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Saudis Launch Unemployment Insurance... To Encourage Job Creation?

Tyler Durden's picture





 

With Washington fighting over whether to stop emergency unemployment benefits in the US, the Saudi Arabian government has re-written their economic textbooks with some wonderful new logic. In an effort to encourage its citizens to seek jobs in private companies (as opposed to the majority in government jobs - which the IMF sees as unsustainable), the Saudis are introducing compulsory unemployment insurance for all citizens with jobs. As Reuters reports, "It may not be the most cost effective solution in the near term but if it helps normalise the labour market it is a price worth paying." With unemployment at 12%, and only 30-40% labor force participation, the costs could be significant.

 

Via Reuters,

Saudi Arabia will introduce compulsory unemployment insurance this year for all citizens with jobs, the world's top oil exporter said on Monday.

 

Saudi Arabia, an absolute monarchy that has no income tax, is trying to push more citizens into work to tackle long-term unemployment that officials see as unsustainable in light of high population growth and uncertainty over future oil revenue.

 

The introduction of unemployment insurance is designed to make it more attractive for young Saudis to seek jobs in private companies, where the starting salary and other benefits are less generous than in government jobs.

 

While the official unemployment rate is around 12 percent, economists say only 30-40 percent of working age adults participate in the labour force. Most Saudis who do not have jobs are financially supported by a relative.

 

Most of those who work are employed by the state, but the government cannot support such a large wage bill in the long term, and the International Monetary Fund has warned that the private sector must meet future job demand.

 

"If there is a guarantee of income, particularly when that is connected to the level of previous earnings, it should make people more comfortable with taking positions in the private sector," said Paul Gamble, director, sovereign group, Fitch Earnings.

 

...all Saudi workers in both the private and public sectors will be charged one percent of their monthly salary as a subscription...Their employer will pay the same amount into the scheme

...

Those who lose their jobs will be entitled to up to 12 months of compensation, set at 60 percent of the average salary they earned in the previous three years for the first three months and then 50 percent for the following nine months.

...

Riyadh has raised spending on social benefits in the past three years in response to the 2011 "Arab Spring" uprisings. While Saudi Arabia escaped mass protests, its leaders were uncomfortably aware that unemployment spurred demonstrations elsewhere.

...

 

It is not yet clear if the payments Saudis will make into the scheme will cover the cost of insurance payments.

 

"It may not be the most cost effective solution in the near term but if it helps normalise the labour market it is a price worth paying," said Gamble.

 

Besides the new unemployment insurance, Saudi Arabia has also introduced tough new quotas for companies to employ Saudi nationals as well as foreign workers, who are cheaper and easier to fire.

 

It has also introduced a fee that companies must pay for each expatriate they hire over the number of Saudi workers, and has cracked down on visa irregularities to reduce the number of foreigners looking for jobs inside the kingdom.

 


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Tue, 01/07/2014 - 18:11 | Link to Comment Sudden Debt
Sudden Debt's picture

we all pay unemployment insurance. it's called "Taxes"

Tue, 01/07/2014 - 18:16 | Link to Comment shepherd
shepherd's picture

At least in that case the government does something good and valuable for a change.

Tue, 01/07/2014 - 18:19 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

In Soviet Union, citizenry is pretend to work and state is pretend to pay. Forward socialism!

Tue, 01/07/2014 - 18:33 | Link to Comment Headbanger
Headbanger's picture

Ah, those were the good old days when life was so much simpler with Khrushchev pounding shoe at UN and Kennedy pounding  Angie Dickinson!

What a mess we have now, huh!?

 

BTW..  I find 7.62x25 Tokarev live round at gun range with Tula (539) head stamp made in 1948. 

Make me think is good weapon to add to modest collection. Or maybe CZ 52 is so beautiful with nice wood grips, yes?

http://guns.findthebest.com/l/479/CZ-52

Tue, 01/07/2014 - 18:40 | Link to Comment negative rates
negative rates's picture

I would bet that it is a for mens club only.

Tue, 01/07/2014 - 18:48 | Link to Comment Headbanger
Headbanger's picture

Not so fast.  Me is know strong woman who shoot Ruger Suoer Blackhawk 44 magnum better than men can

I have big crush on her but never anger woman who shoot better than men!

