Social LandscapeSaudi Arabia

DEMOGRAPHY• Population – 29.3 million (Euromonitor, 2013);

By 2020, it will grow to 33.5 million• Population Growth Rate – 1.53%• Median Age – 26.7 years in 2013, up from 17.8 years in

1980.• Urbanization – 85% of total population (2011)

32.40%

64.80%

2.80%

Age Structure0–14 years 15–64 years65 years and above

Others

Filipino

Bangladeshi

Yemeni

Egyptian

Indian

Pakistani

0 0.5 1 1.5 2 2.5 3 3.5 4

3.6

0.5

0.5

0.8

0.9

1.3

1.5

Foreign Nationals Population

Foreign Nationals Population (Million)

POPULATION BY AGE AND SEX• Gender Inequality

– Gender Inequality Index Rank – 145/186– Gender Inequality Index Value – 0.682/1.0

KEY INDICES GDP per Capita – $ 25,736.21 (World Bank, 2013)

CPI – 3.5(World Bank, 2013)

HDI (Human Development Index) – 0.782 (Rank – 57/187)(UNDP, 2012)

Corruption Measurement ToolsCorruption Perception Index – 46/100 (Rank – 63/177); Bribe Payers Index – 7.6/10 (Rank – 22/28)(Transparency International, 2013)

Press Freedom – 56.88 (Rank - 163/179)(Reporters without Borders, 2013)

Youth Development Index – 0.56 (Rank – 103/170)(Commonwealth Youth Programme, 2013)

INCOME DISTRIBUTION

• High income inequality

• GPI GINI Index – 32

• Saudi government discloses little official data about its poorest citizens

• Between 2 million and 4 million of the country's native Saudis live below poverty line (about $530 a month)

• Poverty rate among Saudis continues to rise as youth unemployment increases sharply

EXPENSES

Consumer Price Index (Excluding Rent) – 61.26

Rent Index – 15.9

Groceries Index – 68.37

Restaurants Index – 33.76

Consumer Price Plus Rent Index – 39.45

Local Purchasing Power – 97.55

Relative to NYC

LITERACY AND EDUCATION

• Based on Islamic Principles – traditionally little attention to Science and Mathematics

• Education system inadequate to meet the country’s technological needs

• Government investing into Education reforms – $ 3.1 Billions• 8th Highest Education Spender• Expected years of Schooling – 14.3 years• 90% attend public schools; 840 private schools for rich Saudis and

Expats• Youth (15-24 years) Literacy Rate 2008-2012 (Unicef, 2013) – Male 99%

Female 97%

HEALTHCARE

• Brisk growth in market sizeHospital beds to increase from 51k to 70K

• Unmet demand in value chain including medical education, research, facilities, provisions and reimbursements

• Upcoming insurance based system

• High incidence of major diseases including diabetes, heart disease, and congenital disorders

• Private hospitals, pharmaceutical companies and medical devise manufacturers seek international partners

CULTURE

NITAQAT

RELIGION

• Sunni Islamic State

• 97% of total population is Muslim and 100% of domestic population is Muslim

• Of Muslim population, 85-90% are Sunni Muslims and 10-15% are Shia

• Public worship of other religions is prohibited by law although they can practice their religion privately

• Zakat System of taxation

CULTURE TIPS FOR DOING BUSINESS• Things move much more slowly than they do in the west. This

is part of the culture, it is important to do things like ask about the family of the people you are meeting with. It is a critical part of business in the Arab world.

• The other big thing that you will notice is that religion plays a much more important role in business than it does in other countries.

• Most Arabs will not openly disagree with you or say no to something. Instead they will allow you to save face by seeming to agree when they don't.

• Arabs tend to say a lot more with non-verbal communication. Other things like personal space are also issues that you need to be aware of. Arabs will stand much closer to you when they talk than is normal in the west.

• Do not probe too much into personal matters

• Do not serve alcoholic drinks

LABOUR

FACTORS OF LABOUR

Hafiz

KafalaNitaqa

t

NITAQAT SYSTEM

• Based on Nationalization • Performance calculated on moving average of 13 weeks• Incentivise those who implement and sanctions for non

compliance• Better than Saudisation:

– Flat 30% Saudi population in Work force– Repercussions:

• Costly Labour• Hard to Layoff if not efficient• Unwilling to engage in low skilled tasks

• Labour Law:– Article 35

“Prior to renewing the work permit, it shall be ascertained that none of the Saudi applicants possesses the required qualifications and is willing to undertake the same work.”

KAFALA SYSTEM

• Residence Card (Iqama ) and Work permit

• Passport surrendered to Kafeel (Sponsor for Work Visa)

• Can’t change job unless previous sponsor releases the employee

• Can terminate contract at anytime without explanations and ban employee from Saudi Arabia permanently

HAFIZ SYSTEM

• SR 2000 for unemployed Saudi a month up to 1 year

• 78 % of Hafiz benefits are women

Cons• Being exploited by people• Housewives enrolled for extra cash at household

VISA AGGREEMENTS

LABOUR WORKFORCE FACTS

• Education Sector comprises of 87.4% Women workforce• In 2011, 89.1 % of private sector manpower was expat• 9.1 million Expat population

38%

32%

21%

5%4%

% CompositionConstruction Wholesale Private HouseholdHealth Education

SOCIAL WELFARE• Administered by the General Organization for Social Insurance (GOSI)

• Saudis and citizens of the Gulf Cooperation Council pay no income tax

• Commitment to the well-being of the community underlies the KSA’s social stability and is in line with Islamic principles

• Ninth five-year plan looks promising – $385 billion was allocated to projects

• Higher allocations for social infrastructure – allocation of $4 billion to fund 22 new healthcare projects across the country

• Welfare programs like Social security pensions, benefits and relief assistance to the disabled, elderly, orphans and widows without income

• Wasta is intrinsic to the operation of many valuable social processes and is central to the transmission of knowledge and the creation of opportunity

CORPORATE SOCIAL RESPONSIBILITY• CSR Saudi Arabia summit

• Efforts to bridge the perception gap between Jakat (Charity) and CSR

• Reduce risk from Saudisation where young citizens are often unable or unwilling to compete with well-educated and cheap foreign labour; Similar to Emiratisation in UAE

Challenges• Need for a more strategic governmental umbrella for CSR that encourages,

incentivizes and supports companies

• Non-existent role of consumer-driven CSR

• Incidents of disregard of labor standards

• Gender equality is a non-issue

OUTLOOK AND IMPLICATIONS

We propose that the following areas need to be invested in:

Growing Industri

es

Education

Chemicals

Mining (Gas and Phosphat

e)

Solar Energy

THANK YOU