Saudi social and economic change proves to be a delicate balancing act
By James M. Dorsey
The World
Bank issued a stark warning in its 2018 outlook for the Saudi economy. “The
Kingdom likely faces a looming
poverty problem,” the bank said.
The bank has
since noted in its 2019
and 2020
outlooks that “while no official information is available on poverty, identifying
and supporting low-income households is challenging.”
Dependent on
world oil prices, the curve
of Saudi gross domestic product (GPD) per capita never was a straight line
upwards. Instead, it ebbed and flowed.
In one such
ebb and flow, Saudi GDP per capita dropped by almost half from a peak of US$
17,872 in 1981 to $8,685 in 2001, the year in which 15 Saudi middle-class
nationals constituted the majority of jihadists who flew aeroplanes into New
York’s World Trade Towers and the Pentagon in Washington.
2001 was a
year in which many Saudis struggled to make ends meet amid depressed oil prices
and then King Abdullah’s efforts to introduce a measure of Saudi fiscal restraint.
Many held two and three jobs.
"Prior
to the Gulf War, we didn't pay rent in student dormitories -- now we do," a
Saudi student enrolled in Saudi Arabia's prestigious King Fahd Petroleum and
Minerals University told this writer at the time.
"In the
past, it didn't matter if you didn't complete your studies in five years. Now
you lose your scholarship if you don't. Soon we'll be asked to pay for tuition.
Before the Gulf War, you had 10 job offers when you graduated. Now you're lucky
if you get one," the student said referring to the US-led reversal of the
Iraqi invasion of Kuwait.
"There's
nothing to do here but sit around, watch television and smoke shisha," added
Abdulaziz, one of the student’s friends using the Arabic word for a water pipe.
"There's nothing we can do to change things. That's why we get married
early, only to discover that it was a mistake."
Saudi GDP
per capita has dropped again, although less dramatically, from $23,337 in the
year that the World Bank warned about looming poverty to $20,110 in 2020.
On a
positive note, the bank reports that while “poverty information and access to
survey data to measure welfare conditions have been limited” Saudi Arabia has
seen “gains
in administrative capacity to identify and support low-income households.” The
bank warned, however, that the middle class could be most exposed to the pains
of austerity and fiscal restraint.
To be sure,
the Saudi Arabia of the turn of the century is not today’s kingdom. Despite Saudis
having constituted more recently one of the larger contingents of foreign
fighters in the Islamic State, Saudis are unlikely to respond today to a
unilateral rewriting of a social contract that promised cradle-to-grave-welfare
and potential economic hardship by drifting towards militancy and extremism at
a time that a young Saudi crown prince has promised massive change and
delivered some.
Prince
Mohammed bin Salman has liberalized social mores, rolled back the influence of
ultra-conservative clerics, created greater leisure and entertainment
offerings, and enhanced women’s rights and professional opportunities as part
of his plan to wean the kingdom off dependency on oil exports and diversify the
Saudi economy. He has simultaneously significantly tightened the political
aspect of the kingdom’s social contract involving the
public’s absolute surrender of all political rights, including freedom of
expression, media, and assembly.
In exchange,
Prince Mohammed’s Vision 2030 reform plan promises, according to the World
Bank, to protect citizens from the pain of economic change by “modernizing the
social welfare system, redirecting price subsidies toward those in need,
preparing and training those unable to find employment, and providing tailored
care and support to the most vulnerable citizen.” In doing so, the government has sought to
soften the impact of higher energy prices as well as the introduction tripling
of value-added tax (VAT) and expatriate levy.
More than
social protections, Vision 2030 is about creating jobs for Saudis in a country
where unemployment
was 11.7 per cent in the first quarter of this year.
Saudi
Arabia’s private sector has reportedly created in the
last three years a third of the 1.2
million new jobs the kingdom needs to generate by 2022 to meet its
unemployment target. The kingdom’s statistics agency said the first-quarter
unemployment was the country’s lowest in nearly five years, but the decline was
partly driven by people dropping out of the labour force rather than new job
creation.
Prince
Mohammed asserted in May in a wide-ranging
interview that “we have 200,000 to 250,000 people getting into the job
market each year and public sector jobs are limited.”
Taking
tourism as an example, the crown prince said the development of the industry
would create three million jobs, one million of which would be for Saudis who
over time could replace ex-pats who would initially fill two-thirds of the
openings.
“Once we
create three million jobs, we can Saudize them in the future. There are also
jobs in the industrial sector and so on,” Prince Mohammed said. He predicted at
the same time that the percentage of foreigners in the kingdom could increase
from a third of the population today to half in the next decade or two.
Writing
about the changing social contract in Saudi Arabia, scholars Mira Al Hussein
and Eman Alhussein cautioned that the government needs to manage rapid economic and
social change, in part by providing clearer information to the public. The
scholars identified issues involving rights of foreigners versus rights
accorded children of mixed Saudi-non-Saudi marriages, the rollback of religion
in public life, and austerity measures as potential points of friction in the kingdom.
“The
ramifications of existing grievances and the increasing polarization within
Gulf societies…as well as the extensive social engineering programs have pitted
conservatives against liberals. Arab Gulf States’ ability to redefine their
social contracts without turbulence will depend on their tactful avoidance of
creating new grievances and on solving existing ones,” the scholars said.
A podcast
version of this story is available on Soundcloud, Itunes, Spotify, Stitcher, TuneIn, Spreaker, Pocket Casts, Tumblr, Podbean, Audecibel, Patreon and Castbox.
Comments
Post a Comment