Saudi Arabia's move to nationalise engineering jobs 'required' to tackle unemployment

Private sector companies will need to allocate 25% of engineering roles to Saudi citizens starting from Sunday

Saudi Arabia plans to lower the Saudi unemployment rate to 7 per cent and increase the participation of women in the workforce by 2030. Bloomberg

Saudi Arabia's requirement that companies allocate 25 per cent of engineering jobs in the private sector to citizens looks set to help the kingdom tackle unemployment, as the Arab world’s largest economy moves ahead with its economic diversification strategy.

The rule, which takes effect on Sunday, is applicable to private sector companies that employ five or more people in engineering professions, the Saudi Press Agency reported.

It will provide more “productive job opportunities for male and female citizens in various regions of the kingdom”, SPA said.

"Rapid Saudisation is one of the key elements of the Vision 2030 plan and the latest move concerning engineering jobs is one further step to fulfil the aim of increasing Saudis in the expanding private sector in the kingdom," Junaid Ansari, head of investment strategy and research at Kamco Invest, told The National.

"This follows a similar rule for the insurance sector and, before that, in the education, telecom and real estate sectors. We believe that this is a required step to tackle the issue of unemployment in the kingdom."

However, the move needs to be balanced with consistent investment in Saudi Arabia's education sector "so that the overall talent pool in the kingdom not just remains stable but improves at a rapid pace in order to keep up with the growing requirements of the private sector", he added.

Saudi Arabia's Vision 2030 diversification strategy aims to lower the unemployment rate among citizens to 7 per cent and increase the number of women in the workforce by the end of the decade.

Strategies include nationalisation quotas for private sector companies, bringing in more foreign investment and expanding the non-oil economy to create more jobs in sectors such as tourism and technology.

The overall unemployment rate in the country, for Saudis and expatriates combined, remained relatively stable at 3.5 per cent in the first quarter of this year, compared to 3.4 per cent in the last quarter of 2023, General Authority for Statistics data shows.

It also shows the unemployment rate for Saudis decreased to 7.6 per cent in the first quarter from 7.8 per cent in the preceding three-month period.

The jobless rate for Saudi females recorded a slight increase to 14.2 per cent from 13.9 per cent in the prior quarter, while the rate for Saudi males decreased to 4.2 per cent from 4.6 per cent.

The data for the first quarter also showed an increase in the labour force participation rate for Saudis, reaching 51.4 per cent compared to 50.4 per cent in the previous quarter, while the rate for the total labour force participation (including Saudis and non-Saudis) decreased to 66 per cent from 67 per cent in the fourth quarter of last year.

As part of the Saudi government's latest decision, incentives are also being provided to the private sector to recruit more citizens, the SPA report said.

These include support for recruitment, searching for suitable workers, training and job continuity.

Companies employing Saudi citizens will also gain priority access to "localisation" support programmes and employment schemes through the Human Resources Development Fund.

The Ministry of Human Resources and Social Development issued a procedural guide explaining the details of localisation, professions and required percentages on the ministry’s website.

The government also stressed the need for companies to adhere to and implement the provisions, “to avoid the regulatory penalties that will be applied to violators".