Tue, 01/07/2014 - 20:18 | Link to Comment Harbanger
Harbanger's picture

The Saudis launch unemployment insurance to passify the serfs.  Do we see any connection to what we're doing?

Tue, 01/07/2014 - 20:25 | Link to Comment Jack Napier
Jack Napier's picture

Compulsory = slavery.

I guess working for peanuts wasn't slave enough for them.

Tue, 01/07/2014 - 21:16 | Link to Comment Harbanger
Harbanger's picture

In the new paradigm compulsory = benefits.  Any compulsory connection to ACA?

Wed, 01/08/2014 - 02:29 | Link to Comment A Nanny Moose
A Nanny Moose's picture

I think it's funny how you are now writing like Boris. It is contagious. Perhaps a new form of anti-NSA cryptography to the lowest common denominator (strictly mathematically speaking. No reference to low IQ intended.)

Can you say, "and now back to moose and squirrel?"

Tue, 01/07/2014 - 19:50 | Link to Comment samsara
samsara's picture

ah yes, and the US was pumping about 8 million barrels a day and gas was 30 cents a gallon.....

(yes and word was that Angie was the best in bed)

Tue, 01/07/2014 - 18:21 | Link to Comment Sudden Debt
Sudden Debt's picture

untill they decide that you decided to stop looking for work.

Tue, 01/07/2014 - 20:09 | Link to Comment johngaltfla
johngaltfla's picture

Nah. It's more rational than you think. It is designed to keep women who want to work off the roads. God only knows between camel jockeys and women driving BMW's in Riyadh, paying them to stay home is a much safer, saner option than one could ever imagine.

Tue, 01/07/2014 - 20:19 | Link to Comment teslaberry
teslaberry's picture

this is directly on point, and humerous. saudi pop rap.

http://www.youtube.com/watch?v=lqJDuZIcQ34

Tue, 01/07/2014 - 18:13 | Link to Comment superflex
superflex's picture

Another sign of peak oil and the coming fall of the House of Saud?

Tue, 01/07/2014 - 18:47 | Link to Comment Toburk
Toburk's picture

Or that Saudi's population has grown six fold over the last 40 years since the 70's, and will have grown more than 12 fold by 2030.

Tue, 01/07/2014 - 19:02 | Link to Comment samsara
samsara's picture

It's not a "or" it's an "and"

Tue, 01/07/2014 - 19:22 | Link to Comment Freddie
Freddie's picture

I hope Putin smacks the living shit out of The House of Saud. 

Tue, 01/07/2014 - 19:47 | Link to Comment samsara
samsara's picture

Well, that's what I kinda meant when I said that "Ghawar is dying" above

Tue, 01/07/2014 - 18:35 | Link to Comment Hedgetard55
Hedgetard55's picture

According to Bathhouse Barry, the more unemployment you pay, the more jobs are created. 

Tue, 01/07/2014 - 18:42 | Link to Comment falak pema
falak pema's picture

The welfare state dies in first world and it comes to reset the ME absolutist monarchy that now changes to private oligarchy managed economy.

The Saud neofeudal family realizes it has to move closer to west which moves closer to Saud by changing its structures the other way right before our eyes. The Bush Saud handshake sealed that convergence as a long range plan. The West had no other choice as Saud ruled the spring of Oil rejuvenance. Fate or destiny still plays a role.

It spawned the current Globalism as run by oligarchy corporates like Carlyle; the template of the future.

The new Oligarchs begin their career managing the debt slave economy as elected Senators to Capitol Hill on behalf of their Masters; Oligarchs of previous generation. Once they have served loyally the oligarchy for twenty years they move up to the Inner private circle like Bush, Major, Blair and Sarko; as Executives of World Inc.

This is the legacy of Reagan-Thatcher Mantra and NWO, where libertarian people or recalcitrant deviants of all shapes and colors, those who believe in individual conscience and free will, are now labelled the terrorists of tomorrow; wherever they be; like Snowden and Wikileaker.

As this political convergence ensures a globally despotic Corporate overlord structure of capitalists that runs surrogate nation states via debt slavery on public balance sheets.

