Recent weeks have demonstrated that Saudi Arabia is not completely immune from the unrest sweeping the Middle East and North Africa. The events have forced Riyadh to react by announcing two multibillion-dollar packages.

Having pledged to inject $36bn into social welfare in February, King Abdullah bin Abdulaziz al-Saud promised an additional $93bn in March. The measures include public sector pay bonuses and the creation of 60,000 additional jobs in the Interior Ministry.

Achieving successful education reform is not necessarily about how much money you throw at it

Chadi Moujaes, Booz & Co

There are two reasons behind the discontent in Saudi Arabia. The first is growing unemployment, with joblessness concentrated among young male secondary-school leavers and female graduates. The second is a widening gap between professional Saudi Arabians’ aspirations and the opportunities available. The key to solving both issues is investment in education.

Unemployment concerns in Saudi Arabia

The kingdom has a pronounced youth bulge. Nearly 80 per cent of nationals are aged below 39, with a third aged under the age of 14. At least 450,000 locals are unemployed, some 10.5 per cent of the local workforce. Unemployment among youths aged 20-24 is about 40 per cent. In January, the Saudi labour minister said the kingdom needed to create 5 million new jobs by 2030 to absorb these new entrants to the marketplace.

The problem is at present, most school leavers are ill-equipped for the modern labour force. The kingdom’s education system stresses rote learning at the expense of critical analysis. Memorising the Quran lies at the core of the curriculum and outputs in science, languages and maths are weak. Many high school graduates have to spend two further years in school to raise their language, maths and science skills to university entry level, eating up a quarter of the higher education budget.

According to the Finance Ministry, Saudi Arabia has trebled its spending on education in the past decade. Over the current decade, it will spend $37bn on building and upgrading schools and universities. The 2011 budget allocates SR150bn ($40bn) to education and training. This represents 25.9 per cent of the total spend and an 8 per cent increase on 2010. The budget provides for the construction of 610 new schools, in addition to the 3,200 already under construction.

In addition to the school building programmes, various initiatives are under way to reform how education is delivered. The $2.4bn King Abdullah bin Abdulaziz Public Education Development Project (Tatweer) was launched in 2007 with the aim of transforming education for 4.5 million state school students by introducing modern teaching methods, assessment criteria and accountability.

Plans are under way to expand and reform all levels of education, starting with expanded intakes at nursery school. Fewer than 10 per cent of infants attend kindergarten, yet international studies suggest that early learning boosts children’s cognitive and literacy skills.

New curriculums will raise teaching standards in maths, science and English at primary and secondary schools, steering education away from rote learning. Tatweer aims to improve training and professional development for teachers as well.

Investment is also being channelled into vocational training. The Technical & Vocational Training Corp (TVTC), a unit of the Labour Ministry, is expanding the availability of skills-based learning in the kingdom. New polytechnics are being opened that teach practical, technical and industry-specific skills. So far, TVTC has invested SR4bn in 22 polytechnics to train 30,000 nationals a year.

Skills requirements for jobs in Saudi Arabia

Observers say that TVTC has moved towards strategic partnerships in which the business community takes the lead. Successes include a Plastics High Institute in Riyadh and Jeddah’s Saudi-Japanese Automotive High Institute that teaches automotive assembly techniques.

“There are signs that TVTC is listening to the private sector, letting businesses define their future skills requirements,” says Chadi Moujaes, Abu Dhabi-based principal at US consultant Booz & Co.

At university level, despite significant new investment in colleges and universities, higher education is still struggling to match demand. Today, more than 100,000 nationals complete their higher education overseas, under the King Abdullah Foreign Scholarship Programme, which was set up in 2005. The new spending package announced in February includes funds to increase access to education abroad.

The investment in higher education has produced results. According to the Washington-headquartered World Bank, Saudi Arabia has increased gross enrolment rates in higher education from 20 per cent in 1999 to 30 per cent in 2007. But there are still many areas of weakness. In particular, Saudi universities provide insufficient places for engineering and medical students. There is also a lack of funding for research and development.

