Youth employment initiatives and services in Saudi Arabia

Youth employment initiatives and services in Saudi Arabia Cross-channels strategies and programs Abdulkarim Al-Nujaidi, PhD Executive Deputy Director General Human Resources Development Fund October 29-30, 2013 1

Objectives Overview of the Human Resources Development Fund (HRDF) (Vision, Mission and Mandate) Present certain key challenges within the Saudi Arabian context (Why is this important to Saudi Arabia?) Discuss the youth and female employment programs and services (What successful strategies have been deployed by MoL and HRDF across KSA?) Discuss opportunities for involving key stakeholders to provide an integrated ecosystem (How can education providers, the private sector, and government agencies create impact?) 2 2

Human Resources Development Fund (HRDF) www.hrdf.org.sa Vision A sustainable and productive national workforce Mission To develop the young national workforce and enhance their competitiveness through supporting distinct and specialized training, qualification and employment programs that meet the needs of beneficiaries through qualified staff, advanced information systems and integrated research and knowledge methodologies Since its establishment, HRDF has emerged as an efficient medium for bringing young Saudi job seekers closer to employment in the local labor market by institutionalizing innovative and effective unemployment assistance programs and services including effective training and up-skilling opportunities to enable the Saudi youth acquire the needed competencies to work in both the public and private sectors, resulting in a more productive national economy 3 3 Source: HRDF

KSA Ministry of Labor, HRDF and sister organizations (MoL+) 4 4

Setting the KSA Context 5 5

Saudi youth unemployment rate: ~ 41% Youth unemployment rate (aged 15-24) 2012 60 OECD BRICS 1 50 40 41% 30 20 10 OECD average 17% BRICS 1 average 13% 0 Greece Spain South Africa Saudi Arabia Portugal Italy Slovak Republic Ireland Hungary Poland Estonia Sweden United Kingdom France Finland Czech Republic Brazil Luxembourg Iceland Belgium New Zealand Chile Slovenia United States Russia Turkey Denmark Canada Australia India Korea Netherlands Mexico Japan Austria Germany Norway Switzerland 6 6 1. Excluding China Note. OECD is the weighted average of 33 countries excluding Mexico. OECD calculations based on the Short-term Indicators from Eurostat and various national sources. (Cut-off date: 2 May 2012), Source: www.oecd.org, CDSI, World Bank, BCG analysis

Sri Lanka Malaysia Thailand Saudi Arabia Indonesia Italy Romania Argentina Taiwan UK Cambodia Chile Ecuador Iran South Korea Poland Australia Brazil Algeria France Russia Colombia Portugal Venezuela South Africa Spain Canada Turkey United States Netherlands Japan Germany Above average youth unemployment ratio may indicate difficult education to employment transition Ratio of youth to adult unemployment (%) 8 6 4 5.1 H2 2012 data from CDSI Youth unemployment: 41.9% Adult unemployment: 8.2% Average of benchmarked countries 3.4 2 1.5 0 Best in class % of youth unemployment (between 15 and 24) versus % of adult unemployment (over 24 years old) 7 7 Note: latest available data (cases older than 2008 excluded) Source: ILO, CDSI, BCG analysis

Five key differentiation factors significantly affect the KSA social and economic status 1 Factors Description Implications Average wages Average wages fluctuate significantly (up to 50%) across regions in KSA creating purchasing power disparities Different wage brackets require varying wage subsidy intervention levels and methods 2 Education levels Job seeker (Hafiz) educational levels varies across KSA: 9 regions with ~40% or more of JS with lower than high schools degrees, only 3 regions with higher education levels Different talent pools require targeted training programs to match supply and demand 3 Unemployment rates Average Saudi unemployment rate about ~12.0%, mainly driven by female unemployment. 6 regions above the average with unemployment peaks fostered by male unemployment Demographic specificities require distinctive training and wage subsidy designs 4 Industry concentrations Distinct regional industry concentrations and economic activities across KSA: Riyadh & ER with more economic opportunities Specialized economic activities creates distinct demand for talent and require differentiated training programs 5 Level of expatriate workforce Foreign contribution to labor market is very high (avg. ~83%) with more developed regions (Riyadh, Makkah and ER) less prone to non-saudi employees Better balance between local and expatriate employees to allow for distribution of opportunities to unemployed Saudi job seekers 8 8 Source: HRDF, Hafiz, CDSI, BCG analysis

