by Swapnil Sujal•Published on February 2, 2026

A major part of the diversification drive was to increase the presence of Saudis in the workforce and reduce the unemployment rate in the kingdom. Despite being an oil-rich economy, Saudi Arabia was struggling with a high unemployment rate, with 75% of unemployed people in the 2010s being in their 20s. The rising unemployment was due to the combined factors of rising population growth and the employment of foreign workers. The Saudi Population grew from a mere 6 million in the 1970s to 28 million by the early 2010s. Though the state laid out billions to provide aid to the underprivileged, some of the royals were often accused of being self-centered about their own wealth and the kingdom’s international image than actually solving the crises. [1] This led the kingdom to adopt the policy of Saudization.

The First Version of Nitaqat and Its Failure

The first attempt to solve the issue was attempted in late 2011 with the introduction of the Nitaqat policy, which stipulated 5-3-% of the employees in Saudi Companies to be national. The policy also dealt with the rising number of illegal migrant workers from South Asia. [2]

By 2013, nearly hundreds of thousands of foreign workers sought to leave the country; however, the Saudis were not drawn to fill in the gap. This was mostly due to the low wages of these workers. Migrant workers were mostly employed in blue-collar unskilled labor, with 2/3 of them earning less than SR1000 per month. [3]

Such low wages were unappealing to Saudi youths. Suddenly, the demand for workers surged, but shops and companies found it difficult to hire nationals who often demanded four to five times the salaries that the owners had previously paid to expatriates. [4]

The ministry was also struggling with increasing the employment of female workers. Though the labor ministry directed shops dealing with women’s wear and accessories to replace the salesforce with an all-female salesforce, the owners faced difficulties with finding women workers with negotiation skills, and the women faced difficulties with balancing the long hours and their household work.[5]

This led to a large 23% gap between Saudi male and female workers. By 2012, only 15% of the Saudi workforce was filled with Saudi women. The government at one point proposed the creation of a women-only city to increase female participation in the kingdom’s workforce. [6]

By 2014, the first attempt toward Saudization had failed. Members within the Shura Council of Saudi Arabia were criticizing the ineffectiveness of the Nitaqat policy to increase employment among the Saudi nation. [7]

More than 200,000 companies were closed as they failed to meet the minimum percentage of Saudi nationals that were required by the new policy to be employed. [8]

Beginning with Vision 2030, a part of Saudization was reserving some roles for Saudi nationals only. Starting in 2018, 41 roles in Medina were reserved for Saudi nationals only, while many jobs in the closed markets, shopping complexes, non-governmental organizations, and travel and hospitality industries were made exclusive to Saudis. [9]

The Second Version of Nitaqat Mutawar Program

In 2021, Saudi Arabia launched a reformed 2^nd version of Nitaqat, increasing the minimum wage to more than $1,000 monthly. The revised version set out a clear 3-year target to create 340,000 jobs for Saudis by 2024, using a linear formula and creating 32 activity choices to replace the previous 85 activities. [10]

Saudi Arabia has been focusing on improving the quality of education. From 2015 to 2019, the number of schools increased to 38,000 by 16.5%, while the private sector schools increased by 42%. This created a new sector for Saudization. In 2021, the government announced decisions mandating all posts at national and international schools to be localized. This was targeted to create 28,000 jobs for Saudis and improve the involvement of Saudi nationals in the education sector.  ^[11]

In the same year, a localization rate of over 25% was attained by the private sector, followed by over 80% in the financial and insurance sector, 70% in administration, defense and social insurance, 60% in the mining sector, and 50% in the education and information and communication sector. The Kingdom also localized 20% of the engineering specialists, which was expected to create 7,000 jobs. [12]

A complete localization was issued for closed commercial spaces like malls, creating over 50,000 jobs for Saudi nationals. Additionally, a complete localization of the ride-hailing service and a 20% discount for accountancy-related services were issued. [13]

In the medical sector, the initial phase attempts to localize at 65% in radiology, 70% in medical labs, 80% in physiotherapy and therapeutics, 35% in community pharmacies and medical complexes, and 65% in hospitals. The plan also targets 55% localization in density by 2026. [14]

By the end of 2024, Saudi nationals comprised 25% of tourism related workforce. In 2025, Saudi Arabia increase the wage subsidies for Saudi workers in the tourism sector by 30 to 50%. Hotel managers and tour agency directors. These reservations in the role will be applicable from the second quarter of 2026. [15]

Impact on Unemployment Among Saudis

The initiatives have been greatly successful in achieving the vision objective. By 2024, the unemployment rate among Saudi nationals was 7%, even crossing the vision’s target of 8.0 by 2030. Employment in the private sector among Saudis increased by 12% in 2024. Women’s participation also improved, with women comprising 36% of the labor force. This has led the kingdom to revise its earlier unemployment target from 8% to 5% by 2030. [16]

 

In the first quarter of 2025, the unemployment rate dropped to a historic low of 6.3% among Saudi nationals. [17]

However, the subsequent quarters saw a rise in the unemployment rate, with the unemployment rate among Saudis increasing to 6.8% in Q2 and 7.6% in Q3. The Saudi male unemployment rate rose to 5%, while the Saudi female unemployment rate rose to 12% by Q3 of 2025.

