Jeddah, April 27: As 37,000 teachers begin knocking on doors today to gather data on the kingdom’s population boom, there are signs that the Arab World’s largest economy will not be able to handle the strain of more people, analysts say.
The teachers, who were employed by the statistics bureau, will be counting people over the next two weeks for the kingdom’s census, which is taken every five years. With every head counted, the fears of a shortage of jobs, especially for the huge number of young people, grow.
Asaad Johar, a economics professor at King Abdul Aziz University in Jeddah, said:
“Social factors, particularly religion, are fuelling the population growth that is outpacing the economic growth and availability of services and proper infrastructure in the country.
“There is a widening gap between the ability of the economy to create jobs and the number of people who are added to it every year, and narrowing this gap is a dilemma.”
Saudi Arabia is facing difficulties in providing jobs, water, food and energy to its indigenous young population, which is growing at 2.34 per cent annually, according to official figures from the statistics bureau.
The number of unemployed people in the country went up from 416,350 in 2008 to 448,547 last year, driving the overall unemployment rate to 5.4 per cent, according to the statistics bureau.
Similar to several Gulf countries, Saudi Arabia has a very young population. The total population is estimated at 24.8 million people, according to the United Nations Development Program.
Sixty per cent of the population is under the age of 40, according to figures from the Technical and Vocational Training Corporation, a state-owned educational body based in Riyadh.
Religious teachings that encourage families to have more children make containing the growth difficult. Moreover, charitable funds are providing micro-loans to encourage youth to marry.
Abdullah al Jabr, a fund manager in the northern al Qassim region, told the Saudi daily Okaz in March: “We are providing interest-free loans to encourage youth to marry in order to protect the morality of the society and to increase the Muslim population based on the request of our Prophet Mohammed.”
Saudi Arabia needs to provide at least four million jobs between now and 2020 to keep unemployment at acceptable levels, according to Ali al Ghufais, the governor of the Technical and Vocational Training Corporation.
Prof Johar said that in order to narrow the gap between economic and population growth, the country needs an intensive economic-spending plan but that this would create more inflation.
“In Saudi Arabia inflation is like a spectre and we just want it to be down all the time but for growth we must allow for it,” he said.
Saudi Arabia had trouble funding education and infrastructure projects in the late 1980s when oil prices began to decline. During the difficult period, Saudi Arabia froze most of its plans and borrowed money from local banks.
The Saudi government was able to repay debtors after oil prices increased in 2003 and it reduced domestic debt and was able to resume the projects. However, the population has grown so much, analysts said, that the government may not be able to make up the difference.
Prof Johar said 45 per cent of the current population was born in the past 20 years, during a period when the state cut down its spending on education, infrastructure and services.
The lack of proper infrastructure, education and work opportunities have led many people to move to the kingdom’s two largest cities, Riyadh and Jeddah, looking for work.
To meet this influx, those cities would need to provide around 100,000 new jobs every year for the next 20 years to meet the rise in the size of their population and keep unemployment down, according to recent official figure by planners in both cities.
The government is pushing for more economic growth in the private sector and diversification of the economy away from oil.
The high proportion of skilled jobs that are taken by foreigners is also causing concern. John Sfakianakis, the chief economist at Banque Saudi Fransi in Riyadh, said: “The economy is capable of providing enough jobs but most of them will go to non-Saudis.”
The government does have a programme that encourages businesses to hire Saudis by agreeing to pay half the salary of Saudi employees, but Mr Sfakianakis said the private sector is still not employing enough Saudis while the public sector is over-employed.
Population growth is also straining infrastructure. Demand for water and energy is growing at a rate of around eight per cent per year, according to the ministry of water and electricity.
At least 1 trillion Saudi riyals (Dh980 billion) needs to be invested in Saudi Arabia’s power and water sector through 2025 to meet the needs of the growing population, according to estimates in a March report from Banque Saudi Fransi.
The report said: “Keeping investments in utilities infrastructure high is far from a luxury for a country where power demand outpaces supply in many areas during peak summer months, and natural renewable water resources are among the sparsest in the world”.
Wael Mahdi is a foreign correspondent at Abu Dhabi’s newspaper The National, where this article appeared. He can be reached at wmahdi@thenational.ae.
—-Agencies