Business & Money | Wednesday 27 January, 2016 4:35 pm |

Saudi Arabia has exhibited steady growth in job demand for the past five years, with an impressive peak in demand during 2015, according to the inaugural Monster.com Middle East Employment & Opportunities report. The growth in job demand in 2015 is significant when viewed against the backdrop of financial deficit, caused by the prolonged period of low oil prices. Saudi’s economic challenges have in fact opened the door to opportunities, effectively speeding up the growth of other sectors, while accelerating innovation in technology and education to support this growth.

 

As part of the Monster Employment Index (MEI), a monthly gauge into the region’s recruitment scenario, Monster.com monitored eleven occupational categories across twelve broad industry sectors and tracked online job postings in the six GCC economies as well as Egypt since 2011. Using its findings from the past five years, Monster.com drew together one single Middle East Employment & Opportunities report.

 

Apart from 2013, all calendar years under consideration recorded steady job creation across the GCC. Compared to 2014, the year-on-year growth momentum improved significantly in 2015. Oil and Gas is the only sector where employer hiring activity has plunged from a year-ago, with the growth rate down by 10 per cent in 2015. 

 

In Saudi Arabia, the Monster.com report reveals that employer hiring activity picked up in 2015, even as the price of crude oil dropped by more than 60% since mid-2014, causing economic turbulence. Meanwhile a steady rise in demand was registered for professionals in growth sectors, such as Software, Hardware and Telecom, Healthcare and Hospitality and Travel.

 

“Over the past five years, we have seen the Saudi job market develop steadily, but at a slow pace,” says Sanjay Modi, Managing Director, Monster.com (India, Middle East, South East Asia and Hong Kong). “Employer hiring activity grew faster in the first three quarters of 2015 than in any other year under consideration, at an average rate of 20 per cent year-on-year. This is significant when viewed against a backdrop of extremely low oil prices, and shows the resilience of the Saudi economy as well as the country’s successful growth in local business activity.”

 

 

KSA on track with economic reforms

With the Saudi 2016 budget plan aiming to cut current deficits to 326 billion riyals from 367 billion riyals in 2015, which represented 15 per cent of GDP, the new budget will bring radical change through privatization of sectors like health-care and education. Not surprisingly, during the first three quarters of 2015 online demand in the education sector was growing higher than any previous year, at an average rate of 11 per cent year-on-year. The new government plans might further boost sector growth and stimulate employment.  

 

Another boost to the economy will be given through business innovation and IT skills. At the occupational level, there has been a greater increase in demand for Software, Hardware and Telecom professionals in 2015, partially driven by more demand for software professionals across a variety of sectors. 

 

Renewable and sustainable energy as an alternative to Oil and Gas

Employment growth in the Oil and Gas sector has diminished significantly over the past year, with the average growth rate sliding from 9 per cent in 2012 to 12 per cent in 2013 and a negative 20 per cent in 2014. In the first three quarters of 2015, the MEI showed a six per cent drop YoY. On the positive side, Saudi Arabia has recognised the business potential of renewable and sustainable energy, having recently signed for the largest solar energy factory in the Middle East. This is a substantial step towards active non-oil revenue growth. According to ACWA Power, a major generator of electricity based in Saudi Arabia, renewable energy can currently cater to 20-40% of the daily energy consumption, which means less reliance on oil consumption.

 

A Kingdom fuelled by growing domestic demand, business and religious tourism 

Hospitality has huge potential in fuelling the Saudi economy, with the contribution of religious tourism to the non-oil sector of the country’s GDP expected to rise from 5.4 per cent to 5.7 per cent by the year 2020 and the number of religious tourists to reach between 25 and 30 million in 2025. Already the government is investing in areas where religious tourism is concentrated, expanding the Makkah metro and the Prince Mohammad bin Abdulaziz Airport in Madinah. Meanwhile, the Kingdom is catering to the growth of business tourism and is working on building the world’s largest hotel, which is estimated to cost $3.5 billion to develop 10,000 rooms in 12 separate towers. According to World Travel & Tourism Council, direct contribution of travel and tourism to GDP should rise by 4.3% pa over the next ten years to reach SAR149.1bn in 2025. 

 

Insurance sector to receive boost from mandatory health insurance policies

Although 2015 started on a negative note for the financial community, the Banking, Financial Services and Insurance sector in KSA has grown extensively since 2014, when online job demand in the sector registered an average annual growth of 16 percent YoY. Today, there are some progressive growth opportunities that insurance policies are offering in particular. “The recent move towards compulsory health insurance for expatriates could open new doors for insurance providers,” Modi continues. The new law is expected to cover approximately one million visitors to Saudi Arabia, especially business travellers and relatives of expatriate workers. 

 

Mortgage law to pump money into property industry

Although spending on transport and infrastructure is projected to fall 63 per cent in 2016 due to the oil price rout, the Engineering, Construction and Real Estate sector is growing at an average year-on-year growth rate of 20% in 2015 with the mortgage banking law from 2013 continuing to ease credit extensions for homebuyers. “Despite the massive increase in building projects, Saudi’s rapidly expanding population continues to put pressure on existing infrastructure. Therefore, the government - which accounts for 67 per cent of construction investment – has initiated a number of large-scale projects in the sector for the coming years valued at $800 billion. The Kingdom is estimated to spend $320m to develop the Riyadh mall in 2016, and the Islamic fund will develop the 1.5 sqkm (0.6 sq miles) first phase of the Jeddah Economic City project, an urban development scheme sprawling over 5.3 sqkm,” said Modi.

 

 GCC healthcare market on growth trend

Prior to 2015, employment demand in healthcare decelerated. However the GCC healthcare industry is projected to grow at an annual rate of 12 per cent by 2018, with Saudi Arabia leading the pack alongside Qatar and UAE. “Changes in population growth, longer life expectancy and higher risks of lifestyle diseases will call for more and better healthcare services in the future, possibly triggering a need for more manpower in medicine and heavy investment into education as well,” Modi says. Already online demand in the Saudi education sector is growing at an average rate of 11 per cent on the year, which is higher than that of any previous year.