Youth unemployment in Saudi Arabia could be lowered by reducing reliance on public sector jobs and by improving the competitiveness of Saudi workers in the private sector, according to a report by the International Monetary Fund (IMF).

Fifty per cent of Saudi’s population is below 25 years, a figure set to increase further in the future, leading to a phenomenon widely referred to as a “youth bulge”, the report said.

Economists debate whether Saudi’s burgeoning youth population will be a burden or advantage to the country. Such a large number of young people brings with it enormous opportunity for growth through the generation of innovative, new ideas, and a sufficiently large work force to power these ideas into practice, said IMF in the report.

However, if not managed appropriately, a rapidly growing population of young people could lead to an increased rate of unemployment amongst 15 to 25 year olds, a figure which already stands at around 30 per cent.

The IMF Saudi Arabia Country Report released in July found that a large number of young people will enter the local job market over the next decade, and that creating a sufficient number of rewarding jobs will be a challenge.

However, generating jobs is not the only difficulty the Saudi Government faces. Around 2 million new positions were created in the Kingdom between 2008 and 2012, but three quarters of these jobs were filled by non-Saudis, suggesting the local workforce needs to become more productive and competitive in the face of mounting competition from expatriate workers.

The Saudi Arabian Government has recognised the importance of harnessing the potential of its young people through education. More than SR204 billion from the 2013 budget was channelled into education, a staggering 25 per cent of the Government’s annual spending, and around 10 per cent of its GDP. Saudi Arabia is now ranked as the world’s highest spending nation on education.

Such initiatives have had a positive impact on the learning outcomes of individuals in the country, with the literacy rate among adults currently standing at around 97 per cent, according to World Bank data, up from 30 per cent in 1970. The number of individuals completing school and tertiary education is also on the rise.

These educational developments are instrumental in addressing the skills shortage Saudi Arabia faces, said Mark Andrews, director of qualifications in the Middle East at Pearson’s, a leading learning company.

Andrews added that providing young Saudis with an education that will lead to placement in a rewarding job is not only important for the Kingdom’s youth, but also to the Saudi economy.

“Saudi’s youth bulge offers enormous opportunities in both Saudi and wider region. It has the potential to increase economic growth and living standards, and help realise the Government’s goal of greater economic diversification,” said Andrews.

“However, as the IMF Report makes clear, equipping young people with effective education and training is critical to ensuring the youth bulge becomes an asset – and not a liability. Education and training needs to focus on preparing young people for the workforce.

“Pearson’s research in the Gulf region indicates many local employers believe that the education system does not always prepare school and university leavers with essential employability skills. Employers tell us they want candidates with 21st century skills, such as communication, collaboration, responsibility and problem solving skills.”

Pearson’s 2009 global study into the links between education and employment, detailed in the Effective Education for Employment report found that skills gaps exist for both new employees and more experienced workers.

Gaps around leadership, teamwork, creativity and innovation continue to present employers with difficulties in training and development. And this is a problem not only for Saudi Arabia, but countries right around the world.

Andrews noted that giving young Saudis the right workplace skills will help this growing demographic group enter and succeed in employment and contribute to the long term prosperity and stability of the country.

“Giving young Saudis an education that allows them to enter the workplace, and contribute meaningfully in their careers will not only help reduce youth unemployment. Making young Saudis more effective and productive in their jobs will also foster economic growth and raise the standard of living in the Kingdom. Saudi Arabia’s vast youth population has the potential to become an economic powerhouse in the region, but it is a matter of channelling that potential into positive and productive outcomes,” Andrews concluded. – TradeArabia News Service