A synopsis of key challenges to youth employment in KSA today Existing challenges Young population and relatively high youth unemployment rate. ~41% Structural and economic changes to support the transition to a knowledge and services based economy Barriers to entry to the labor market for Saudi women Saudi job seekers preference for the public sector, 2 Saudis out of every 10 employees employed in the private sector No overarching approach to career education Need to foster an ecosystem of key stakeholders through programs that incent involvement and participation 9 9 Source: HRDF, MoL analysis

Youth employment programs and services 10 10

Key measures and innovative services for youth employment in KSA 11 11 Source: HRDF, MoL analysis

Customers (job seekers and employers) services at HRDF Face-to-Face Channels Alternative Channels Branches JPCs Recruitment Offices Liqaat Training HRDF Web Site Hafiz Online Call Center Taqat Online Taqat Grads Virtual Liqaat Key Accounts The service offerings are supported by key policy interventions such as Nitaqat, Hafiz, female employment, regionalization, subsidies, etc. Channels are operated by HRDF via partnerships with the private sector and their performance is periodically assessed against set of KPIs including outcomes, service levels, experience, appearance, level of professionalism, SLAs, employee responsiveness, employee capabilities, etc. Assessment Methodologies Focus Groups Role-Playing Site Visits One-to-One Interviews Reports & Observations Satisfaction Surveys Mystery shoppers Operational Audits 12 12 Source: HRDF customer service department

Unemployment Assistance Program Hafiz 13

Unemployment Assistance Program Hafiz www.hafiz.gov.sa The Royal Decrees triggered the action to immediately develop the relevant Policy, Procedures and Regulatory Notes, that detail all of the legalities around the Unemployment Assistance Program: Hafiz Hafiz Policy Hafiz Regulatory Notes Defines high level guidelines based on the royal decrees Defines the eligibility criteria of the program Define detailed procedures that govern the implementation of the policy 14 14 Source: HRDF, Hafiz

Unemployment Assistance Program Hafiz (cont d) The Hafiz program provides eligible beneficiaries with financial and/or employment related (pre & post employment) assistance Research, Job seekers segmentation Surveys, reports and statistics Labor market observatory and knowledge center Monthly financial aid for supporting and motivating eligible job seekers, according to the entitlement regulations adopted by the Council of Ministers Training and rehabilitation programs during the period of entitlement to enhance their skills and competencies and improve their chances of getting the right job Job counseling, searching and recruitment services through various Taqat channels operated in partnership with public and private sector entities 15 15 Source: HRDF, Hafiz

TAQAT employment channels 16 16

TAQAT employment channels www.taqat.org.sa 1 Description Job searching and matching site. Direct virtual contact between JS and employers with minimal intervention. More than 76,000 private sector job opportunities posted this far with ~191,200 job vacancies Channel Name Taqat Online www.taqatonline.org.sa 2 3 4 Facilitate virtual interviews. The first online exhibition lasting 5 days was launched in the May 2012. Number of enterprises involved 21 properties. ~50,000 job seekers registered (males and females) from different cities of the Kingdom Facilitate physical interviews. Liqa at were organized in Riyadh, Jeddah and Dammam wherein ~20,000 of JS were assessed and supported. Future such job fairs to target specialized industry sectors in the different regions of the country Medium level physical interaction via this intervention through the provision of job matching services with key employers. The program was launched and today has contracted with 36 such recruitment offices across KSA. The total number of job seekers employed via this channel thus far -- ~4000 E-Liqa at Liqa at Taqat Recruitment Office (TRO) 17 17 Source: HRDF

