RIYADH, 4 January — A study conducted by the Saudi American Bank (SAMBA) and released here yesterday revealed an alarming growth rate in unemployment among Saudis. The study said some 30,000 new jobs are created for Saudis every year, while about 100,000 young Saudis enter the job market.
The lack of adequate job creation by the Kingdom's private sector remains a serious concern, said the study conducted by Brad Bourland, SAMBA's chief economist. The Manpower Council, puts unemployment in Saudi Arabia at 14 percent, which includes 614,000 unemployed Saudis in search of suitable jobs.
Bourland said the new Saudi budget had announced the creation of 27,000 new government jobs, mainly as teachers and health care workers besides a few Saudis to be absorbed in other sectors. "This", he said, "would help stem the unemployment challenge the Kingdom faces in 2001, but private sector job creation was the answer to this challenge, not government hiring."
"Substantial government hiring over the next few years would contradict the stated goal of limiting government growth, and would further weaken the budget structure, which was already heavily oriented toward payment of salaries and other current expenditures at the expense of capital (infrastructure) spending," said Bourland in his study.
The seventh Five-Year Plan (2000-2005) aims to provide employment for 817,000 Saudis, an ambitious, but attainable goal, according to SAMBA. The previous Five-Year Plan targeted the employment of 511,200 Saudis through Saudization and new job creation. The final figures at the end of the sixth plan period show the target was not met.
The GOSI (General Organization for Social Insurance) statistics track most of the new employment for Saudis. It shows the addition of 387,344 Saudis to the GOSI insurance scheme during the previous plan period, a shortfall of about 100,000 from plan goals. The majority of new jobs came during the latter years, suggesting that the higher targets of the new Five-Year Plan are attainable, if the GDP growth forecasts are met.
Bourland said that the government was basing its 2001 budget, the first balanced budget for seven years, on an average oil price for the year of about $22 per barrel at current production levels. This left room for strong fiscal performance even in the context of a sustained decline in prices.
Highlighting the pricing mechanism of Saudi oil, Bourland said determining revenues was very difficult. The Kingdom is the world's largest oil exporter, but Saudi oil is priced against other benchmark crude oils.
With four grades of crude oil, the two major markets of America and Europe and a fifth grade sold into Asia, there are 13 different prices for Saudi crude at any one time. Bourland explained that SAMBA maintains an oil-pricing model accounting for crude grades, discounts and sales.
The model provides SAMBA with an average price for Saudi oil at any given time and the implications of this price for government finances, trade imbalances and economic growth. The model's calculation of an average oil price for the year has been within $30 per barrel, the same figure the Ministry of Finance has reported to the IMF as the annual average price for Saudi oil.
