Our exclusive research with City & Guilds group looked to uncover the trends in employment in Saudi Arabia.
In April 2016, Saudi Arabia (KSA) launched its Vision 2030, an “ambitious yet achievable” roadmap for economic and developmental action. In it, Mohammad bin Salman, deputy crown prince and chairman of the Council of Economic Affairs, sets out commitments to enable Saudi Arabia to become a “global investment powerhouse” and a hub that connects Asia, Europe and Africa.
Plans to diversify the economy away from oil encompass multiple sectors and involve the significant improvement of digital infrastructure. To achieve its demanding goals, the Kingdom requires an efficient and cost-effective workforce, across industries, and a consistent pipeline of productive workers, equipped with the right skills and capabilities.
Currently, however, there are acknowledged skills gaps in areas ranging from technology to leadership and a mismatch between the outputs of higher education and the requirements of the jobs market, which is explicitly mentioned in the vision.
To achieve growth, employers will need to rethink the demographics of their workforce, factoring in the strong emphasis on nationalisation under the Nitaqat programme (designed to increase the number of Saudi nationals employed by the private sector), plus global trends and disruptors such as increased automation, digitisation and artificial intelligence.
At this unique time of transition and opportunity, Changeboard conducted a survey of more than 500 Saudi employers, on behalf of the City & Guilds Group, to gain insights into workforce demographics and trends affecting the employment landscape.
The survey of senior HR professionals in KSA reveals their positivity and confidence: just under three-quarters (72%) expect their business to grow over the next five years – 42% moderately and 30% significantly – while 19% expect it to stay the same. Participants came from a range of sectors and industries, and from organisations of varying sizes.
This supports the upbeat tone of Vision 2030 and the need to equip employers in KSA with a workforce – and talent pipeline – that meets current and future needs and enables growth.
However, a range of challenges were cited by respondents, when asked to score out of 10, disruptors, to indicate the extent to which they feel they are likely to change the nature of work in KSA. Highest rated was the ‘changing workforce demographic’, followed by ‘the emergence of new industries’; digitisation; the decline of traditional industries; globalisation; automation; artificial intelligence; and increased immigration.
Figures from the IMF, published in 2013, showed that migrants make up 56% of the Saudi workforce. The nationalising influence of Vision 2030 – and the Nitaqat programme – on recruitment strategies is clear, with 81% of our survey respondents aiming to increase the number of nationals employed in their business. A new (mawzoon) balanced Nitaqat progamme came into force on 11 December 2016, introducing revised labour quotas and incentives designed to reduce unemployment.
“Our recruiting strategy will be aligned to Vision 2030 – we will hire more nationals,” commented one employer. “We want to reduce our reliance on expatriate workers in the future, for leadership roles,” said another, while a third warned it was “making it harder to recruit the right national talent, as the market has become more competitive.”
However, 80% of employers are still recruiting a mix of national and migrant workers (Western and non- Western); 43% have taken on 75% national talent vs 25% expat talent in recent recruitment exercises; 23% have taken on 75% expats vs 25% nationals, while 15% have taken on expats and nationals equally. Only 13% of employers recruited nationals only, and only 8% expats only.
Although workers come from a broad range of countries, most migrant talent is recruited from India (68%), the UK/Europe (49%), Pakistan (34%) and the US (32%).
Despite its focus on Saudisation, Vision 2030 acknowledges that skilled expats will be needed to supplement national workers: “Achieving our desired rate of economic growth will require an environment that attracts the necessary skills and capabilities both from within the Kingdom and beyond our national borders,” it states.
When recruiting, Saudi employers currently assess candidates’ skills via CV screening, competency-based interviews and by considering qualifications. Most feel certain that expats’ certificates/methods of skills recognition gained outside the KSA are an accurate representation of their skills: only 3% of our respondents believe them to be an inaccurate measure, while 18% “don’t know”.
With or without a supply of Western and non-Western migrant workers, it is challenging to recruit the right candidates for certain roles and areas. The skills most difficult to find right now are technical/job-specific skills (according to 65% of respondents); leadership skills (62%); soft skills (35%); strategic insight and planning (29%); communication skills (24%); IT skills (18%); and customer service skills (12%).
