Saudi Arabia - demographic trends to watch for (page 2 of 2)

While unemployment amongst locals is the direct outcome, related psychological job segmentation is perhaps even more harmful (some jobs are only for expatriate workers and looked down upon by Saudi youth).

2) Secondly, the education system has not been designed to equip the youth with the requisite skills required by a modern economy, and more importantly the attitude. Add to this complacency on the part of many students - a very high proportion of university graduations are in the humanities - and the picture is stark.

Saudi Arabia needs 200,000 new jobs every year. Fortunately with the recent high price of oil, investment in several mega projects, development of economic zones, growing economic liberalisation, and regulatory pressures (tightened emigration policies and higher Saudisation quotas enforced on companies) there is scope to say that things seem to be moving in the right direction.

With a decrease in the influx of expat workers, the job market for Saudis will become competitive. The importance of a modern professional education will considerably increase, and hence the demand for modern educational plans, and professional training, etc, better match employers' needs.

5. Average household sizes will decrease

The average household size in Saudi Arabia has seen a downward trend - from 7.4 people in 1987 to 5.7 in 2004 - a year on year decrease of 1.57%. And all indications show a further reduction to around four by 2015.

The question is, how much of this decrease has happened amongst Saudis, who are used to having large families? Unfortunately, the 2004 Census only provides aggregate information on household sizes, thus no data is found in the public domain to isolate the reduction amongst Saudis only.

However, since we know that over time the expatriate population is expected to be stagnant as a percentage of the total population, and most expatriates are males living without their families, and that the population growth amongst Saudis has dropped significantly, then the overall decrease in household size can safely be attributed almost entirely to Saudis.

A 2004 TNS study amongst Saudis also found a trend towards smaller families. It revealed that Saudis - especially the younger ones - realise the need for smaller families, mainly due to economic reasons and to provide a better quality of life for their children.

This will have a marked impact on the way products are marketed. Marketers will have to gradually align their products to smaller families. There is also a need to reevaluate the 'ideal' family in brand communications.

6. Number of households will tremendously increase

Currently, there are around four million households compared to around 1.9 million in 1987 - a year on year increase of 4.48% (the population growth during this time was 2.83%). This suggests an increase in nuclear families. The current real estate boom owes a lot to this trend (in addition to the stock market crash). Thus, demands for all kinds of household goods - white goods, automobiles, bank loans, furniture - will increase.

7. The so-called gray population will increase

Currently, around three million people - or 12% of the total population - is 45 years old or above. This can be expected to double by 2020, becoming a huge market in itself, having different product and communication needs.

Another important trend to watch is an increase in the economically inactive population; currently at 1.25 million rising up to 3.5 million by 2020. While just feeding them may not be an issue, even in the long run, a real concern will be old age diseases such as senility, arthritis, diabetes. All need special and costly healthcare, hence there is a huge opportunity to educate and sell pension funds, old age benefit plans, healthcare plans, etc.

8. Females will play a more active role in social and economic life

Observers know that Saudi society has opened up. In the 1990s, with a few obvious all female environments, the idea of a woman coming to the office for work was almost unthinkable.

Now the government encourages her to work. In September 2005, the Saudi Council of Ministers approved a new Labour Law, which allows females to work in all fields that suit their nature.

This will have (and is having) a huge impact. Purchasing power will increase. More importantly, this will change the way females see themselves and their lifestyles, thus creating new needs/need states.

New products will be required to match these needs/need states. Nestle's Soup Time and Master Foods' Senzi, for instacne, are good examples of capitalizing on the new trend.