Labour market reform in the gulf - a case study of the saudizition policy and its role in promoting employment in the privat sector

Abstract

The Gulf States have been well-known for their rapidly growing economy whose core basis lies in the extensive oil supplies which their territories harbour. Yet, the presence and overdevelopment of the oil industry has created the rentier state and economy that characterise the current political and economic structure of Saudi Arabia and have brought about a number of socio-economic problems for the country. A high number of expatriate workers, an unsustainable employment in the public sector, the underdeveloped private industries and the extremely high levels of overall and youth unemployment have prompted the Kingdom to implement exclusive labour market reforms. The most famous of these programs, termed Saudisation, seeks to reduce the unemployment rate among the local population, especially in the private sector, but so far it has achieved limited to no results. The following study analyses the demographic and labour market environment in the country in order to pave the way for a critical history and analysis of the Saudisation framework as well as its strengths and flaws. Furthermore, the study discusses the core structural reasons why the Saudisation policy has failed to achieve the ambitious targets set by the government and concludes with a set of recommendations about how to best address these structural problems and enhance the effectiveness of the labour market reforms.