IFM Correspondent

November 4, 2016: US employers hired more workers in October and also hiked the wages of existing workers. Businesses added 175,000 jobs to the US economy in October and 156,000 jobs in September, while the unemployment rate ticked up to 5%.

“The expected payroll gains should easily meet the Fed’s criteria of some further progress in the labour market, which leaves us with a rate hike in December,” said Harm Bandholz, chief US economist at UniCredit Research in New York.

The economy continues to grow in terms of employment as well as economic growth. This could effectively cause the Federal Reserve to hike interest rates in December, as it is felt that the economy is capable of absorbing such a move.

The Fed had voted to keep the rates unchanged for now. Though the US central bank is expected to increase borrowing costs in December, that decision will likely depend on the outcome of the presidential election on November 8. The presidential race between Democratic candidate Hillary Clinton and Republican Donald Trump has rattled financial markets.

Usually, stocks rise before an election but this time, the presidential election has managed to disrupt the usual pattern in the equity markets. US stocks are falling due to the uncertainty over the result.

The trend in employment growth has slowed as the labour market nears full employment and the economy’s recovery from the 2007-09 recession shows signs of aging.

Nevertheless, there has been an increase in average monthly earnings, which grew by 0.3% in October from its previous position of 0.2% in September.

The post Employment grows in the US appeared first on International Finance.

Suparna Goswami Bhattacharya

July 13, 2015: For decades now, Saudi Arabia has managed to attract talented expats from around the world. The region, in fact, became a favourite destination for those looking to work outside their country. The expatriate workforce accounts for a third of Saudi Arabia’s 29 million population. Market reports suggest that the majority of the expat population within Saudi Arabia is mostly employed by Saudi Aramco, foreign military or companies engaged in infrastructure and construction projects within the Kingdom.

This, coupled with the country’s inadequate education system, has resulted in high level of youth unemployment, which has become a big social challenge. According to the CIA’s World Factbook, Saudi Arabia’s youth population “lacks the education and technical skills the private sector needs”. The unemployment rate for Saudis between ages 16 and 29 is 29 percent. According to Woodrow Wilson International Center for Scholars in Washington, DC, two-thirds of the nation’s population under the age of 30, which means a significant number of Saudis, will enter the workforce over the next decade.

“Though the country’s economy has experienced consistent high growth over the past decade, it still faces challenges in high unemployment and low labour market participation under nationals,” says Safiyah Alli, Regional Operations Director, Manpower, a leading company in workforce solutions. This, according to Alli, is largely driven by a low rate of female participation in the labour market, high youth unemployment and the competitive imbalance of expatriate workers and Saudi nationals in the private sector.

Looking at this the Saudi government embarked on a national plan to increase employment among nationals and decrease dependency on the expatriate workforce. It launched Saudisation (or Saudization)programme — replacement of foreign workers with Saudi nationals in the private sector — in 2006.

However, the move has thrown fresh challenges at companies who find themselves in a spot over not being able to hire the required talent. “Although the efforts made by the government are laudable, companies are now having difficulty finding the right local talent,” says Richard Foulkes, Client Partner, Middle East & Africa, Pedersen & Partners, an executive recruitment firm. “The situation has mostly arisen due to the lack of a strong talent pipeline, which is currently being addressed. There is a high demand for industry-ready Saudi professionals, which unfortunately outstrips supply.”

Says a recruitment manager of a local firm: “I understand that we need to employ more local talent, but the way the government is approaching the problem is not helping us. What they are doing has only led to ballooning of salaries as talent is scarce”.

The oil &gas industry in particular is facing a talent crunch.This is mainly due to a combination of an aging workforce and the lack of flexibility to replace them quickly. A lot of time is required in upskilling new employees. Training and development is adding to the cost of talent acquisition.

This has resulted in negative outcomes for companies.

In a few cases, companies employ Saudi nationals only on paper and get the actual work done by an expat who is based abroad. “We are forced to play around the rules. In the process, we end up paying two people —a Saudi national (who is actually not working) and an expat,” says a recruitment manager.

Despite enhancements to the Saudisation programme, unemployment levels have remained almost stagnant.“The Saudi labour force is growing by a rate equivalent to the rate of employment amongst nationals. Hence, unemployment rates are stagnant,” remarks Alli.

Having realised that the programme alone will not solve the unemployment problem, the government has now decided to concentrate on reforming the education system. Earlier this year, the Saudi budget increased the spending on education by 3 percent.

“The government is emphasising the need to foster skill development early on, and has asked colleges and universities to focus on these areas. There are also examples of funds being set up to invest in SMEs, which in turn will help to increase employment levels among Saudis. The government must be appreciated for these efforts,” says Foulkes.

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