Unemployed and Unaware? Communicating Labor Policy Changes to the Saudi Workforce

Ahmad Binobaid, King Saud University

Jonas Draege, Oslo New University College

Andrew Leber, Harvard University


MENA governments have faced an enduring challenge in seeking to provide citizens with jobs. In private-sector labor markets of the Gulf Cooperation Council (GCC), this has primarily taken the form of workforce nationalization: replacing expatriate workers (historically the mainstay of private-sector employment) with citizens. In Saudi Arabia, the Ministry of Labor (MoL)[1] has enforced workplace “Saudization” quotas more stringently in recent years, yet the private sector continued to rely on expatriate employees for around 77% of positions as of April 2021.[2] Despite years of Saudi officials presenting the private sector as an “engine” of jobs growth in the Kingdom (see Hertog in this volume), most young Saudis continue to hold out hope of securing scarce but better-paid public-sector jobs.[3]

As Berrada points out in this collection, policy advice to MENA governments has often stressed the potential for targeted programs—whether improved education systems or public information campaigns—to shape the labor-market behavior and attitudes of citizen job-seekers.[4] Regional governments rarely assess, however, whether these technical fixes are effective at boosting employment or even successfully implemented to begin with. Questions of implementation are particularly relevant for the Arab Gulf monarchies of the GCC, where leaders possess the financial capital and political autonomy to pursue ambitious regulatory reforms yet have often been stymied by fragmented bureaucracies.[5]

In this memo, we focus on the implementation of a specific, citizen-oriented labor-market policy within Saudi Arabia: Hafiz (“incentive”), a form of unemployment insurance. Hafiz is designed to support longer, higher-quality job searches that can match Saudi job-seekers with better opportunities in the private sector, increasing retention of Saudi workers among local firms;[6] the program also connected job-seekers with various other training programs administered by the Human Resources Development Fund (HRDF), a part of the Saudi Ministry of Labor (MoL).[7]

In fieldwork and original survey data, however, we observe relatively low utilization rates for Hafiz even among the unemployed. This indicates not only a present challenge for utilizing Hafiz to shape Saudi labor-market behavior, but also future difficulties in implementing more complex labor-market programs. Despite some evidence that targeted policy interventions can lead Saudi job-seekers to expend greater effort to secure private-sector positions, MoL institutions may struggle to implement these programs at a scale that can make a meaningful difference for Saudi labor-market outcomes.

State Capacity & Citizen Uptake 

Where bureaucratic capacity and political appeared to be the principal barriers to Saudi labor-market reform in the early 2000s, the past decade has seen clear indicators of increasing administrative capacity among Saudi state institutions and the relatively strict enforcement of new regulations.[8] The advent of the Nitaqat regulatory program—a program of firm-specific quotas for Saudization—spurred the collection of considerable labor-market data beyond periodic labor-force surveys that estimated the aggregate size of the labor market. In a sign of improved accuracy, increasingly centralized data-gathering eventually resulted in a sizeable correction: the official number of employed Saudis dropped from around 5 million to around 3 million between Q3 2016 and Q4 2016.[9]

Accurate data has also permitted more targeted enforcement of regulations. Prior to 2011, the lack of accurate data and monitoring capacity meant that the Ministry of Labor was restricted to the blunt policy instruments of either limiting the aggregate number of visas for expatriate workers or forcing the Saudization of an entire class of work.[10] Under Nitaqat, however, the Ministry is able to set much more targeted goals for the Saudization based on the characteristics of a given sector, while sanctioning particular firms for their lack of compliance rather than the “private sector” as a whole. While concerns remain over Nitaqat’s effectiveness, the Saudi government has enforced the program despite the closure of thousands of firms unable to comply with Saudization quotas.[11]

Saudi policymakers have also faced the challenge of encouraging Saudi citizens to seek out private-sector positions and equipping them with the skills to retain such employment. A range of programs across the GCC have sought to encourage citizens to “be better educated and prepared to compete in the labor market.”[12] In searching for policy interventions to achieve this, the MoL has drawn on expertise including Takamol Holding Co., an MoL-created management consultancy tasked with supporting the implementation of labor-market programs;[13] international management consultants, such as the Boston Consulting Group;[14] and various academics affiliated with the Evidence for Policy Design (EPoD) program at the Harvard Kennedy School (which funded the fieldwork and data collection that forms the basis for this memo).[15]

