Young Saudis stare into bleak future as oil prices drop

Worshippers leaving a mosque in Riyadh after prayers. For decades, the royal family has used the kingdom's immense oil wealth to lavish benefits on its people, but the plunge in oil prices is changing all that.
Worshippers leaving a mosque in Riyadh after prayers. For decades, the royal family has used the kingdom's immense oil wealth to lavish benefits on its people, but the plunge in oil prices is changing all that.PHOTO: NEW YORK TIMES

With the government's oil wealth shrinking, cushy jobs are harder to come by

RIYADH • In pressed white robes and clutching crisp resumes, young Saudi men packed a massive hall at a university in the capital city this month to wait in long lines to pitch themselves to employers.

It was one of three job fairs in Riyadh in two weeks, and the high attendance was fuelled in part by fear among the younger generation of what a future of cheap oil will mean in a country where oil is everything.

For decades, the royal family has used the kingdom's immense oil wealth to lavish benefits on its people, including free education and medical care, generous energy subsidies and well-paid (and often undemanding) government jobs. No one paid taxes, and if political rights were not part of the equation, that was fine with most people.

But the drop in oil prices to below US$30 a barrel from more than US$100 a barrel in June 2014 means that the old maths no longer works. Low oil prices have knocked a chunk out of the government budget and now pose a threat to the unwritten social contract that has long underpinned life in the kingdom.

The shift is already echoing through the economy, with government projects delayed, spending limits imposed on ministries and high-level discussions about measures long considered impossible, like imposing taxes and selling shares of Saudi Aramco, the state-run oil giant estimated to be the world's most valuable company.

For younger Saudis - 70 per cent of the population is under 30 - the oil shock has meant lowering expectations as they face the likelihood that they will have to work harder than their parents, enjoy less job security and receive fewer perks.

For younger Saudis - 70 per cent of the population is under 30 - the oil shock has meant lowering expectations as they face the likelihood that they will have to work harder than their parents, enjoy less job security and receive fewer perks.

It is hard to overstate the importance of oil in the development of modern Saudi Arabia. In decades, it rocketed a poor, mostly rural, country to affluence, with most of its 21 million citizens now living in cities festooned with skyscrapers and streets filled with SUVs.

Oil wealth also allowed the ruling Al Saud family to maintain its grip on power and wield clout abroad through chequebook diplomacy.

But the fat years left the economy poorly structured, economists say: 90 per cent of government revenues is from oil; 70 per cent of working Saudis are employed by the government; and even the private sector remains heavily dependent on government spending.

Nor did advances in education create a large professional class or inculcate a culture of hard work. Most of the country's engineers and healthcare workers are foreigners, and many government employees vacate their offices mid-afternoon, or earlier. But with oil revenues crashing and the numbers of young people reaching the workforce growing by the day, those jobs have become harder to get as the government cuts costs and pushes Saudis towards the private sector, where job security and salaries are lower on average.

Economists say at least 250,000 young Saudis enter the job market every year, and that making them effective members of the workforce is a major challenge. In recent years, the government has pushed for greater Saudi employment, penalising companies with few Saudi employees. Many employers hate the programme, saying it forces them to swell their payrolls with people who contribute little.

Four Saudi workers gathered in a McDonald's break room said they liked their jobs but worried that they would not be as successful as their fathers, all of whom worked for the government.

They knew the government had less money to employ citizens, which meant their generation would have to work harder.

"The government is good, but our generation is spoiled," said Mr Ahmed Mohammed, 21. "Everyone wants a government job."

His colleagues agreed. "Everyone wants to sit at home and get paid," Mr Abdulrahman Alkhelaifi, 20, said.

NEW YORK TIMES

A version of this article appeared in the print edition of The Straits Times on February 18, 2016, with the headline 'Young Saudis stare into bleak future as oil prices drop'. Print Edition | Subscribe