By ANGUS MCDOWALL in Dubai and SUMMER SAID in Riyadh, Saudi Arabia
23 march 2011 - The Wall Street Journal - Middle East
A host of new benefits promised recently by Saudi King Abdullah will boost the income of many Saudi citizens and may help the kingdom avoid the regime-shaking unrest that has roiled neighboring Arab countries.
But the estimated $93 billion of government handouts doesn't address one of the kingdom's most destabilizing problems: the persistently high level of unemployment among Saudi youth, some analysts, employers and job seekers say.
The monarchy has taken a number of steps to pre-empt outbursts of public dissent. It said this week it will hold long-delayed municipal elections on April 23—though elected representatives have little power and share municipal councils with government appointees.
On Friday, the king announced the creation of 60,000 new public-sector jobs, higher salaries for government employees and an allowance for the unemployed. That came on top of pledges made in February, when King Abdullah returned home from a three-month medical absence shortly after Saudi ally Hosni Mubarak was driven from power in Egypt.
The world's largest oil exporter hasn't seen large-scale antigovernment protests, although hundreds of Shiites have demonstrated in the country's oil-rich Eastern province seeking equal treatment and the release of political prisoners.
A high rate of youth unemployment was one of the factors that spurred mass demonstrations in other Arab countries, and with hundreds of thousands of young Saudis entering the labor market every year, Saudi authorities have long viewed unemployment as a problem that could provoke dissatisfaction with the government and push young people toward radical politics.
Friday's announcement of benefits coincided with a speech in which the king thanked Saudis for their loyalty a week after they had shunned a proposed "day of rage." Saudi authorities have refused to draw a link between the benefits and elections, and the threat of unrest, maintaining the king is a popular leader and that protests have been the work of a small minority of malcontents.
King Abdullah said Friday that all government employees would receive at least 3,000 Saudi rials ($800) a month, while job seekers will be entitled to 2,000 rials a month—twice the average private-sector salary, according to labor ministry figures.
Some analysts say the unemployment problem can be solved only by getting Saudis more jobs in private companies. But the introduction of higher salaries for Saudi government workers and a guaranteed income for job seekers may discourage Saudis from looking for positions in the private sector.
"It's a step back for private-sector job creation," said Steffen Hertog, author of a study of Saudi Arabia's politics and economy. "Most private sector jobs will now be even more unattractive to Saudis than they were before. At the same time, the government is creating unneeded jobs in the public sector."
Prince Turki Al Faisal, a former head of the kingdom's intelligence service and onetime ambassador in both London and Washington, spoke of a "failure in the kingdom's job market," in remarks at a conference Sunday reported in the local press.
The Saudi unemployment rate for men is over 10%, according to official figures, but that figure doesn't show the large number of Saudis who are neither working nor looking for a job. Because of strict gender segregation and the requirement to seek permission from a male guardian before securing a job, few Saudi women are in paid work.
Saudi Arabia has for a decade attempted to build a broad-based private-sector economy that isn't reliant on high oil prices, and required private companies to hire a quota of Saudi employees.
But most private-sector jobs are held by the kingdom's eight million expatriate workers, while most working Saudis are employed by the state, where they can get higher pay.
"There aren't enough jobs in the public sector and it is more difficult to get a job in the private sector because they always hire foreign workers," says Ahmad Ghalib, a 25-year-old engineering graduate in Riyadh. "Many in my generation don't wake up before midday and now there's an unemployment allowance I doubt they will have the incentive to go and search for jobs."
Many Saudi employers say foreign nationals are cheaper, easier to fire and are often better trained and more experienced. "The education here doesn't produce what the economy needs, it produces people with religious skills," said a senior executive with a major listed Saudi company. "The other thing is the labor law, where if you hire a Saudi you are stuck with him because you can't fire him even if he doesn't perform."
Another Saudi national, who owns a company in the kingdom, said the government's money would have been better used to prepare young people for the demands of a modern, competitive economy.
"What the government could have done instead was to increase spending on education, training programs and social awareness so that Saudis can be more accustomed to the Western working culture," he said.
Since acceding to the throne in 2005, King Abdullah has won a reputation as a comparative reformer in Saudi Arabia's conservative political climate, introducing economic liberalization, more press freedoms, more technical education and less gender segregation.
However, since the recent wave of Arab unrest began, he has barred protests, kept a lid on women's rights and criticized pro-democracy demonstrations in Tunisia and Egypt.
The last round of municipal elections, in 2005, was the only public poll ever held in the conservative Islamic monarchy, where political parties are banned.
Subsequent municipal elections scheduled for October 2009 were postponed so the government could look at improvements to the way the polls were run, including the possibility of extending the vote to women. Women still won't be allowed to vote in the April elections.
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