Complex Made Simple

Unemployed Saudis face a harsher reality with VAT, fuel increases

Saudi Tweets are getting a global audience with “Salaries are not enough” (#الراتب_مايكفي_الحاجه4) and how will the unemployed live? (#العاطل_كيف_يعيش).

It’s an unfortunate reality that those with low or no income do suffer the most from macro-economic measures  such as introducing VAT or raising fuel or energy prices, in the hope of increasing state revenues,.

This especially rings true in Saudi, where the cost of living has traditionally been low compared to other global economies, with subsidies playing a big role in that.

But times have changed with the economy falling in a recession in 2017, contracting by 0.5%, and carrying a budget deficit of less than 10% of GDP estiamted at around $690bn in 2017.

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The finance ministry estimated a deficit of $52 billion for 2018, with no balanced budget in sight until 2023.

Saudi has launched itself steadfast into Vision 2030, with a non-oil diversification strategy that weans the economy from energy subsidies and dependence on oil revenues that today constitue 90% of Saudi revenues.

So what ‘s the new reality facing Saudi people?


Saudi Vision 2030 aims to lower the rate of unemployment, among Saudis, from 11.6% to 7%.

According to Trading Economics, a statistical site on business, total unemployment rate in Saudi Arabia decreased to 5.8 percent in the third quarter of 2017 from 6 percent in the second quarter of 2017.

Unemployment in Saudi Arabia averaged 5.56 percent from 1999 until 2017 and at any point in 2017, there were on average at least 750,000 people unemployed, assuming a Labor force participation of around 55%.

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Total employed in Q3 2017 according to the Saudi General Authority for Statistics were 13.7 million, of which 3 million were Saudi.

Young men and women make up around 36.7% of Saudi population, reaching 31 mllion.

According to the Saudi Gazette (SG), the unemployment rate among Saudis showed signs of stability at 12.8% despite an increase in the number of new jobseekers in Q3, 2017.

“The overall unemployment rate among women fell to 21% in the third quarter compared with the previous quarter when it stood at 23%.

“There were 1,231,549 Saudi jobseekers during the period, including 190,822 men and 1,040,727 women, with the largest number of jobseekers between 25-29,  and about 45.8% of jobseekers were holders of university degrees,” said SG.

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Fuel increases

The Saudi government in December announced a stimulus plan to spend 72 billion riyals ($19 billion) over the next few years to boost private-sector growth.

it introduced a cash transfer program, Citizen’s Account, designed to shield needy Saudi families from the impact of subsidy cuts was started late December as well.

The government said it expects to pay some$8.5bn on the Citizen’s Account payments in 2018.

In return, Saudi Arabia has introduced a 5% VAT and increased the price of petrol hoping in a bid to help grow GDP by 2.7% in 2018.

Starting Monday January 1, 2018, the Ministry of Energy, Industry and Mineral Resources announced plans to increase the price of Octane 91 fuel from 0.75 riyals per litre ($0.2/L) to SR1.37 per litre ($0.37/L) or an 82% increase and 95 Octane from 0.90 riyals per litre ($0.243/L) to SR2.04 per litre ($0.55/L) or up 126%.

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How Saudi fuel compares to other countries

Forbes Middle East says that Saudi petrol prices are still among the world’s cheapest despite the price hikes.

It quotes saying the Kingdom’s petrol prices are the 15th lowest in the world.

“Regionally, the petrol prices in the Kingdom are still cheaper than the UAE where a litre costs $0.58, but slightly more expensive than Kuwait’s $0.36/L, the cheapest in the region.

It lists petrol prices in some of the major cities in the world that are more expensive than Saudi including:

London: $1.68, New York: $0.79, Paris $1.71, Tokyo: $1.23, Iceland: $2.02, Norway: $1.92, Monaco: $1.90 and Netherlands: $1.88.

And lists top 5 countries with the cheapest petrol price per litre which are:  Venezuela: $0.1, Turkmenistan: $0.28, Kuwait: $0.35, Iran: $0.36 and Algeria at $0.37