The “importance of filling skills gaps when it comes to meeting the broader goals/ambitions of the business” is rated highly by employers in our survey. The absence of vital skills is impacting negatively on many businesses, making more than half of organisations less productive and forcing more than a third to rely heavily on expensive consultants and outsourcing. Perhaps most worryingly, the gap in leadership skills results in a lack of strong leadership within more than a third of businesses.
Matching skills to need
The mismatch between “the outputs of higher education and the requirements of the job market”, is highlighted in Vision 2030 and perceived by 82% of our survey respondents. While employers broadly believe that nationals, Western expats and non-Western migrant workers are suitably prepared for the workplace, the acknowledged lack of certain skills (see chart, page 28) means upskilling and career development is essential.
To this end, 52% of employers in KSA offer dedicated career development programmes for all members of their workforce; 39% for nationals only; 86% believe that having specific career development opportunities/programmes helps employees to be more engaged.
Almost two-thirds (64%) of employers in KSA have the budget to upskill staff, while 18% do not, but would like to – with an inevitable focus on training nationals and young people, in particular. There is also a desire to upskill leaders/ managers and women, but budget is also allocated to non-Western and Western expats.
This is broadly in line with the government’s emphasis on Saudisation and reflects the fact that more than half of the Saudi population is under 25. More than 50% of university graduates in the Kingdom are women and one core commitment expressed in Vision 2030 is to increase women’s participation in the workforce from 22% to 30%. “We will continue to develop their talents, invest in their productive capabilities and enable them to strengthen their future and contribute to the development of our society and economy,” the Vision pledges. This is an area of opportunity for employers.
Employers also indicate there is scope to align learning and development (L&D) to business, recruitment and talent strategies.
An interest in vocational training
Given the specified need for technical/ job-specific skills, leadership skills and soft skills, among others, and the mismatch between education and employers’ needs, vocational training could be a significant tool in developing a workforce fit to implement Vision 2030.
Vocational education and training prepares individuals with practical, work-based skills, directed at a particular occupation (compared to academic, knowledge-based skills). It is typically delivered through colleges and training providers, or through training programmes offered by employers.
An overwhelming 83% of survey respondents say they would consider implementing vocational qualifications/training into their skills development plans. However, this figure might be higher with improved awareness: a fifth (21%) of respondents admit they are not aware of it, while its image could be improved. Almost half (49%) of employers would like to build stronger relationships with vocational training providers, as well as schools, universities and recruitment agencies.
While vocational training could equip both nationals and migrant workers with the practical skills required by employers, consistency would be enhanced by an international skills qualification/ certification common to different nationalities, or a global standard for skills within industries. A significant 73% of employers said this would aid recruitment, while 15% admitted they “don’t know”, which suggests that they retain an open mind on this issue.
Next steps for Saudi employers
Ultimately, to nurture the talent pipeline and develop an efficient, and cost-effective workforce, across industries and sectors, employers in the KSA are open to using a blend of training and education to gain missing skills and develop a consistent pipeline of productive workers, equipped with the right capabilities for the challenges and opportunities of Vision 2030.
The survey results show a clear appetite among employers in KSA for vocational education and training, including strong potential for industry-specific/common international skills qualifications to simplify recruitment processes and to provide consistency.
There is a substantial opportunity, in line with commitments to multi-faceted education made in Vision 2030, to equip nationals and potential migrant workers with the right skills and capabilities to fulfil required roles, via the most appropriate education and training methods, and to provide ongoing development.
Developing the workforce
According to the City & Guilds Group chief executive Chris Jones, developing the workforce will involve three key steps. The first will be bridging the gap between education and employment – encouraging employers to work with education providers to develop high-quality technical education, and curricula fit for purpose.
The second means challenging the perception of higher education as the best route into a career and embracing alternatives – particularly as 82% of our respondents identified a disconnect between what is taught in higher education and what employers look for in new recruits.
Third, it means exploring global industry skills standards: Saudi Arabia needs to attract and export top talent. If skills can be recognised and verified internationally, it gives employers enhanced confidence when recruiting, while supporting positive migration.
He concludes: “Vision 2030 is a brilliant opportunity for Saudi Arabia, but to be successful, it must be underpinned by an effective, outward-looking education and skills system.”