The Saudi National Labor Observatory (NLO) revealed that the Kingdom achieved significant progress in several key labor market indicators against G20 countries.
The Labor Market Comparative Report, issued by the NLO, showed a surge in the annual growth rate of labor force, for both locals and expats, and a notable growth in employment and labor force participation rate in the period between 2016 and 2021.
Outperforming G20
Saudi Arabia secured the top rank in labor force growth rate, for males and females, compared to all G20 countries. Female participation in the Saudi labor force surged by 5.5%, while male participation increased 1.7%. This was significant growth compared to Australia, Argentina, Türkiye and other G20 countries.
The incredible growth in female participation in the labor market is largely driven by Saudi Arabia’s policies, initiatives and programs that support women empowerment.
The Labor Market Comparative Report attributed this notable growth in the Saudi labor force to several factors, including the increased participation of women in the labor market, the high percentage of Saudi youth population which has exceeded 18 million, and the Kingdom’s economic growth which has attracted foreign labor.
Participation Rate
Saudi Arabia recorded the highest growth rate in the labor force participation rate between 2016 and 2021. It ranked the first among three G20 countries in this index. The Kingdom achieved a 6.2% increase in labor force participation, followed by Japan with only a 2.1% increase.
This progress can be attributed to many factors, including robust economic expansion, the entry of more youth into the labor market, the implementation of effective policies that encourage employment, and the entry of foreign labor due to the Kingdom’s powerful economic growth.
As for male participation rate, Saudi Arabia ranked the second among G20 countries in 2021, with 79.2%. However, the Kingdom recorded a lower female labor force participation rate in 2021 compared to other G20 countries.
Employment Rate
The NLO report showed that Saudi Arabia secured the ninth place among the top ten G20 countries in terms of employment rate, which reached 57% in 2021. Furthermore, the Kingdom recorded a high male employment rate compared to other G20 countries, with 76%.
Saudi Arabia also ranked first in the growth of female employment rate, recording a surge of 10% in the period between 2016 and 2021. These figures underscore the Kingdom’s commitment to supporting enhancing employment levels for both males and females.
Unemployment Rate
Unemployment rate in Saudi Arabia reached 6.6% in 2021, placing the Kingdom in the eighth place among G20 countries. Additionally, the Kingdom witnessed an unemployment gap between males and females in the period between 2016 and 2021, although this gap has significantly improved due to Saudi Arabia’s reforms and initiatives to encourage female participation in the labor force.
In 2023, the unemployment rate in Saudi Arabia declined to 7.7%, a remarkable drop from 12.3% in 2016. Moreover, this figure is close to the Vision 2030 target of 7%, stressing the robustness of the labor market reforms and strategies undertaken by the Kingdom.
Significant Progress
Saudi Arabia has made major strides towards improving its labor market, in line with the transformative Vision 2030. These accomplishments are the product of the Saudi Ministry of Human Resources and Social Development (HRSD) efforts to strengthen the Saudi labor market and enhance the Kingdom’s global status.
In this regard, the Kingdom has achieved remarkable progress in 2024 in several global labor market indicators, including flexible working arrangements, ease of finding skilled employees in the labor market, and equal pay for equal work.
In 2024, Saudi Arabia has ranked the 14th globally in the flexible working arrangements, advancing 7 places since 2021. Furthermore, the Kingdom advanced 3 places in the ease of finding skilled employees since 2021, securing the 4th place globally. Saudi Arabia has also made significant progress in closing the gender gap in the labor market, advancing two places in the equal pay for equal work index since 2023. The Kingdom has ranked the 13th globally in 2024.
Women Empowerment
In the first quarter of 2024, Saudi women participation in the labor market increased to 34.1%, reflecting the Kingdom’s efforts to empower women and boost their participation in the labor force.
Additionally, Saudi females holding senior and middle management positions increased to 43.8% in the first quarter of 2024. The Human Resources Ministry is working to increase women participation in the labor market to 40% in the coming period.
Vision 2030
Under the ambitious Vision 2030, Saudi Arabia aims to achieve economic diversification and global competitiveness. A skilled workforce is pivotal to establish the Kingdom’s status as a hub for innovation, entrepreneurship and technological advancement in the MENA region and the world.
To this end, Saudi Arabia has launched a wide range of programs and initiatives to boost its labor force and increase Saudis participation in the labor market. One of these programs is the Nitaqat Program (Saudization program), which aims to increase Saudi nationals’ participation in the private sector.
According to the latest figures released by the National Labor Observatory, the number of Saudi nationals working in the private sector in June reached 2.34 million, accounting for an increase of 16,598 since April.
This achievement is supported by proactive measures taken to promote Saudization, such as regulatory frameworks that incentivize companies to hire and retain local talent. Therefore, the private sector has witnessed a shift towards hiring Saudi skilled employees who have a deep understanding of local culture and business practices.