In an attempt to remedy this, the $2.6bn King Abdullah University of Science & Technology (Kaust) graduate research university was opened in 2009. The authorities are encouraging the private sector to invest in universities’ research and development capabilities. Saudi Aramco has signed a memorandum of understanding with King Fahd University of Petroleum and Minerals to fund posts in petroleum engineering. Petrochemicals major Saudi Basic Industries Corporation (Sabic) has donated $2bn for engineering research to King Saud University.

Private education

Part of the reform plan is to increase enrolment in private schools from 11 per cent to 25 per cent. Until recently, expatriate schools were closed to Saudi nationals. But with the state sector struggling to meet demand, the ban has been lifted. Previously, private schools had to adopt the national curriculum, textbooks and practices. New steps introduced in 2010 give private schools more leeway, although religious studies remain the core of the curriculum.

Whether Saudi Arabia can reach its goals for private education remains to be seen. Private education costs money. The kingdom’s better private schools charge about SR25,000 a child a year, unaffordable to the average Saudi family.

The problem for Riyadh is that education reform takes time to implement. Persuading schools and teachers to embrace change will be no easy task. It is likely to take another decade for the reforms to be completed, and yet the government is under pressure to deliver immediate results.

Harnessing female talent is another challenge. According to the Paris-headquartered Unesco, 58 per cent of Saudi students are female, yet women comprise just 16 per cent of the workforce. Careers for women are mainly limited to healthcare and teaching. Changing this will require a radical shake-up of societal values. Saudi Arabia must also support and promote entrepreneurship if it is to create the much-need job opportunities, says Ahmed Younis at Doha-based think-tank Silatech.

At present, most locals work for government departments and for state-owned firms. Meanwhile, the kingdom imports 5 million foreign workers to work in the private sector.

It is hard to restrict imported labour when nationals refuse low-paying menial jobs and when employers struggle to fill technical, professional and managerial jobs. Analysts say it is 30-50 per cent cheaper for companies to hire non-Saudi staff. As a result, two decades of Saudisation policies have largely failed, the exception being the banking sector where nationals make up 80 per cent of the workforce.

Many companies resort to so-called shadow employment, putting locals on the payroll in name only to meet their quotas. This has turned Saudisation into a kind of corporate tax, while failing to encourage nationals to embrace private sector work and offer them a meaningful transfer of skills. Fewer than 10 per cent of nationals held private sector jobs in 2009.

“In my personal opinion, the private sector is keen to hire Saudi graduates, but there is a huge expectation gap,” says Asher Nour, chief financial officer of the local Al-Touq Group.

“Graduates are not keen to start at junior level … while the private sector expects Saudi graduates to deliver from day one in today’s competitive world. The graduates have come through a system and curriculum that has not necessarily kept pace with the practical job market.”

Hand outs undermining education efforts in Saudi Arabia

Other observers fear that King Abdullah’s $130bn welfare bonanza will undermine the drive to get nationals into work and efforts to increase jobs in the private sector.

“In handing out more money to the unemployed and to state employees, the authorities are going to make it harder to achieve their goal to develop a strong home-grown, prosperous private sector,” says Edwin Eisendrath, managing director of US-based Huron Consulting Group. “Having more people work for the government is not a solution.”

Education reform in the kingdom will have to strike a balance. “On paper, it is clear that Saudi Arabia is trying to do all the right things,” Moujaes says. “Achieving successful education reform is not necessarily about how much money you throw at it. The real issues are how to allocate the money and how to execute plans. The challenge facing Saudi Arabia is not a lack of vision or a lack of willingness; it’s about the ability to implement change. Having a grand vision can create more problems than it solves, if the means to deliver is not there.”

King Abdullah has made education reform a key plank of his leadership. Much has been achieved, but much more needs to be done. Unfortunately, as the isolated protests around the kingdom show, time is no longer on the king’s side.