IMF lauds labor market reforms in Saudi Arabia

The Kingdom of Saudi Arabia's flag

The International Monetary Fund (IMF) praised the reforms witnessed by Saudi Arabia’s labor market, saying that they have begun to yield tangible results, including a decline in unemployment rates, a rise in women’s participation in the labor market, and increased employment in the private sector.

Preliminary results of the IMF’s annual consultations with the Kingdom highlight exceptional growth in the non-oil sector, effectiveness of structural reforms, and the soundness of fiscal policies, state-run news agency SPA reported.

The IMF expressed its support for the government’s decision to adopt expansionary fiscal policies in 2025, aimed at sustaining growth momentum despite falling oil prices.

The IMF hailed the ongoing structural transformation in Saudi Arabia’s labor market, as the latest figures from the General Authority for Statistics show a continued decline in the unemployment rate among Saudi nationals, now standing at 6.3%, marking a significant improvement compared to previous years.

The IMF also commended the substantial and noticeable increase in women's participation in the workforce, which reached 36.3% in Q1 2025, compared to just 19.7% in 2018, according to the Labor Market Bulletin issued by GASTAT.

At the same time, the authority reported that the unemployment rate among Saudi women dropped to an unprecedented low of 10.5%, continuing a long-standing trend of growing female participation in the labor market.

The IMF noted that this transformation is supported by ongoing reforms aimed at enhancing productivity, developing skills, and engaging employers.

Wages in high-skilled jobs rose, reflecting growing demand for advanced talent in fields such as engineering, digital services, and finance. While this growth signals a dynamic and healthy labor market, the IMF emphasized the importance of continuing to develop and train national talent in these sectors to enhance competitiveness and maintain wage stability over the long term.

Moreover, the IMF confirmed that the Kingdom’s decision to adopt a higher-than-budgeted fiscal policy for 2025 is an appropriate measure to mitigate cyclical fluctuations that could worsen the economic impact of lower oil prices.