A 1.3 percentage point uptick in GDP for Saudi Arabia by enabling and strengthening its workforce of the future

Reducing the mismatch between the skills a workforce possesses and the work tasks that it needs to perform is critical to increasing overall productivity. Addressing the skills mismatch that affects approximately half of Saudi Arabia’s workforce will bring significant benefits for the Kingdom and enable more than 1.3% additional GDP growth per year, according to market-specific insights from Boston Consulting Group (BCG)’s report titled Alleviating the Heavy Toll of the Global Skills Mismatch.

The report, which is also available in an interactive version shows that the skills mismatch is the key barrier to human capital development in Saudi Arabia – where 50% of the workforce don’t realize their working potential in full and their skill set is either insufficient for their work or exceeds its requirements.

The report points to the need for a more human-centric approach to education and employment. Doing so can enable future talents to be an equal partner to the workforce and fully unlock their potential in the workplace. As a result, this would strengthen productivity, innovation, and even sustainable development in the workplace.

“In a world where more than 1.3 billion people globally work in jobs for which they are either underqualified or overqualified, The Kingdom of Saudi Arabia has a tremendous opportunity to address the skills mismatch challenge to bring a significant upside to the Kingdom,” said Dr. Leila Hoteit, the global leader of BCG’s education, employment, and welfare sector and co-author of the report. “Our latest research highlights innovative ways of protecting and investing in human capital. Produced through careful analysis, strategic thinking, and partnerships, our new insight underlines the demand for a human-centric approach and the need for education systems to adapt to new market requirements.”

The Path to Self-Realization

The report highlights that to address the skills mismatch, the 20th-century social contract—with its standardized forms of education, nontransparent labor markets, and job-for-life expectations—needs to be transformed into a fundamentally new pact that involves employees, employers, the government, and the education system.

While Saudi Arabia has been kindling the entrepreneurial spirit among its youth, more is needed from the Kingdom’s business and government to inculcate the needed motivation and accountability in people for their personal development by offering the right incentives and education.

BCG proposes three areas of development that will help Saudi Arabia fight the skills mismatch challenge:

• Fundamental Skill Sets: Saudi Arabia’s results on education standard assessments such as the Program for International Student Assessment (PISA) and Trends in International Mathematics and Science Study (TIMSS) are generally lower than global averages. Governments, businesses, and educational institutions must find ways to help people develop skills that will enable them to perform present-day jobs and jobs that don’t yet exist.
• Human-Focused Environment: Aim to provide better working and living conditions, as Saudi Arabia ranks #158 in the Prosperity Index's Personal Freedom segment. Planners and HR specialists must understand the specific needs, values, and demands of talent, whose knowledge, skills, experiences, and ambitions differ greatly from one generation to another. The Kingdom has rapidly progressed on this dimension and has moved up the rankings table by 12 places in the past decade with the biggest improvement in the Natural Environment segment.
• Labor Market Inclusivity: Inclusivity in Saudi Arabia has room for further improvement, with women’s participation in the labor force calculated at 16% of the total working-age females compared to 45% in the EU. The Kingdom has made significant recent progress on female empowerment with women’s participation in the labor force calculated in 2020 at 30% of the total working-age females compared to 21% in 2015. Still, inclusivity in Saudi Arabia has room for further improvement to reach female participation OECD levels of over 60%. Policymakers and business leaders must figure out how to unlock the potential of all kinds of labor in the economy, including older workers and the disabled.

Future Skills Architect

BCG’s Future Skills Architect, an evidence-based analytical tool, enables government and business leaders to uncover the skills mismatch in their labor supply. It also allows them to explore the policy measures that some countries have already adopted.

“Global changes and market transformations in Saudi Arabia require flexible education and career models, and adaptive upskilling and lifelong learning programs. Human centricity and personalization should replace rigid standardized systems.” said Maya El Hachem, Managing Director and Partner, and also co-author of the report.