By Sara Khoja, Clyde & Co, Dubai
In late April 2015, Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman, announced an ambitious and ground breaking programme to develop the Kingdom’s economy and society over the next fifteen years. How the programme will be implemented together with the immediate five year plan set out in the National Transformation Plan 2020 will be of key interest to businesses operating in the Kingdom. In this article, we examine the main likely employment implications of Vision 2030 and the introduction of ‘weighted Nitiqat.’
With the Ministry of Labour estimating that each year 250,000 new graduates enter the job market in KSA, the creation of employment opportunities is a social and economic imperative. Vision 2030 seeks to reduce the overall unemployment rate from 11.6 % to 7%, overhaul the education system and increase the female participation rate from 22% of the workforce to 30%. Remittances by foreign workers is also high with a plan to increase in country spending by the resident population from 2.9% to 6%. The National Transformation Plan aims to create 450,000 new jobs by 2020.
Developing the local workforce will be a task spread across a number of Government authorities, including the National Labour Gateway (TAQAT) which will seek to establish sector councils to examine each socio-economic sector’s skills and knowledge requirements to promote vocational training and entrepreneurship. Apprenticeships will be promoted through the establishment of a centralised student database from which large private sector companies.
Other stated goals are the increase of foreign direct investment from 3.8% to 5.7% and the proportion of GDP from the private sector from 40% to 65%.
Defence and Security
KSA is currently the third largest global spender on military equipment. Under Vision 2030, the goal is to localise military spending and establish a local manufacturing capability (including the production of complex equipment such as military aircraft). There are currently seven local defence companies and two research centres in the Kingdom. Increasing capacity will require the development of a specialist and skilled Saudi Arabian workforce.
In 2015, the number of religious tourists to the Kingdom reached a high of eight million. By 2030, the goal is to have increased this to 30 million. The nurturing of a domestic tourist industry is also a stated aim with several historical and cultural sites (including the Red Sea coast) earmarked for development with a desire to double the Kingdom’s UNESCO registered sites which now include Jeddah’s old city; Al Balad. This expansion will create jobs but also challenges in training staff to a proper level to perform effectively in a service industry.
Vision 2030 envisages an annual growth rate of 10% in retail, the workforce for which amounts to 1.5 million works, only 0.3 of which are KSA nationals. By 2020, the aim is to have 1 million more Saudi nationals working in retail by 2020.
Civil Service and collaboration between the public and private sectors.
By 2020, the Government aims to have trained 500,000 government employees and to create HR centres of excellent to promote best practices and provide training within every government agency. The King Salman Program for Human Capital Development will also be launched with a comprehensive programme to examine efficiency within the civil service and the development of strategic partnerships.
As well as the headline announcement of a plan to publicly list 5% of Saudi Aramco, over the next five years, the Government plans to privatise eleven airports, and over the next fifteen years to privatise almost three hundred hospitals and over 2,200 health centres.