TAQAT employment channels (cont d) 5 6 Description High level physical interaction intervention with specialized recruitment and employment assistance centers launched in 2011. Contracted with four global coalitions to run the 27 centers (males & females) in several cities in the Kingdom. ~158,086 job seekers referred to JPC, of which ~89,262 enrolled and ~27,948 employed thus far Provide the same JPC services remotely via the internet and through a call center. This channel is under development and expected to enhance the outreach to job seekers in remote locations and those who may not be able to attend a physical JPC for services Channel Name Job Placement Centers (JPC) Tele-JPC 7 Dedicated online job matching and career counseling portal for Saudi job seekers who are university students and/or recent graduates. Launched in May 2013 for scholarship students in the US, the portal has 853 registered job seekers, 630 job opportunities and 4,213 job vacancies thus far TaqatGrads www.taqatgrads.org.sa 8 Rehabilitation centers and Mobile JPC (expected to launch soon) Source: HRDF 18 18

Tools for job matching and job searching Professional e-trainings and assessments CV building and interview tips Employers/Recruiters assistance programs Online channels serve job seekers and graduates and aim to position HRDF as the National Employment Gateway Career counseling Full-time, part-time, seasonal, temporary jobs On-the-job training and apprenticeship programs Recruitment channels Communication and interaction through social media 3ogbalak and Dirasat programs Online electronic integrated gate for job seekers and graduates Support hiring programs E-Gate programs Source: HRDF 19 19

Training and up-skilling Career Education 20 20

KSA's challenges provide several key objectives for HRDF's Career Education program Objectives for a Nation wide Career Education program 1 Empower the youth through smooth integration into workforce 2 Steer job seekers to appropriate careers 3 Instill a professional outlook of the individual 4 Create awareness of Career Education opportunities services and channels Source: HRDF, BCG analysis 21 21

Career Education program will incorporate global good practices across 4 main criteria I 2 3 4 How to work Career How to get & sustain Self discovery on the job exploration the job Goals Gain a better understanding of one-self and one's interests Learn to behave in the workplace in different roles (operational or leadership) Develop goals for future education and professional career based on the market Equip with basic job application abilities Focus area examples 1. Self-awareness training 2. Social skills exercises 3. Independent learning training 4. Communication skills practice 5. Interpersonal relations and team work training 6. Conflict management skills 8. Knowledge on education and career options 9. Entrepreneurship introduction 10. Summer jobs & internships 13. Job search strategies 14. Job application 15. Interview training 16. Job onboarding support 7. Volunteering 11. Individual career goal evaluation 12. Personal career scenario planning Source: HRDF, BCG analysis 22 22

Training and up-skilling E-training 23 23

E-training courses for Hafiz beneficiaries Launched for Hafiz beneficiaries since February 2013 34 different E-training courses across a range of different courses administered to Hafiz beneficiaries on a periodic basis Partnerships undertaken with training providers to develop online content and e-learning courses to improve awareness, communication and employment opportunities for Hafiz beneficiaries # Courses published Visiting and Views Assigned (not unique) # of job seekers who attended courses # of job seekers who completed the courses 34 33,054,619 15,736,368 4,340, 580 3,923,423 Source: HRDF, Hafiz 24 24

Training and up-skilling Classroom training 25 25

Classroom training opportunities Cambridge IT training and certification opportunities for Hafiz beneficiaries since Nov 2012 Number of students (thousands) 4 3 2 1 0 3.2 0.6 Certified Employed This program intends to provide IT training and certification to serious Hafiz job seekers (males & females) Over 3,200 students completed the training and received the certification thus far, majority were previous university degree holders as well Of these 600 have been placed into sustainable employment The program has been extended for another year starting Nov 2013 Source: Cambridge, HRDF-Training department analysis as of Sept 2013 26 26

