-rate
In the above figure, it has been apparent that unemployment in Saudi Arabia in the last quarter of 2013 has declined from 5.60 to 5.50 percent. From 1999 to 2013, it has averaged at 5.44 percent with an all- time high of 6.30 percent in the last quarter of 2006. Unemployment in the last quarter of 1999 had a record low of 4.35%. In Saudi Arabia, the rates of unemployment are reported by Central Department of Statistics and Information.
The other countries such as the Kenya play a role in low unemployment levels in Saudi Arabia. Low policy, labor costs forcesSaudi Arabian businessmen move their business in African countries such as Kenya and employ the easily available Kenyan labor force. The citizens in Saudi Arabia end up with no jobs, which also make the country some revenue to their counterparts (Zuhur & Sherifa 2011).
Increasing oil production and higher oil prices are providing a boost to the economy of Saudi Arabia. However, despite this boost, the majority of the country’s residents are not deriving some boosts from this boost because most jobs are being given to foreigners. In addition, it happens that only a small number of Saudi Arabian’s has secured employment opportunities from the private sector.
Apparently, there is a mismatch between the needs of the private sector employers and the skills that the young Saudi’s have (Cordesman2003).
Increasing unemployment comes with technology advancement that continues to increase unemployment levels in the Saudi Arabia. However, some Saudi Arabian residents are opting to remain jobless because the minimum wage is way below what they would earn in Asian markets (World Bank 2003). High levels of unemployment insinuate that the economy of a country is in the middle of a struggling stage. Thi is because the companies and employers in the current economic setup are cannot meet the current supply of labor (Le & Renard 2014).
High unemployment levels in an economy depict underutilization of economic resources. Unemployment in Saudi Arabia has posed serious impacts towards the society because the unemployed population must find some income, which they may rely on such as government and family benefits, which become an expense to these parties.
Whenever an economy succumbs into the recession phase as a result of inflation, the currency becomes weak in the exchange markets. The government will find a way of figuring out how to protect the dollar from the persistent loss of value (Zuhur & Sherifa 2011).
Tn addition, institutions of higher learning in Saudi Arabia are only focusing on theoretical aspects of learning and not the vocational aspects pertaining to education. As a result, graduates fall short of the company’s requirements for both vocational and technical specialists.
The Saudis also demand a higher pay than what is being given to foreign workers, which makes Saudi-based companies reluctant to employ them and opt for the cheap labor (Simmons 2013). Private employers are known to offer unattractive benefits packages, low salaries and demand longer working hours. Unemployment rate measures the unemployment prevalence that is a percentage of unemployed people by the total employed people.
As Saudi Arabia is struggling with high unemployment levels, the Kingdom launched a deportation campaign considered as the largest in all the Middle Eastern countries. More foreign workers face deportation to their native countries in the quest for creating employment for the citizens of Saudi Arabia. However, it has been skeptical whether the sweeping of labor market lowers the rates of unemployment in the Middle Eastern countries.
The kingdom has also been taking a closer look at the policies that are in place and how policy makers can further manipulate their policy recommendations to reduce unemployment levels.
The Saudi government has been urging employers to establish work environments that are gender segregated. It is also planning to lift the ban that had earlier imposed on female lawyers who argue cases in courtrooms. Labor Department is also making appropriate provisions and programs that will allow women to work from and at the same time fostering self-employment (North & Tripp 2012). Taxes imposed on young entrepreneurs are also being lifted to allow entrepreneurship where some Saudis will create employment for themselves and still employ others in the process.
The government imposed a new system known as “Nitaqat” system. The system seeks to improve the number of nationals securing employment in the private sector. The new system also replaces expatriate workers securing jobs in areas with the Saudi citizens. Under the Nitaqat policy, the government offers some incentives to the private companies in Saudi whenever they employ Saudi Nationals. The companies face to sanctions by denying work visas for Saudi workers.
There has been an introduction of another program known as the Hafiz-program. The program allows a monthly allowance to job seekers for a period that exceeds one year. The allowance is after a job seeker shows participation in work seeking programs as well as training activities.
The Nitaqat system only aims at increasing the Saudi workers that are working in the private sector. However, the system does not change the structure itself because it has the basis of the comparative advantage of the economy and cheap foreign labor as well more so in the industries that are energy-intensive.
The drawback of this policy recommendation is that it only focuses on the private sector and neglects how the citizens can seek employment in the public sector. Additionally, imposing sanctions and restriction on private companies is an invasion of policies of a company. A foreign investor who feels that his company will not abide by the policy recommendations may decide to move his company to another country or close down his business. Closure will be a loss for the Saudi national in both employment loss and employment loss.
In addition, some private sector companies in the Saudi kingdom are properties of top government officials. Hence, the policy is counterproductive.
New entrepreneurs will also find it difficult to establish their businesses because of the government red tape sanctions that fuel patronage that results in a dormant and unproductive private sector that lacks a sense of entrepreneurship and innovation. Lack of innovation will be a big hindrance to developing an economy, which is more diversified (North & Tripp 2012).
The measure the Saudi government is taking to curb unemployment is not comprehensively addressing the women’s unemployment which has been steadily increasing. Lifting restrictions, however, has a potential of bringing a confrontation between establishments that are conservative religious and the regime (Simmons 2013).
Quick fixes are proving to be unavailable in reducing unemployment in Saudi Arabia, and the regional problem will be a concern for quite some time. Most Saudi youngsters are also entering the job market, and the problem appears to be recurring.
Unemployment in Saudi Arabia has posed serious impacts towards the society because the unemployed population must find some income, which they may rely on such as government and family benefits, which become an expense to these parties. Unemployment level in Saudi Arabia is becoming a major social problem because there has been a mismatch in the employer’s needs in the private sector and the skills that the young Saudi’s have. Better policies and stringent measures should, be instituted by both the policy makers and the government so as to reduce the unemployment rates. Employment reduction is possible by making sure that the economy stabilizes tax reduction on businesses and the creation of a serene and conducive environment that will serve to promote businesses in the country.
Taxes imposed on young entrepreneurs in Saudi are also being lifted to allow entrepreneurship, where some Saudis will create employment for them and still employ others in the process. Employment has deemed to be essential because whenever people become unemployed, they embrace illegal acts such as drug abuse and crimes,, which are detrimental to the state of an economy.
Additionally, a policy measure that can be used to curb unemployment is “Nitaqat” that seeks to improve the number of nationals who are securing employment in the private sector
Cordesman, A. (2003) Saudi Arabia enters the twenty-first century: The political, foreign policy, economic, and energy dimensions, Westport, Conn: Praeger.
Gause, F., & Council on Foreign Relations Saudi Arabia in the new Middle East. (2011) New York: Council on Foreign Relations.
Le, A., & Renard, A. (2014) Le a Society of Young Women: Opportunities of Place, Power, and Reform in Saudi Arabia.
North, P., & Tripp, H. (2012) CultureShock! Saudi Arabia: A survival guide to customs and etiquette. Tarrytown, NY: Marshall Cavendish Editions.
Simmons, R. (2013) Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Hoboken, N.J: Wiley.
World Bank, (2004) Unlocking the Employment Potential in the Middle East and North Africa: Toward a New Social Contract. Washington, D.C: World Bank.
Zuhur, S. (2011) Saudi Arabia. Santa Barbara, Calif: ABC-CLIO.