Saudi Arabia's labour market reform will face tests

Significance

The changes aim to make private-sector employment more attractive to nationals, relative to the public sector. Ongoing labour market reforms focus on restructuring the kingdom’s workforce and reducing the enormous fiscal cost of the bloated public sector, by persuading young Saudis to choose non-government jobs while paring back some of the generous employment terms they enjoyed.

Impacts

• The government will offer visa and property ownership incentives to attract the highest-skilled workers, amid regional rivalry for talent.
• Major foreign investors and businesses operating in special economic zones will be granted exemptions from local employment obligations.
• Low-skill manual labour, predominantly in the construction sector, will remain almost exclusively performed by foreigners.