Classroom training opportunities (cont d) Classroom training opportunities for Hafiz beneficiaries though Al Khaleej training centers since May 2013 227 of 500 passed interviews and placement tests Meccah, Al-Khobar and Khamis Mushait centers at full capacity while Jeddah at 75% 250 200 150 52 75 50 Males Females 100 227 175 50 50 25 25 25 0 Total Registered for the next track Currently attending 0 Jeddah Makkah Al-Khobar Khamis Mushait Certified Computer Technical training = 75 (50 M, 25 F) Certified Business Administration = 100 (75 M, 25 F) Source: Al Khaleej, HRDF-Training department analysis as of June 2013 27 27

Training and up-skilling through strategic partnerships On-Job-Training (OJT) 28 28

The most successful solutions for employing jobseekers integrate a variety of employment and training strategies Combining work and training increases success rates of employment programs Students 1 place OJT as the most effective instruction technique Success indicator World Bank McKinsey 0.2 ~0.14 OJT 62% 0.1 ~0.05 Hands-on learning 58% 0.0 Multimedia 54% -0.1 ~-0.14 ~-0.06 Seminars Traditional lecture 30% 46% -0.2 In-class training only Workplace training only In-class training and workplace training combined In-class and workplace training combined plus other services Online/distance learning 30% 0 20 40 60 80 % of respondents saying technique is effective Combining classroom training with workplace training like OJT better meets jobseeker needs 1. Based on a survey of students across 9 countries (Brazil, Germany, India, Mexico, Morocco, Saudi Arabia, Turkey, UK, USA) 29 29

On-the-Job Training solutions assist students and job seekers transition into work Development programs where the training happens... at the work place while doing the actual job A professional trainer or an experienced employee... serves as the instructor The relationship is normally governed... by a contract between the employer and the trainee May be complemented by other forms of training... (e.g. classroom training) Source: BCG analysis 30 30

On-the-Job Training and Employer Driven Academies pilots 3 month program launched in September 2012, providing on the job hands-on training across the functions of HR, Administration, Patient Services and Security 68 Hafiz beneficiaries 23 males and 45 females in Riyadh Presently an internship program and will evolve into a structured OJT with designated certified mentors and starting with an employment contract between Al Habib and the candidate EDA program launched in November 2012, to provide employer specific real job training which would result in full-time employment 90 days of intense training (classroom and on-the-job) 1,029 attend the induction session, 253 registered and 67 were selected for the program Lessons learned and contracted with Al Shaya to cater to 400 trainees per year Source: Al Habib and Al Shaya recruitment teams; HRDF-SPP analysis 31 31

Other partners and upcoming programs within the OJT landscape Government agencies Colleges of Excellence الجهات شبه الحكومية Training Providers Other private sector (Al Bandar, Al Nahda, etc.) 32 32

Female employment programs 33 33

Upward trend marked in female employment in the private sector Number of Saudi women employed in private sector has increased significantly after implementing the initiatives, especially between year 2011-2012 250000 200000 200366 150000 100000 99486 Number of Saudi Women Employed in Private Sector 50000 51451 48406 55618 0 2008 2009 2010 2011 2012 Source: HRDF/MoL analysis 34 34

Female employment initiatives in the private sector 1 2 3 Direct Employment Programs Developing Employment Methods Sustaining Women Employment through Supporting Services Women Employment in the Retail Sector (Women Clothing & Accessories) Women Employment in Factories Nationalization of Malls Tele-work Part time jobs Work from home ( productive families) Society Awareness on women employment Women Employment Guidelines for the private sector Transportation Support for working women Nurseries to support working mothers 35 35 Source: HRDF analysis

1 2 3 Female employment in the Retail Sector In June 2011, a Royal decree (A/121) was announced enforcing that only Saudi women are entitled to work in retail shops selling women related merchandise. This Royal decree is being implemented in phases 1 : Phase 1 Saudi Women employment in lingerie and make-up shops In June 2011, a Royal decree (A/121) was announced entitling Saudi women to work in factories. This Royal decree is being implemented in phases 2 : Phase 1 Saudi Women employment in pharmaceutical factories Phase 2 Saudi Women employment in evening & wedding dresses, Abayas & accessories shops Phase 2 Gradual expansion of Saudi women employment in other factories with production lines Phase 3 Gradual expansion of Saudi women employment in other areas of women fashion retail 36 36 1. Phase 1 has been launched and Phase 2 and 3 are currently in the planning stages 2. Currently a study is being conducted to identify the positions suitable for women in factories

