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Monday, December 16, 2013

How Saudi Arabia Should Combat Joblessness

By Ghassan Khoury, Senior Managing Consultant and Johnathan Tozer, Senior Consultant

Business leaders in Saudi Arabia must create engaging workplaces for the country to see reduced unemployment, in particular among young Saudis. Gallup data reveal that only 35% of Saudi nationals were employed by an employer in 2012, and just 9% of those employees were engaged with their workplaces. The International Monetary Fund reported that “creating a sufficient number of rewarding jobs for [young Saudis] in the private sector will be a challenge.” Assuming there is little increase in public-sector jobs, unemployment in the Kingdom could rise by nearly 1.4 million in the next decade.

Policy changes alone, such as efforts to replace the expatriate workforce with Saudi workers, could create a vicious circle. Forcing Saudis into jobs for which they are not a good fit makes them less likely to be engaged, affecting a variety of business outcomes and potentially leading many to voluntary unemployment.

With such a strong societal need for jobs, leaders in Saudi Arabia should consider all physical and emotional influences on an employee’s work life, and create national and industry-wide strategies to combat unemployment. These include:

1. Promoting Education and Industry Collaboration: Gallup’s 2011-2012 data indicate that 19% of employed Saudis have a college-level education, the lowest proportion among Arab Gulf countries surveyed. What’s more, private-sector leaders complain that many young Saudis do not have skills or training that match the needs of the country’s labor market. As Saudi Arabia continues its planned $22 billion education development investment, education leaders in the Kingdom should collaborate with industry leaders to ensure they are equipping future employees with the qualifications they need to be successful in the local workforce.

2. Support SMEs in Creating Engaging Workplaces: Small and medium-sized enterprises (SMEs) are considered engines of job creation in the Kingdom and across the MENA region. Thus, leaders should not overlook SMEs when it comes to providing sustainable and engaging jobs for Saudis. As Saudi Arabia invests in programs to spur SME start-up and growth, including financial support and training, leaders should consider specific initiatives focused on leadership development and workforce engagement.

3. Base Selection on Candidates’ Talent, Not Personal Relationships: It is essential for organizations to select candidates based on talent and fit for the role, rather than on personal connections or “wasta.” Wasta is commonly used across the MENA region among those seeking to gain an advantage (in this case, employment) due to favoritism rather than merit. The selection and hiring processes must work in tandem with a robust performance-based organizational culture; to do otherwise risks a loss of productivity -- not only because of the poor fit for roles among improperly hired employees, but also because of the negative perceptions it creates among their otherwise engaged colleagues. Saudi leaders should look to examples such as new auditing procedures in the United Arab Emirates, where recruitment processes in government and business organizations are not based on wasta.

With Saudi Arabia facing a pending youth unemployment bulge, leaders across the Kingdom should not only focus on creating jobs, but also on fostering rewarding employment in engaging and productive workplaces. This will help to ensure a successful future for every young Saudi.

For more advice for business leaders, read the State of the Global Workplace report.

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