Saudi Arabia aims to create 1.2 million jobs by 2022 by focusing on the retail sector in order to reduce unemployment to 9 percent, a senior labor ministry official told Reuters.
After flooding the U.S. market in recent months, Saudi Arabia plans to slash exports to the world’s largest oil market in the coming weeks in an effort to dampen visible build-ups in crude inventories.
Oil traders only get official figures on a monthly basis, or not at all in the case of stockpiles in big consumers such as China and India. Saudi Arabia has shipped 860,000 bpd of crude to the U.S. on average so far this year, according to Bloomberg calculations based on weekly customs data.
Khalid Al-Falih, the kingdom’s energy minister, told reporters last week that Saudi production will drop in January to 10.2 MMbpd, down from 11.1 MMbpd in November.
President Donald Trump, who has used social media to ask the Saudis and OPEC to keep the taps open. Fluctuations in U.S. crude imports and stockpiles have an outsize impact on the market because data are available on a weekly basis.
Getting hundreds of thousands of unemployed Saudis into the workforce is a major challenge for Crown Prince Mohammed bin Salman, who oversees economic policy for the world’s top oil exporter, where unemployment currently stands at 12.8 percent.
The kingdom has struggled for years to create jobs for Saudi nationals, as private sector companies relied on cheap foreign labor and the state education system prepared students poorly for the market.
The oil market has so far largely ignored the production cuts that OPEC and its allies announced in early December, a larger-than-expected 1.2 MMbpd or just over 1% of global demand. Many Saudis also prefer higher-paying public sector jobs.
“In total we need 1.2 million jobs but I believe now that has come down a because we started in 2017, so we have already made some headway,” Ahmed Kattan, deputy minister of labor for labor policies, said in an interview on Tuesday.
Saudi crude shipments to the U.S. next month could even test the 30-year low set in late 2017 of 582,000 bpd, down about 40% from the most recent three-month average, the same people said, asking not to be named as the information isn’t public.
“We are focusing on the retail sector, because retail is labor-intensive, a sector that requires medium skills which is aligned with the unemployment supply, so it means we are not pushing the private sector where they cannot find demand.”
Forcing them to buy similar crude elsewhere, such as Mexico, Canada or Venezuela. They could also hit Motiva Enterprises LLC, the Saudi-owned company that operates the largest refinery in the U.S.
Some 10 million foreigners are working in Saudi Arabia, doing many of the strenuous, dangerous and lower-paid jobs largely shunned by the 20 million nationals.
“People look at these things, scrutinize them,” he said of the data on Bloomberg Television Thursday. Kattan said 47 percent of unemployed Saudis have only been educated to high school level or less, making them suitable for retail jobs.
The labor ministry plans to restrict employment in 12 retail sub-sectors to Saudi nationals, including in furniture, car spare parts, watches, eyeglasses and sweets shops, with implementation starting in September, he said.
Cutting the jobless rate to 7 percent by 2030 and raising women’s participation in the workforce to 30 percent from 22 percent are among a raft of ambitious targets in a program to diversify Saudi Arabia’s economy and reduce its dependence on oil exports.
With two-thirds of Saudi workers employed by the public sector, the government is targeting job creation in the private sector as it streamlines spending following a sharp fall in global oil prices.
Kattan said the authorities were trying to make hiring Saudis more attractive by reducing the wage gap between them and foreigners and limiting employers’ control over foreign workers’ residency permits, which often locks them into long-term contracts.
“These (reforms) together will help the business sector to change their business model from labor-intensive to capital and automation-intensive,” he said.
Hall now serves on the advisory board of Orbital Insight, a Palo Alto-based provider of analytic platforms to translate satellite and aerial images into useful data, including global oil supplies.