1 2 3 Nationalization of Malls (Service Centers) Service centers to be established in malls to offer government services of which some will target supporting women employment such as transportation, nurseries & guidance on the suitable work environment Nationalization of Malls is an initiative that aims at encouraging retail sector employers to employ Saudi females through setting up service centers inside malls that provide government services and incentives for employers such as assisting in recruitment, training, guidance on women employment, transportation support and nurseries. Other government entities services Guidance on women employment Recruitment Service Centres in Malls Nurseries MoL Services Transportation Support Source: HRDF, MoL analysis 37 37

1 2 3 Tele-Work and Part-time jobs Telework and Part-time jobs are initiatives under (A/121) that aims at providing more work opportunities for women that fit their needs for a work-family balance through working remotely and from their homes Studies are being conducted presently to examine the needs to build proper regulations and infrastructure to apply telework in Saudi Arabia. Furthermore, to encourage companies to identify telework opportunities for women, MoL+ have developed an approach to count women working remotely in the nationalization program ( Nitaqat ), which will help employers improve their Saudization level. Customer Service Sales (via phone) Advertising Call Centre Translation & Document Management Computer Programming Possible job options for Telework & Part-time Consulting Journalism Additionally, employers are being encouraged to recruit women in part time jobs through counting two part time working women as one full time women in the nationalization program ( Nitaqat ), which will help employers increase their Saudization level. Marketing Graphic Design Releasing medical reports Ticketing & Reservations Source: HRDF, MoL analysis 38 38

1 2 3 Working from home (productive families) Work from home is one of the initiatives under (A/121) that aims at advocating the skills development and employment of families (mainly women) and increasing overall productivity of the population towards the national economy The Saudi government is seeking to develop a governing entity for productive families to help support them better as they are considered as one of the means of employment in Saudi, specifically for women. Currently a study is being conducted to understand the status quo better and develop the concept of productive families and accordingly establish proper implementation support through policies, etc. Source: HRDF, MoL analysis 39 39

1 2 3 Sustaining females into employment Policies & Regulations Policies developed to support the new initiatives Financial Support HRDF subsidizes part of the salaries & training & transportation Supporting Services Transportation means & nurseries are being developed for working women Women Employment Training Training material are being developed for women entering new sectors such as retail and factories Society Awareness Media campaigns are developed to create awareness on women employment targeting society in general, employers and women Source: HRDF, MoL analysis 40 40

Subsidy programs 41 41

High-level objectives and clustering of the various subsidy programs 1 Providing scholarships for qualifying, training and employing national workforce in private sector 2 Contributing to the cost of qualifying and training national workforce in private sector Jobs 3 Financing the establishment and the expansions of training institutions Qualifying & Training the National workforce 4 5 Paying percentage of salaries of those who are employed in private sector after being qualified and trained Financing field programs, projects and studies aimed at employing nationals and reduce dependencies on the expatriate workforce Employment of Saudi Nationals 6 Undertaking related research and studies and providing management and HRM consultation Study and Research Source: HRDF analysis 42 42

Example subsidy programs Funded Programs Jobseeker Funded Programs Jobseeker Male Female Male Female Support for Qualified Candidates Entrepreneurship Grant Program Support for Non-Qualified Candidates Heath training Program Non-profit Institutes Train to Hire Program Women's work in factories Saudi Female employment in retail program Women's Part Time Work HR Officials Skills Improvement Program Manpower Retention Incentive Program Support Teachers Program Tele-working Prisoners Support Program SABIC contractor Saudization project Entrepreneurship Development Program Tourism Specialist Training Program Source: HRDF 43 43

