Saudi Arabia's Demographic Challenge
The Kingdom of Saudi Arabia has several demographic challenges. One of these is the kingdom's projected growth rate. The population is expected to increase from 28 million to 38 million by 2030. Another is the age of the Saudi people. Half the population — roughly 14 million — is under the age of 25. Additionally, the kingdom has a youth unemployment rate of 28 percent. To ensure stability and social order, the government provides heavy subsides. Oil export revenue funds the vast majority of these subsidies.
Saudi Arabia is trying to stimulate growth in the private sector to boost employment rates. However, the growing population lacks the education and technical skills necessary for private sector employment. As a result, the government has recently invested more than $21 billion in the education sector.
Another aspect of the kingdom's demographic challenge is the underutilization of women in the work force who constitute roughly 16 percent of the country's workers. This contrasts sharply with the kingdom's ethnically similar neighbor Kuwait, where women make up 40 percent of the work force.
The kingdom's demographic challenge has a sectarian element in the Eastern Province, which, unlike the rest of the Sunni-dominated country, is home to a large Shiite population. Because it holds the majority of the kingdom's energy reserves, the Eastern Province is critical to the Saudi economy. However, the oil-rich province is historically susceptible to protests and violent clashes from Shiite activists, some of who demand increased rights and even the downfall of the monarchy.
Oil production is unlikely to be directly threatened so long as the government can at least subdue some of the unrest in the Eastern Province. However, to counter the rising population, high youth unemployment and threatened oil revenue, the kingdom will have to focus on equipping the Saudi population with the skills necessary to be productive in the private sector while finding sustainable ways to maintain a high export revenue.