While several studies have examined Saudi firms’ behavior in reaction to the Nitaqat regulations, along with the effect of small-scale information interventions, there has been little direct study of labor-market policy uptake among Saudi citizens. We therefore focus on citizens’ awareness of Hafiz, a form of unemployment insurance that provides a monthly stipend of SAR 2,000 (2/3 of the monthly minimum wage for citizens of SAR 3,000) to support Saudis during extended job searches. The terms of the program require a weekly, online check-in to report on job-search activities, though there is no specific level of activity required beyond checking in.[16] Hafiz is a foundational program among recent Saudi labor-market reforms, enrolling Saudi job-seekers in a nationwide employment database and serving to connect these citizens with relevant training programs. Saudi citizens have strong incentives to apply for this program, due to the direct material benefits it provides and the limited eligibility requirements for the program. Accordingly, awareness of the program is not only substantively important in its own right but serves as an indicator of how well MoL is communicating a wide range of MoL programs.[17]

If anything, existing concerns regarding Hafiz are that the program is over-utilized, benefiting citizens who have little intention of looking for work. More than 79 percent of the recipients before February 2012 stayed in the program for the full 12 months of eligibility, suggesting either quite difficult job searches or little effort to find work.[18] The number of Hafiz beneficiaries in 2012 was also double the estimated number of unemployed Saudis in the 2012 Saudi labor market survey, suggesting that some individuals who reported being “out of the labor force” nevertheless enrolled in the program.[19] In particular, a jump in female unemployment rate in 2011, coinciding with the introduction of Hafiz, has led to some speculation that this resulted from Saudi women simply seeking out the benefits of the program (though this may simply represent a continued increase in the number of Saudi women seeking jobs).[20] Technically, the program is divided into “Hafiz 1” (for those aged 20 to 35 looking for their first job) and “Hafiz 2,” launched in 2014 to support citizens aged 35 to 60 who struggled to find work.[21]

For Hafiz 1, there was no marketing campaign targeting the beneficiaries; the Saudi Press Agency announced the formation of the program by a royal decree in 2011, with an MoL press conference following soon thereafter.[22] Nor was there an independent effort to communicate the benefits available through Hafiz 2, that was launched in 2014. Immediate registration of some 1 million Saudis for Hafiz 1 in the first 9 months of its existence likely reinforced the idea that these programs were too simple to need ample messaging or explanation for the Saudi public.[23] In the years since, much communication by MoL and HRDF regarding Hafiz and other programs has taken place through a range of social media platforms, particularly on Twitter (@HRDFNews) and Instagram (@hrdfnews). There are also efforts to develop awareness of labor-market programs through cooperative agreements with university employment offices and on-campus workshops.[24]

If these communication efforts are effective, then we should find that most unemployed Saudis are making use of Hafiz or have done so at some point. A finding that Hafiz is not widely known, or not utilized by individuals who report being unemployed, would suggest that the program not only suffers from “false positives” (Hafiz beneficiaries who are not job-seekers) but also “false negatives” (job-seekers who are not registered for Hafiz benefits).[25] This would in turn suggest that even straightforward policies with immediate benefits require better communication to citizens regarding how these policies function.[26] It also suggests even greater difficulties in encouraging citizens to participate in training programs that offer fewer direct benefits and require more effort from citizens themselves to be effective.

Citizens’ Awareness and Utilization

We fielded an original telephone survey of just over 2,700 Saudi citizens from August to October of 2020, incorporating representative samples of 3 Saudi regions–Riyadh (1,000), Ha’il (724) and Jazan (600)—and smaller samples of several Saudi cities (Jeddah, Dammam and Buraidah).[27] The survey was conducted as part of a research partnership between the Saudi Human Resources Development Fund (HRDF), an MoL agency tasked with boosting Saudi labor-force participation, and EPoD. The terms of the approved research project for this institutional collaboration governed the sample size chosen. The survey exclusively covers Saudi citizens aged 18 to 45—accounting for over 70% of the adult Saudi population, and those most likely to be concerned about finding employment (rather than looking forward to retirement. Household sampling was drawn from a 2-million-entry phone number database maintained by HRDF. This potentially biases our data in favor of respondents being more likely to have heard of HRDF programs than a “typical” Saudi citizen yet should strengthen a finding of limited awareness of HRDF programs.

