July 2007

1. Saudi Labor Market Medium-Term Outlook (2007-2010) The National Commercial Bank NCB Economics Department July 2007 Dr. Said A. Al-Shaikh Chief Economist s.alshaikh@alahli.com Mazen A. Tammar Senior Economist m.tammar@alahli.com July 2007

2. Saudi Labor Market: Medium Term Outlook (2007-2010) • According to our estimates, the Saudi labor market (including both Saudi and Non-Saudi nationals) expanded by an average annual rate of 2.7% over the five year period 2001-2005, reaching 8.4 million workers by the end of 2005 (Table 1). • We project growth to remain relatively stable at 2.6% per annum over the forecast period 2007-2010, bringing the total workforce from an estimated 8.6 million workers in 2006 to roughly 9.5 million workers by 2010. • Roughly 72% of incremental jobs created over the forecast period, estimated at 1.14 million jobs, will be captured by three economic sectors; (1) Community and Social Services, (2) Construction, and (3) Wholesale, Retail and Trade (Figure 1). • In terms of institutions, the Private sector is expected to capture 92% of incremental job additions, about 1.05 million jobs, with 53.4% occupied by Saudis (Table 2). • An estimated 648 thousand Saudi nationals are expected to join the Saudi labor market between 2006-2010, bringing Saudi participation to 46.7% by 2010, up from 40.4% in 1995 and 44.9% in 2002. • Non-Saudi, Private sector jobs will predominantly be concentrated in the low-skill/wage sectors (i.e. Construction and Wholesale, Retail and Trade).

3. Key Labor Market Growth Drivers • Saudi demographic structure exemplified in: • Robust population growth patterns, with annual growth rate averaging 2.5% between 1992-2004 (2004 census). • Youthful population; roughly 54% of total population falling below the age of 30 years (Figure 2). • Economic Growth and diversification strategies. • De-regulation and liberalization. • Increased female participation in the Saudi workforce.  increased Private sector participation

4. Employment Distribution Statistics by Economic Sector Sources: Central Department of Statistics and NCB.

5. Employment Distribution Statistics by Economic Sector Sources: Central Department of Statistics and NCB.

6. Employment Distribution Statistics by Institution Sources: Central Department of Statistics and NCB.

7. Figure 2: Saudi Population Pyramid, 2005 80-84 AGE BRACKET MALES FEMALES 70-74 60-64 50-54 40-44 30-34 20-24 10-14 0-4 2,000,000 1,000,000 1,000,000 2,000,000 Saudi Demographic Structure Sources: Central Department of Statistics 2004 Census, US Census Bureau International Database, NCB.

8. NCB Economics Department To be added to the NCB Economics Department Distribution List Please contact: Mr. Noel Rotap Tel.: +966-2-646-3232 Fax: +966-2-644-9783 Email: n.rotap@alahli.com NCB Economics Department NCB Economics Department The Economics Department Research Team Head of Research Dr. Said A. Al Shaikh Editor/Chief Economist s.alshaikh@alahli.com Muhammad Y. Malick Senior Economist y.malick@alahli.com Mazen A. Tammar Senior Economist m.tammar@alahli.com Macroeconomic Analysis Hany Y. Genena Senior Economist h.genena@alahli.com Perihan Al-Husseini Economist p.alhusseini@alahli.com Management Information System Walaa S. Shaheen MIS Officer wa.shaheen@alahli.com Sector Analysis/Saudi Arabia The Economics Department Research Team Head of Research Dr. Said A. Al Shaikh Editor/Chief Economist s.alshaikh@alahli.com Muhammad Y. Malick Senior Economist y.malick@alahli.com Mazen A. Tammar Senior Economist m.tammar@alahli.com Macroeconomic Analysis Hany Y. Genena Senior Economist h.genena@alahli.com Perihan Al-Husseini Economist p.alhusseini@alahli.com Management Information System Walaa S. Shaheen MIS Officer wa.shaheen@alahli.com Sector Analysis/Saudi Arabia Disclaimer: The information and opinions in this research report were prepared by NCB’s Economics Department. The information herein is believed by NCB to be reliable and has been obtained from public sources believed to be reliable. However, NCB makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this report constitute the current judgment of the author/authors as of the date of this report. They do not necessarily reflect the opinions of NCB as to the subject matter thereof. This report is provided for general informational purposes only and is not to be construed as advice to investors or an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or other securities or to participate in any particular trading strategy in any jurisdiction or as an advertisement of any financial instruments or other securities. This report may not be reproduced, distributed or published by any person for any purpose without NCB’s prior written consent. Disclaimer: The information and opinions in this research report were prepared by NCB’s Economics Department. The information herein is believed by NCB to be reliable and has been obtained from public sources believed to be reliable. However, NCB makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this report constitute the current judgment of the author/authors as of the date of this report. They do not necessarily reflect the opinions of NCB as to the subject matter thereof. This report is provided for general informational purposes only and is not to be construed as advice to investors or an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or other securities or to participate in any particular trading strategy in any jurisdiction or as an advertisement of any financial instruments or other securities. This report may not be reproduced, distributed or published by any person for any purpose without NCB’s prior written consent. To be added to the NCB Economics Department Distribution List Please contact: Mr. Noel Rotap Tel.: +966-2-646-3232 Fax: +966-2-644-9783 Email: n.rotap@alahli.com To be added to the NCB Economics Department Distribution List Please contact: Mr. Noel Rotap Tel.: +966-2-646-3232 Fax: +966-2-644-9783 Email: n.rotap@alahli.com NCB Economics Department NCB Economics Department