The prospects for Saudi women’s participation in the labor market

The prospects for Saudi women’s participation in the labor market

The ruling Saudi family needs to diversify its economy and keep wealth within the country to survive a future beyond oil. In order to reach this goal women are essential as workers and consumers, they are granted new rights at an unprecedented pace. But to appease conservative forces, female empowerment may remain purely economic in nature.

On Sunday 24 June Saudi women took to the road, ending the world’s last female driving ban. This policy change looks at least partly like a clever PR move, long-overdue and self-evident. Nonetheless, its social and economic impact cannot be understated given Saudi Arabia’s geography. In a vast country with desert temperatures, low fuel prices, spread-out cities and an underdeveloped public transportation network, driving really does mean freedom. Will other freedoms for women inevitably follow?

A future beyond oil

For the past 40 years, the Saudi royal family could count on its oil revenues to fill the state treasury, hire foreign laborers and keep the population appeased. But 32-year old Crown Prince Mohamed bin Salman realizes the day will come when this liquid gold loses its value. He has initiated a number of reforms to diversify the economy and keep money from flowing outside the country. Integrating women in the workforce is an essential building stone in reaching this goal.

With only 22% of Saudi women active in the labor market, female participation is low even compared to GCC neighbours like Oman (30%), UAE (41%) and Kuwait (44%). Bloomberg estimates that a slow convergence of participation towards GCC norms could raise Saudi GDP-growth by 0.4%-0.9% each year for the next two decades. Meanwhile about 10 million foreign workers send home $38 billion in remittances every year. In order to counter this outflow of funds, the government has introduced a monthly expat levy, and provides incentives for businesses to hire Saudi nationals. Greater female participation in the labour force would obviously play a major role in offsetting some of the work currently done by foreigners. Under the Crown Prince’s Vision 2030, there is a goal to increase the proportion of women in the labour force to 30% over the next 12 years.

“Educated housewives”

Over the last decade, the percentage of university-age women attending tertiary education in Saudi Arabia increased from 30%, to 50% – outperforming countries like Mexico, China, Brazil and India. In fact female students outnumber their male counterparts in the desert Kingdom, forming 57% of the student body in 2016. More women than men graduate in physics, biology, IT, mathematics and statistics.

Yet unemployment among Saudi women stands at 33%, nearly 5 times the rate for men. The ability to drive will of course enable women to do valuable labor for households that employment statistics do not capture, like bringing children to school, volunteering, shopping and so forth. But the disparity between capability and opportunity results in a large pool of untapped human resources. When the Saudi General Directorate of Passports recently announced 140 vacancies for female border guards, they received no less than 107,000 applications. By far the largest private female employer is the retail industry, with 200,000 Saudi women now working in this sector.

Not all positions occupied by women are in retail. Last year Sarah Al Suhaimi was appointed the first female chair of the Saudi Stock Exchange, the largest in the Arab world. It was under her leadership that this entity was upgraded by MSCI to Emerging Market status last Wednesday 20 June, after FTSE had done so earlier this year. These upgrades are estimated to increase foreign liquidity by $35 billion. They also set the stage for the public listing of national oil company Saudi Aramco, expected to be the largest IPO in history. Some of the country’s largest banks are also run by women.

Strategic liberties

Since last year Saudi women no longer need the permission of a male guardian to study or work, and since earlier this year they can independently start their own business. Other facets of the controversial guardianship-system still stand: until this day women cannot travel abroad, marry, make legal claims or be released from jail without consent of their designated male guardian. Segregation in the workplace is no longer a must, although the requirement to provide separate toilets, lunch rooms and security systems can still serve as a barrier to hire women. Cinemas were recently opened to the public for the first time in 40 years, women are now allowed in sport stadions and Riyadh witnessed its first mixed gender concert in April.

Saudi Arabia ranked 138th out of 144 countries on the 2017 Global Gender Gap Report. This is certainly progress compared to the country’s 141th ranking the previous year. However, the new liberties are mostly economic in nature, leaving institutionalized power imbalances between genders within families largely untouched. This way the progressive elite is likely to be the main group to benefit from the reforms, while women from conservative families remain largely homebound. In that case the economic benefits will largely be felt in progressive cities like Jeddah and Al Khobar, and in cities with a large elite like Riyadh. More conservative regions like Qassim, Ha’il and Asir will witness a slower pace of change.

This approach of selective empowerment is how Prince Mohamed keeps conservative forces in Saudi society from revolting. Although it is hard for observers to get a clear view on internal power dynamics, the Prince has certainly been consolidating power. The arrest and Ritz-Carlton detainment of 500 royals and businessmen in November last year has been the most televised example of this evolution. Notwithstanding, the country has a long history of gender segregation, and a powerful – albeit somewhat short winged – religious core still opposes many of the modernizing initiatives. Granting women enough rights to make them workers and consumers without awakening sleeping dragons by going much further is Prince Mohamed’s safest bet to remain in power.

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