Figure 1: Awareness of Hafiz.

Our survey results show that most citizens surveyed (68%) were aware of Hafiz as a policy.  We break responses down according to category of employment in Figure 1. Unemployed and part-time respondents (as well as those outside of the labor force) report greater awareness of Hafiz than fully employed Saudis. We might expect this given that Hafiz directly targets the unemployed; part-time employees might have recently utilized the program before securing their current job.[28]  Still, merely being unemployed does not guarantee that Saudi citizens will learn about the program; even among the unemployed, around 25% of respondents were unaware of Hafiz.

OLS regressions indicate that awareness of Hafiz is not systematically associated with gender or income (Table 1), and only weakly correlates with age brackets. However, even controlling for whether or not respondents are currently students, those without a college education are more likely to have heard of Hafiz than those with at least a four-year degree, suggesting room for improvement in utilizing universities as a platform for informing citizens about HRDF programs.

However, the fact that only 42% of unemployed respondents reported utilizing Hafiz suggests that state institutions are not clearly communicating the opportunities afforded by these policies to Saudi citizens.[29] In other words, around 1 in 4 unemployed Saudis in our sample has neither heard of nor utilized Hafiz, while a further 30% of so have heard of Hafiz but have not utilized the program. Fieldwork lends greater confidence to our findings. The researchers spoke to several unemployed Saudi women at one HRDF branch office who were unaware that they even qualified for Hafiz—surprising the regional director sitting in on the focus group.[30] Furthermore, duration of unemployment appears uncorrelated with likelihood of having utilized Hafiz among respondents (Figure 2), suggesting that unemployed citizens are no more likely to learn about Hafiz over the course of unemployment.

Figure 2: Awareness/Utilization of Hafiz by duration of unemployment

Again, despite efforts to engage universities and a rhetorical emphasis on employing recent Saudi college graduates, those without a college degree (including those with a few years of college or technical schooling) reported much higher usage rates of Hafiz than those with a college degree; each category of respondents was around 6-16 percentage points more likely to note utilization.[31] We also observe a gender gap in utilization rates, with Saudi men being notably less likely to report utilizing the program than Saudi women.


Within the MENA region, GCC governments are pursuing reforms to nationalize labor markets and encourage citizens to pursue jobs in the private sector. To be sure, and as Steffen Hertog notes in this volume, GCC citizens face clear structural incentives to eschew private-sector careers in favor of pursuing stable, better-remunerated jobs in the public sector.[32] So long as public-sector jobs represent a more stable, better-paid career path, citizens may have little reason to care about training programs or respond to “nudge” policies.[33]

Still, these kinds of programs offer the possibility of improving job-market outcomes at the margins. Elsewhere in this volume, Nada Barrada cautions against defining “unemployed youth,” or “the unemployed” in general, as too rigid a category; some citizens may still benefit from new labor-market policies even in the face of structural incentives to the contrary.[34] What we lack is a clear understanding of whether existing policies can appeal to enough citizens, with a large enough effect on their job prospects, to make a meaningful difference in the face of these structural barriers.

While researchers certainly encountered many Saudis who expended great effort in pursuing or securing private-sector positions, this memo raises some concerns about the aggregate impact of these programs. Limited uptake of a program such as Hafiz, with few requirements for citizens to obtain direct material benefits, suggests even greater challenges for programs that require more active participation from citizens. Within our survey, for example, just 21% of unemployed Saudis reported participation in Doroob, a program of skills-acquisition workshops, and just 13% noted participation in Tamheer, an on-the-job training program. Outside of relatively captive grade-school school classrooms, regional states may therefore struggle to resolve labor-market challenges by shaping citizens’ “mindsets” or making more information available to job-seekers.[35]

Table 1: OLS regressions of binary indicators variables (Have Heard of Hafiz & Have Utilized Hafiz) on explanatory variables. HC-1 corrected standard errors clustered at the region-governorate level.