HRDF is implementing Direct Subsidy Payments (DSP) 1 Subsidy Payment to Employer 2 Direct Subsidy Payments (DSP) Step 1 Step 2 Step 1 Employer pays employees full amount HRDF reimburses Employer within 5 days Employer pays employees a % of salary HRDF pays employees the remaining % of salary Traditional Revised DSP On time payment - Reduce/eliminate the cash-flow concerns that the WSP participating employers have raised over the last few years Government support awareness - Increase awareness of government support to the public, generally, and amongst the beneficiaries specifically DSP experience - Positive feedback from Teacher's Support Program led to rolling out DSP to other programs Source: HRDF 44 44

Additional Subsidy Programs associated with Saudization The advantage of the proposed subsidy program is that the limit of subsidy is higher than current HRDF programs where the subsidy is up to SAR 4,000 up to four years. Also, the program is based on the subsidization of half of the salary for new Saudi employees, and the upper limit of subsidy differs according to the classification of the entity in NITAQAT classification The additional subsidy of wages program associated with Saudization Platinum Green Yellow Red 4000 3000 2000 2000 3000 2500 2000 2000 2000 2000 0 0 1000 0 0 0 # of years First year Second Year Third year Fourth year Source: HRDF, MoL 45 45

National Labor Observatory 46 46

National Labor Observatory (NLO) Vision Mission To improve the operation of the Saudi Arabian labor market by providing participants (policy makers, employers, intermediaries, workers, job seekers and others) with reliable data and insight to improve their decision making whilst protecting individual privacy Deliver exemplary service through providing up-to-date, timely and accurate labor-related data, analysis and insight to support policy design, decision-making and performance measurement to the Ministry of Labor and various public and private sector entities Provide exemplary service through data and objective insight to the Ministry of Labor and affiliates Goals & Aspirations Support the development of a labor data ecosystem for the creation and sharing of accurate and timely information whilst protecting privacy Provide services in a sustainable way to other public and private sector entities and individual job seekers Source: HRDF, MoL analysis 47 47

National Labor Observatory (NLO) Objectives Create a central repository for national data that can be used by different governmental agencies to steer strategies and make decision based on actual facts Provide information to policy makers to develop policies about the labor market to help Reduce unemployment Increase Saudization Ensure that mismatch between skills supplied by institutions and skills demanded by job creators is minimized as far as is possible Provide information reporting services in a sustainable way to public and private sector entities and individual job seekers Bring together stakeholders data to develop a shared vision of the labor market and skills development Source: HRDF, MoL analysis 48 48

Fostering an ecosystem of training and employment in KSA 49 49

Customize HRDF interventions by regional clusters Region Wage brackets 1 Education Unempl oyment Economic Opportunity Saudization Cluster characteristics Makkah Al-Riyadh Est. Region Al Madinah Najran Asir Hail Al-Jouf Al-Baha Al-Qassim N. Frontier Tabuk Jazan 1. Wage brackets in yellow include wages between 3,000 and 4,000 SAR / month. Source: HRDF, BCG analysis 50 50 A B C D The high education seekers Regions with economic opportunities and high wages, but low/medium education levels, below average unemployment and below average non-saudis employees The core training seekers Regions with some economic opportunities but low unemployment rates, low wage brackets and low education levels The labor opportunities seekers Regions with highly education levels, limited economic opportunities and above average unemployment and low wages The combined intervention seekers Regions with low economic opportunities, high unemployment rates, medium/low education levels and low/average wage brackets and above average non-saudis Above average Average Below average

An integrated ecosystem with coordinated stakeholder interests will foster an environment for youth employment Government agencies must act as facilitators and policy setters Private sector Private sector can provide a practical skills development environment Educators and training providers can offer a launch pad for swift transitions into employment Training providers Government Agencies Graduates and job seekers Graduates and job seekers must help themselves for a smoother transition into employment Source: HRDF, BCG analysis 51 51

Q & A 52 52

Thank you 53 53