Remote Work in Saudi Arabia—The pandemic’s impact on labor markets has been profound in many developed nations. The “Great Resignation,” a record number of workers not returning to their jobs after lockdowns, began as an escalating lack of workers in a few industries. These people aren’t necessarily quitting their jobs, as has become apparent in recent months. Because they’re looking for new opportunities, they’re rethinking their career trajectories, shifting industries, or launching their enterprises. As a result, there is a lack of workers since workers travel elsewhere in search of better employment prospects. “The Great Reshuffle” is what these high-income countries are seeing, not “The Great Resignation.”
Saudi Arabia is the best place to see the results of a significant reorganization. Oil-rich countries’ labor markets are visiting one of the most dramatic shifts in the world. As a result of recent measures emphasizing female employment, Saudi nationals—especially Saudi women—are entering the workforce at an unprecedented rate. During the epidemic, Saudi Arabia’s workforce participation grew, contrary to the trend in many other wealthy countries. Over 70% of private-sector workers in the United States are:
- Foreign nationals.
- Leaving the workforce in huge numbers.
- Resulting in a sharp and quick decline in total employment.
Since the epidemic outbreak, nearly a million jobs have been lost.
Post-pandemic worker redeployment is beginning to emerge in Saudi Arabia. Jobs churning—the simultaneous presence of new hires and departures—nearly doubled from the previous year in the final two quarters of 2021. Since last year, the number of Saudi citizens resigning from their positions in the third quarter of 2021 has increased by 95%. In the third quarter of 2021, resignations rose to 3% of private-sector employment, the highest level ever recorded. There was a substantial increase in the number of people quitting their jobs in Q3 2021 compared to Q3 2020 and Q3 2019.
The employment of new employees, on the other hand, is swiftly picking up after the downturn caused by the epidemic last year. The Saudi private sector’s job turnover rate (measured as the sum of new hires and resignations as a percentage of total employment) is 6.7%.
The labor market is constantly churning, but an increase in churn signifies that the labor market is strengthening. A churn metric is not a measure of net job creation but rather a measure of the flexibility of the labor market. A beneficial development occurs if churning workers are shifted to more productive positions, firms, and industries. Employers’ ability to better match employees with jobs will improve as the reallocation of labor accelerates.
As a result, the mobility of foreign employees in the workforce is expanding. In Q3 2020, the annual growth rate of employment transfers was 23 percent, but by Q3 2021, it had risen to 93 percent. Because of recent modifications to the Kafala sponsorship system, foreign workers can now switch jobs.
It’s still unknown what’s causing this global shakeup in the first place, and OECD countries have the most relevant knowledge. Resignations in the United States reached a record high of 3 percent of total non-farm employment in the third quarter of 2021. The highest resignation rates were seen in the hospitality and food services (7 percent), leisure and hospitality (6 percent), and retail (5 percent) sectors, indicating that workers are looking for more rewarding careers in higher-productivity industries. Working conditions and pay can be improved with greater bargaining power in the workplace.
A strengthening economy and a tightening labor market in Saudi Arabia could be driving this reorganization there. Rising oil prices and surprisingly significant growth in non-oil businesses are boosting economic activity. Employers may have more difficulty finding suitable workers when foreign employment decreases and Saudi unemployment reaches historic lows (11.3 percent).
Workers may also be benefiting from more favorable labor market conditions that allow them to move into higher-paying employment. There has been a growth in the average salary for Saudi workers, notably for those with advanced degrees (Figure 2). In reality, the earnings of Saudis with college degrees are rising at a greater rate than those with secondary education, at 6% and 1%. High-skilled occupations account for the majority of the newly created positions.
In the third quarter of 2021, 51% of all new Saudi recruits were in the professional or associate professional category, compared to just 15% in the same period last year. Workers in Saudi Arabia may be leaving their jobs because of higher earnings and the availability of better prospects elsewhere.
Other elements may be at play. Flexibility is becoming increasingly crucial to workers, as evidenced by studies showing a preference for remote or hybrid work arrangements. There is a chance this might happen in Saudi Arabia, too. According to Google Trends, job searches for “remote work” and “jobs” have surged by 190 percent in Saudi Arabia over the past two years.