[1] Variously known as the Ministry of Labor and Social Affairs (1961-2004); the Ministry of Labor, after Social Affairs was split off (2004-2015); the Ministry of Labor and Social Development, after the two ministries were merged again (2015-2019); and the Ministry of Human Resources and Social Development, after the combined ministry was merged with the Ministry of Civil Service (2019 to present). We refer to the labor-market regulation aspects of this ministry as MoL for the sake of simplicity.

[2] Caline Malek. “How Saudization is harnessing Kingdom’s local talent to private-sector expansion,” Arab News, July 8, 2021, https://www.arabnews.com/node/1890971/saudi-arabia.

[3] In the survey that forms the basis for this memo, over 75% of respondents from each region and city preferred employment in the public sector, with little difference by age cohort.

[4] Roberta Gatti, Matteo Morgandi, Rebekka Grun, Stefanie Brodmann, and Diego Angel-Urdinola. Jobs for shared prosperity: Time for action in the Middle East and North Africa. The World Bank, 2013.

[5] Steffen Hertog. Princes, brokers, and bureaucrats. Cornell University Press, 2010.

[6] For evidence of this with respect to U.S. unemployment insurance, see Ammar Farooq, Adriana D. Kugler, and Umberto Muratori, “Do Unemployment Insurance Benefits Improve Match Quality? Evidence from Recent US Recessions.” Working Paper 27574. National Bureau of Economic Research, 2020.

[7] Variously known as the Ministry of Labor and Social Affairs (1961-2004); the Ministry of Labor, after Social Affairs was split off (2004-2015); the Ministry of Labor and Social Development, after the two ministries were merged again (2015-2019); and the Ministry of Human Resources and Social Development, after the combined ministry was merged with the Ministry of Civil Service (2019 to present). We refer to the labor-market regulation aspects of this ministry as MoL for the sake of simplicity.

[8] Daniel Moshashai, Andrew M. Leber, and James D. Savage. “Saudi Arabia plans for its economic future: Vision 2030, the National Transformation Plan and Saudi fiscal reform.” British Journal of Middle Eastern Studies 47, no. 3 (2020): 381-401.

[9] General Authority for Statistics, Kingdom of Saudi Arabia. “Labor Force Survey: Q3 2016,” 2017; General Authority for Statistics, Kingdom of Saudi Arabia. “Labor Force Survey: Q4 2016,” 2017/

[10] Hertog, Princes, Brokers and Bureaucrats, 185-222.

[11]Jennifer R. Peck. “Can hiring quotas work? The effect of the Nitaqat program on the Saudi private sector.” American Economic Journal: Economic Policy 9, no. 2 (2017): 316-47.

[12] Calvert W. Jones. Bedouins into bourgeois: Remaking citizens for globalization. Cambridge University Press, 2017: p. 65-66

[13] See archived version of “About” page for Takamol at from August 6, 2016: https://web.archive.org/web/20160806143058/https://takamolholding.com/en/. The current version of the home page makes no mention of its origins as a government entity.

[14] Alexander Tuerpitz. “Virtualizing employment in Saudi Arabia,” talk given at TED@BCG Berlin (TED Institute event in partnership with the Boston Consulting Group), October 2014. https://www.ted.com/talks/alexander_tuerpitz_virtualizing_employment_in_saudi_arabia#t-5508

[15] For background papers on the project, see: “Back To Work In A New Economy: Background Paper on the Saudi Labor Market,” Evidence for Policy Design, Harvard Kennedy School, April 2015, https://epod.cid.harvard.edu/sites/default/files/inline-files/hks-mol_background_paper_-_full_-_april_2015.pdf; “The Labor Market in Saudi Arabia: Background, Areas of Progress, and Insights for the Future,” Evidence for Policy Design, Harvard Kennedy School, August 2019, https://epod.cid.harvard.edu/sites/default/files/2019-08/EPD_Report_Digital.pdf.