Not a bad concept in terms of control and fear meme if salaries and pensions are all paid by the Oligarchy and not the State. That way accountability and legal frameworks get bypassed like JPM and Madoff, or Libor/Forex hand shake deals. All done without true diligence and transparency, from behind the  curtain of executive privilege.

Monarchy restituted but in the perverted form of surrogate pseudo political republican front men running the public institutions like Congress and fizzy FED.

 

Tue, 01/07/2014 - 19:11 | Link to Comment Canucklehead
Canucklehead's picture

Falak, you really use a lotta words to say you don't understand the present situation. Bear with me here...

What is your reaction if Obama says you should not listen to Mylie Cyrus or Justin Beiber?

What is your reaction if Mylie Cyrus or Justin Beiber say you should not listen to Obama?

Who had a better year? Who made more money.

Who got laid by man, woman, or beast?

Obama, Clinton, Bush, et al are simply jesters speaking to the narrative. It is not truth they speak, but the narrative.

Pay attention to the narrative.

Tue, 01/07/2014 - 18:48 | Link to Comment Peter Pan
Peter Pan's picture

With all the  suicide bombers that part of the world produces, it's hard to believe that job prospects aren't any better. Or is that why the participation rate is so low?

Tue, 01/07/2014 - 19:29 | Link to Comment Freddie
Freddie's picture

+1

I jokingly tell people that the fastest growing job in the USA is sign holder in front of all sorts of stores.  If you go on Craigslist and other jobs boards - you actually see jobs for sign holders.

Tue, 01/07/2014 - 19:11 | Link to Comment samsara
samsara's picture

To me this is a sign post saying:

Ghawar Is Dying

Getting them "Private Sector Jobs". Meaning, "We see oil revenues declining from here, and ah, well, you're gonna have to fend for yourself."

http://www.newcolonist.com/ghawar.html

Tue, 01/07/2014 - 19:26 | Link to Comment Freddie
Freddie's picture

I saw something online today where scumbag Al Waleed said the USA doing fracking is a threat to all oil producing nations.  The Saudi "royals" are evil vermin.

Tue, 01/07/2014 - 19:33 | Link to Comment cynicalskeptic
cynicalskeptic's picture

Saudi fields have been on the decline for decades with no new finds.

BUT if the Saudis demanded that the US pay for oil 'under the table' in gold in exchange for supporting the petrodollar, and if they were smart enough to stash those payments away instead of letting NY and London 'lease' them out, the Saudis may be in better shape than we realize.

Historically the Saudis wanted gold in payment (going back to their first transactions with US oil companies involving payment with chests of gold coins).  There are rumors of US gold disappearing from Ft. Knox in the late 70's and being replaced with 'fake' bars.  The petrodollar was great for the US but not for the Saudis - what incentive did they have to keep it going?   BUT if the Saudis were foolish enough to let western bankers talk them into 'making money' off their gold holdigns by 'lending' them out - well then the Saudis are screwed.  Oil running out and no hard assets to fall back on.

Tue, 01/07/2014 - 19:37 | Link to Comment samsara
samsara's picture

Ah, well actually we don't get much oil from SA....

Tue, 01/07/2014 - 19:05 | Link to Comment DIgnified
DIgnified's picture

ZH has the best article thumbnails. 

Tue, 01/07/2014 - 19:28 | Link to Comment Dr.Evil
Dr.Evil's picture

Bot I so wish, that you could also see a large version!

Tue, 01/07/2014 - 19:19 | Link to Comment Musashi Miyamoto
Musashi Miyamoto's picture

Protectionism, Bitchez!

Tue, 01/07/2014 - 20:52 | Link to Comment Promethus
Promethus's picture

Probably 98% of Saudi's don't work, but thank Allah they have government jobs. When the oil money runs out no amount of unemployment insurance will help them.

Tue, 01/07/2014 - 21:57 | Link to Comment tony wilson
tony wilson's picture

is london covering the insurance for the mossad dancing crews of 911.

now saudi is mentioned in open us court will the jewish royalty of the house of saud pay what is jew in blood tribute.

will silverstein put in yet another claim not on the goy but on his own race.

Wed, 01/08/2014 - 01:31 | Link to Comment dunce
dunce's picture

It would not be long after they stopped exporting terror that the population would turn on the rulers. The royal family are real preppers.

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