Demographics And Saudi Arabia


Source of picture: Wikimedia Commons

By John Richardson

EIGHTY percent of Saudi Arabian families get by on incomes of less than $3,300 a month, whereas Saudi Aramco makes $900m of profits every day, says Leslie McCune, managing director of the UK-based chemicals logistics consultancy, Chemical Management Resources Ltd.

But he adds that in order to help compensate for this huge economic disparity, Saudi Aramco, the state-owned oil, gas, refining and petrochemicals player, hands over four out of every five dollars of its profits to the government for re-investment in the country.

The state-owned Saudi Aramco’s agenda also involves creating jobs for a youthful population. The median age of the country is just 25.3 years with unemployment at 448,000 out of a total population of 28 million.

Saudi Arabia, which controls around a fifth of the world’s proven oil deposits, launched a nationalisation programme, dubbed Nitaqat (ranges), in mid-2011 in a bid to tackle unemployment, which was estimated at around 11% at the end of 2010. The level is far higher among women and university graduates, ranging between 20% and 45%.

The good news is that nearly 250,000 jobs have been created for nationals in the private sector in the first 10 months of the programme, says the government.

But the Kingdom still has a long way to go: there are 8.4m foreign workers in Saudi, 80% of which are in the oil, gas, refining and petrochemicals sectors.

Hence, state-owned Saudi Aramco is tasked with generating more local employment via the Sadara joint venture with Dow Chemical.

Sadara, which Dow describes as the world’s largest integrated chemical facilities and the largest ever built in a single phase, will comprise 26 plants, some of which are due to start-up in H2 2015. The complex is scheduled to be fully operational in 2016.

Products will include polyurethanes (isocyanates, polyether polyols), propylene oxide (PO), propylene glycol (PG), elastomers, linear low density polyethylene (LLDPE), low density (LDPE), glycol ethers and amines.

The idea is to create more local jobs through producing a wider range of derivatives and downstream of these derivatives, a similarly broader range of manufacturing industries.

This challenge will no doubt be one of the key topics under discussion at this week’s Gulf Petrochemicals and Chemicals Association (GPCA) 7th Annual Forum in Dubai.

Saudi Arabia’s demographic difficulties underlines our argument that demographics will shape global economic prospects over the coming decades. Tackling youth unemployment and ageing populations requires coordinated action between companies and policymakers. 

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