It’s important to remember that in Saudi Arabia, the importance of the Nitaqat—a policy that requires companies to employ a particular proportion of Saudis—must be taken into account. For example, Saudi women’s resignations from the private sector have increased in the last two years. This may also signal the end of Nitaqat’s ‘ghost employment.’ Women who were engaged by companies solely on paper to fulfill the Nitaqat quota are now resigning to seek actual jobs now that additional chances for women have opened up in the sector.
A more dynamic labor market might provide Saudi workers greater power and leverage to demand better wages and working conditions. The amount to which workers are transferred from low to high productivity enterprises will ultimately determine whether or not these trends result in productivity gains.
Remote Work in Saudi Arabia
Even after the pandemic is over, working from home will continue popular. To stay ahead of the curve, any organization should think about establishing an atmosphere where employees can take advantage of the new possibilities and expectations while also dealing with the problems that may arise in the future. Attempts to revert to pre-pandemic work practices are likely to result in a loss of market share.
Many people were forced to work from home because of COVID-19. With internet access and professions that don’t necessitate face-to-face interaction, workers could adjust quickly. Nowadays, a large number of people all over the world want to work from home regularly. An Ipsos poll found that 66% of respondents wanted employers to offer more flexibility in scheduling following the epidemic, and 28% said they would consider quitting if their company required them to return to work full-time.
Most people choose a hybrid approach to working from home rather than a full-time remote job. Moreover, half of the respondents surveyed by Ipsos wished to work from home at least 2.5 days each week. According to McKinsey, 52 percent desire a hybrid option after the pandemic; 11 percent want to work remotely full-time. These adjustments will necessitate action on the part of employers. Globally, 31% of all employees are expected to work remotely (full-time or hybrid) by 2022, according to Gartner.
According to Gartner, 53% of the US workforce will be conducting remote work by 2018. In the United States, there is an intense desire for more flexible employment arrangements. It has been estimated that 45 percent of full-time US employees already work from home regularly. Also, 91% of US workers who work remotely plan to continue doing so after the epidemic, with 54% choosing a hybrid model and 37% wanting to work totally from home. According to business trend analysts, the hybrid model will play a significant role in the future of employment in the US.
Remote work isn’t just famous in the United States, and both the McKinsey and the Ipsos surveys found considerable interest from around the world. According to Ipsos, people in Saudi Arabia prefer to work remotely 3.3 days a week on average.
According to surveys, many CEOs are less thrilled about remote work than employees. In late 2020, a PwC survey indicated that only 13% of US executives desire to abandon the physical office completely. While many employees would prefer working fewer days a week, 68 percent of bosses want staff to work at least three days a week. It’s not all bad news, though, as many corporate leaders rethink their office space requirements.
There are numerous advantages to working from home. Thanks to this perk, employees who are raising children or looking after elderly relatives can better balance their job and personal lives. Telework saves time and money in many places, especially in cities. It is possible to reduce road congestion with remote work. Working from home increases productivity for many people. Companies can hire workers from anywhere globally if the job allows 100% telework, and employees have more freedom to live where they wish. Real estate footprint reduction can also save companies money.
There are also drawbacks. People have a more challenging time forming bonds with coworkers when they work from home. There is some evidence that working from home may hurt teamwork, especially when communicating between different departments. Many business leaders are concerned about building a company culture without a standard physical location, and a lack of clear expectations and boundaries might lead to burnout among employees. An individual must have reliable, high-speed internet and a suitable place for their job to do remote work.
It’s challenging to strike the correct balance while making decisions. Some people are better suited to working remotely than others. Depending on their personality type, some people are better right to work in an office or at home. One of the main reasons maQny managers choose to return to the workplace is that workers who feel valued and empowered tend to prefer it. According to polls, young people have different priorities regarding work-life balance. Numerous polls have found that parents prefer working from home. People who have long commutes are also likely to benefit more from remote work.