top of page

Saudi women to drive amid economic slowdown


The decision to allow women to drive in Saudi Arabia following a royal decree by King Salman means that around 800,000 men in the territory may start losing their jobs from mid-2018.

They're mostly from Southeast Asian nations like Malaysia and Indonesia, according to Saudi government statistics.

The decree is a first for the Middle Eastern country, which has long denied women the right to vote, work and drive. Earlier in September the king announced he was allowing women into the national stadium in Riyadh to celebrate National Day alongside men for the first time.

Following the decree permitting women to drive, the king has announced the establishment of a committee involving the internal affairs, finance, labour and social development ministries, which will look into the effect of the action.

The announcement also comes on the day the king was handed the 53rd Saudi Arabian Monetary Authority (SAMA) report into the country's economy.

The review into the economic and financial developments during 2016 paints a mixed picture of Saudi Arabia which has grappled with a low oil price and the cost of a war it's funding in neighbouring Yemen. Saudi Arabia grew at 1.7% in 2016 and this comes at a time when the government is under increased pressure over the standard of living in the kingdom.

"The supply and demand in the international oil market led to a decrease in the average price of Arab light oil by 18% to reach about $41 a barrel in 2016," the report states.

The king's plan for women includes diversifying the economy and creating new sectors for young people to work in, as well as laying on more cultural events such as concerts.

That's as low oil prices negatively impacted government jobs that the majority of Saudi families rely on for income. The cost of hiring drivers for women to do basic chores has become a major headache for the country as it's chewed away at the value of wages and also has directly impacted Saudi Arabia's GDP.

The move is opposed by hardliners and Saudi authorities faced a social media backlash over the decision to allow women to attend the national celebrations to mark the 87th anniversary of Saudi Arabia's founding.

Saudi Arabia is not a fully open-market country and its growth has lagged behind those of other emerging marketplaces, with the country having a sizeable budget deficit.

In April 2016 the kingdom announced it was launching reforms called Saudi Vision 2030 which is seeking more international partnerships to improve the competitiveness of the Saudi economy.

It plans to sell up to 5% of the state-owned Aramco oil company and will loosen the government grip on the private sector. Saudi Arabian oil reserves are the second-largest globally, while it remains the biggest exporter and it controls around a quarter of all oil in the world.

Previously, Riyadh relied on the oil reserves which are close to the surface and relatively inexpensive to extract.

The petroleum sector accounts for around 92% of revenues, 97% of export earnings, and 55% of GDP, according to government statistics. Another 40% of GDP comes from the private sector.

Saudi Arabia is also conducting a war in neighbouring Yemen, which includes the use of expensive equipment and thousands of troops. That as the oil price has dropped to around $55 from a high of $120.

It is an absolute monarchy that provides a host of free benefits for its citizens, which, in turn, has meant it's remained relatively stable while many states around the region are buffeted by social uprisings.

These include Libya, Syria, Iraq, Kurdistan and Turkey.

But corruption has become endemic in the country as the state controls all aspects of life; there is low transparency in the functioning of government as well as opacity about state budgets and financial practices.

Saudi's pay a 2.5% religious tax and total domestic income from tax amounts to 4.6%, which is far below international norms.

By relying on oil exclusively for growth, the kingdom has exposed itself to the ramifications of global pricing, particularly as many parts of the developed world shift towards the use of electric vehicles and sustainable energy.

  • Facebook Social Icon
  • Twitter Social Icon
  • Google+ Social Icon
  • YouTube Social  Icon
  • Pinterest Social Icon
  • Instagram Social Icon
frayIntermedia
bottom of page