[16] Harvard University. “Back to work in a new economy,” 129-130.

[17] Technically, the program is divided into “Hafez 1” (for those aged 20 to 35 looking for their first job) and “Hafez 2,” launched in 2014 to support citizens aged 35 to 60 who struggled to find work. “<<Hadaf>> yasruf al-daf‘a al-‘uwla min <<Hafez s‘ubat al-husul ‘ala al-‘aml [HRDF disburses first round of <<Hafez for difficulty in finding work>>],” Al-Riyadh, June 3, 2014, https://www.alriyadh.com/941041.

[18] Harvard University. “Back to work in a new economy.” 55.

[19] Harvard University. “Back to work in a new economy,” 56.

[20] Harvard University. “Back to work in a new economy,” 52.

[21] There is little difference in practice and the two programs were later combined. “<<Hadaf>> yasruf al-daf‘a al-‘uwla min <<Hafez s‘ubat al-husul ‘ala al-‘aml [HRDF disburses first round of <<Hafez for difficulty in finding work>>],” Al-Riyadh, June 3, 2014, https://www.alriyadh.com/941041.

[22] “Iqrār ’i‘āna māliyya lil-shabāb al-bāḥith ‘an al-‘aml fī iṭār ḥal ‘ājil wa marḥaliyy,” Al-Riyadh, February 24, 2011. https://www.alriyadh.com/607523

[23] Angus McDowall. “More than 1 million Saudis on unemployment benefit,” Reuters, March 28, 2012, https://www.reuters.com/article/us-saudi-unemployment-subsidy/more-than-1-million-saudis-on-unemployment-benefit-idUSBRE82R0L320120328.

[24] “T‘āwun bayn <<hadaf>> wa jām‘at al-’imām ‘abd al-raḥmān li-tawẓīf al-kharījīn,” Al-Yawm, October 6, 2019, https://www.alyaum.com/articles/6214741/الشرقية-اليوم/تعاون-بين-هدف-وجامعة-الإمام-عبدالرحمن-لتوظيف-الخريجين.

[25] This is important as recent policy changes to the design of Hafiz have mainly addressed participants’ failure to seek jobs, with a recent policy change phasing out benefits over time (with stipends decreasing by SAR 250 every 3 months).

[26] Marianne Bertrand, Sendhil Mullainathan, and Eldar Shafir. “Behavioral economics and marketing in aid of decision making among the poor.” Journal of Public Policy & Marketing 25, no. 1 (2006): 8-23.

[27] Our survey also covers smaller samples of Saudi citizens in three other cities: Buraidah, Dammam and Jeddah. Excluding them does not substantively alter our results.

[28] In other words, participants in HRDF programs might be more likely to secure part-time work, or part-time employees might be more likely to seek out HRDF programs to secure better jobs.

[29] We might interpret these results as a kind of social desirability bias, with Saudi citizens unwilling to admit to having utilized Hafez out of concern that this might hinder them from registering with Hafez again. Yet respondents who believed that their statements would ultimately seen by “public-sector organizations,” including HRDF, were, if anything, more likely to state that they had used Hafez.

[30] Focus group with unemployed Saudi women, HRDF regional office, February 17, 2020.

[31] As a possible explanation, fieldwork in Ha’il and Riyadh indicated close collaboration between HRDF offices and branches of the Kingdom’s Technical and Vocational Training Corporation (TVTC). HRDF workshop for regional TVTC representatives, January 29, 2020; roundtable discussion at TVTC Ha’il Branch, February 10, 2020.

[32] Steffen Hertog, “The emergence of labour market outsiders among GCC citizens,” this issue.

[33] On “nudge” thinking in Saudi policymaking, see Ahmed Al-Zahrani. “A Journey In Behavioral Economics: From Research to Policies,” Presentation for SAMA Quarterly Workshop, March 2018, https://www.sama.gov.sa/ar-sa/EconomicResearch/Quarterly%20Workshops/الربع%20الأول_2018_العرض%20الأول.pdf

[34] Nada Barrada, “Youth and Work in Morocco: A Manifesto against Waithood,” this issue.

[35] Cf. Jones, Bedouins into Bourgeois, 90-96.