Saudi Arabia to launch employment programme

02 August 2011

Kingdom to use results-based employment agencies and open job centres

Saudi Arabia is set to launch a new programme to tackle rising unemployment. The kingdom is the world’s largest oil exporter, but still has an unemployment rate of about 10.8 per cent.

The proposed Work Programme will use private-sector expertise to place currently unemployed people in long-term work placements. Private companies specialising in employment will be awarded contracts and paid using a results-based structure in a public-private partnership (PPP) framework, depending on the number of people they find work for and the length of placement.

The Labour Ministry has approached about 30 international companies working in Saudi Arabia to offer work placements. Companies in a range of sectors including engineering, retail and construction have been targeted. They will be paid according to the number of people deployed in long-term employment in the company. The firms also have an incentive to participate to comply with Saudisation guidelines.

The ministry invited bids from employment agencies in June to conduct a pilot scheme for the initial phase of the programme. It is now finalising contract agreements with two groups. The first group comprises France’s CapGemini, the UK’s Working Links and the local Al-Elm, while the second group is a partnership of Australia’s Ingeus and the UK’s Deloitte.

The pilot phase will focus on the deployment of job centres and the scheme will last for up to one year. “Our consortium is currently finalising contractual arrangements with the Human Resources Development Fund (HRDF), a government agency. Our objective is to finalise this over the coming couple of weeks with a view to commencing delivery of five job placement centres in the autumn,” says a Working Links spokesman.

The Ingeus/Deloitte team intends to deliver a further six job centres. According to industry sources, about 30 job centres will be established at the pilot phase in total.

Both the CapGemini/Working Links (without Al-Elm) and Ingeus/Deloitte groups have won results-based contracts for work programmes in the UK. In April, the UK’s Department for Work and Pensions (DWP) awarded contracts to several employment agencies. The groups were awarded most of the contracts on offer.

The Labour Ministry is now looking for an international adviser to assist in the implementation of the programme beyond the pilot scheme. The ministry has invited consultants to submit proposals.

The issue of unemployment has long been a problem in the kingdom. According to a 2010 estimate, the unemployment rate for Saudi nationals is 10.8 per cent. This figure has been growing steadily over time. At present, there are more than two Saudi Arabian nationals to every expatriate. In the workforce, there are more expatriates than nationals.

A large proportion of the unemployed are in their early 20s. The Labour Force Review of 2008 identified citizens in the 20-24 age group as the most in need of assistance as unemployment is much higher in this group than in the 25-54 age bracket.

According to the review, “Youth unemployment has several economic and social consequences requiring special attention by all relevant agencies to address its causes, the most important of which are the structural imbalances in the labour market.”

As a result, the Economy and Planning Ministry drew up a plan to increase employment from about 8.2 million to 9.4 million by 2014 as part of the kingdom’s Ninth Development Plan. According to the plan, the number of local Saudi Arabians in workforce should exceed expatriates by 2014.

The government’s aims have been given added impetus by the protests that erupted in the kingdom in March. Protesters focused heavily on employment problems. The Work Programme was put forward as a way to address these concerns.

There is much to gain for the government from finding meaningful employment for its citizens. There also exists many opportunities for international companies. When the Work Programme was implemented in the UK, it aimed to reduce the number of people on incapacity benefits, which cost the country about $3-5bn a year.

Due to the high costs of the benefits system, the government was willing to award large results-based contracts to the private sector if the companies were able to find meaningful employment for Britons, who are typically older people with a long history of unemployment.

Saudi Arabia’s unemployment demographic is very different to that of the UK but the Labour Ministry hopes that implementing a similar programme will reduce unemployment in the kingdom.

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