Support and trust for the private sector are also growing in the kingdom. 95% of the unemployed Saudis are willing to work in the private sector. Aside from this, Saudis have also shown a willingness to work additional hours and a long commuting time. Nearly 71% of the unemployed Saudi females and 87% of the unemployed Saudi males are ready to work for more than 8 hours a day, while 61% of the unemployed Saudi female and 47% of the unemployed Saudi males are willing to travel at least an hour to the work location.

Impact on the Labor Force Participation

In the first quarter of 2025, the labor force participation rate among Saudi nationals stood as 51.3%. In Q2, it decreased to 49.2% while in Q3, it further dropped to 49%. There exists a nearly double gap between male and female participation, with the male participation in the labor force being 64.3%, while the female participation in the labor force is only 33.7%. [18]

 

Similarly, the employment-to-population ratio among the Saudi nationals dropped from 48 in the first quarter of 2025 to 45.9 in Q2. In Q3, it reached to 45.3, with the Saudi male employment to population ratio being 61.1, while the female employment to population ratio being 29.7.

 

Conclusion

Although the percentage of female participation in the labor force has doubled from that of 2016, it still remains quite low compared to their male counterparts. Among the nations, the core working group comprising people aged between 35 and 54 grew slightly by 0.2% from 5.9 million in Q2 to 6.1 million in Q3 of 2025, while the unemployment rate among the oldest generation aged 55 and beyond, grew much greater by 1.6% from 0.5% in Q2 to 2.1 in Q3 of 2025.

Demographically, amongst the Saudis, the difference in the rise between the male core working age group and the female core working age group was negligible at 0.1%, while the difference between the rise in the male older age group and the female older age group was at 1.6%, with more older generations of Saudi female retaining their jobs.

 

References

[1] Murphy, C. (2012, December 3). In Saudi Arabia, unemployment and booming population drive growing poverty. The Washington Post. https://www.washingtonpost.com/world/in-saudi-arabia-unemployment-and-booming-population-drive-growing-poverty/2012/12/02/458e648c-3987-11e2-a263-f0ebffed2f15_story.html

[2] Roche, E. (2013, April 4). India concerned over Nitaqat policy in Saudi Arabia: Ministry. Mint. https://www.livemint.com/Politics/97NhC6kTe26dtPYAvolvUN/India-concerned-over-Nitaqat-policy-in-Saudi-Arabia–minis.html

[3] Naffee, I. (2013, May 14). Low wages deter Saudis from taking up unskilled jobs. Arab News. https://www.arabnews.com/news/451572

[4] BBC News. (2013, November 28). Saudi Arabia’s hidden poverty. https://www.bbc.com/news/world-middle-east-25127368

[5] Mohammed, I. (2013, July 9). Abaya shops fail to hire women. Arab News. https://www.arabnews.com/news/457479

[6] Davies, C. (2012, August 12). Saudi Arabia plans new city for women workers only. The Guardian. https://www.theguardian.com/world/2012/aug/12/saudi-arabia-city-women-workers

[7] Arab News. (2014, January 29). Shoura: Nitaqat failed to yield desired results. https://www.arabnews.com/news/517201

[8] Ghafour, P. K. A. (2014, August 5). Nitaqat: 200,000 firms closed down. Arab News. https://www.arabnews.com/news/611896

[9] Middle East Monitor. (2018, December 17). Saudi Arabia nationalises 41 professions. https://www.middleeastmonitor.com/20181217-saudi-arabia-nationalises-41-professions/

[10] Asharq Al-Awsat. (2021, May 24). Updated version of Saudi ‘Nitaqat’ program aims to provide 340,000 jobs by 2024. https://english.aawsat.com/home/article/2989296/updated-version-saudi-%E2%80%98nitaqat%E2%80%99-program-aims-provide-340000-jobs-2024

[11] Arab News. (2021, May 9). Saudization of schools to create around 28,000 new jobs for locals. https://www.arabnews.com/node/1856191/business-economy

[12] Hassan, R. (2021, March 20). Engineering sector making strides to achieve Saudization targets. Arab News. https://www.arabnews.com/node/1828896/business-economy

[13] Arab News. (2021, April 9). Retailer welcomes new rules on Saudization for malls. https://www.arabnews.com/node/1839926/business-economy

[14] El-Shaeri, N. (2025, January 26). Saudi Arabia raises local workforce quotas across key sectors. Arab News. https://www.arabnews.com/node/2587872/business-economy

[15] Walid, R. (2025, May 26). Saudi Arabia increases wage support to 50% for tourism sector jobs. Arab News. https://www.arabnews.com/node/2602206/business-economy

[16] Asif, Y. (2025, August 6). IMF report highlights Saudi Arabia’s workforce transformation, strong non-oil growth. Al Arabiya English. https://english.alarabiya.net/News/gulf/2025/08/06/imf-report-highlights-saudi-arabia-s-workforce-transformation-strong-nonoil-growth

[17] General Authority for Statistics. (2025, September). Labor market statistics Q2 2025. https://www.stats.gov.sa/documents/20117/2435273/LMS+Q2_2025_EN.pdf/c596f7f3-bfce-007a-b0ed-83792da1654f?t=1759133628117

[18] General Authority for Statistics. (2025, December). Labor market statistics Q3 2025. https://www.stats.gov.sa/documents/d/guest/lms-q3_2025-en-pdf

 

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