Fast-growing populations across the GCC countries make economic diversification imperative in the region, S&P has said in a report.
Population in the GCC region has grown by an average 4.2% over the past decade, of which 55% is below the age of 30, S&P said in the report.
Meanwhile, the labour force has expanded by an average 3% per year over the past decade to reach 15.3mn in 2009.
“This makes it imperative that economic diversification in the region continues to create more jobs, especially as the oil sector is more capital-intensive than labour-intensive,” S&P said.
According to S&P, unemployment data for the GCC was “hard to find”.
The Saudi Arabian Monetary Agency said unemployment in the kingdom reached 5.4% in 2009. But this number does not show a concerning picture: 10.5% of Saudi nationals were unemployed that year and 43.2% of those nationals below 24 years old were without a job, S& P said citing figures released by the Saudi Central Department of Statistics.
A similar picture emerges from data published by the UAE statistical office: official unemployment rate in the UAE was 4.2% in 2009, a number that breaks down between non-nationals (2.8%) and nationals (14%).
The situation is complicated by the fact that the employment of nationals is generally concentrated in the public sector, while foreign nationals are primarily employed in the private sector.
About 90% of nationals in the UAE and 55% in Saudi Arabia are employed in the public sector, where wages are generally higher and social benefits more attractive.
Most GCC governments have recognised the necessity to encourage the shift of the national workforce from the public sector to the private non-oil sector and to foster the expansion of the latter.
The Saudi Ninth Development Plan (2010-2014), for example, aims to lift the non-hydrocarbon sector share of the kingdom’s GDP from 70% to 81%.
Similarly, Kuwait’s five-year development plan has the non-hydrocarbon sector share rising from 44% to 61% by 2014.
“Achieving those targets will be important to position the GCC economies on a long-term sustainable growth path,” S& P said.from gulf times.