Saudi Women: Driving Beyond a Rentier, Oil-based Economy
On Tuesday, King Salman issued a decree that was widely celebrated within and beyond Saudi Arabia. By June 2018, the Saudi Press Agency says, women will receive the right to apply for driver’s licenses in accordance with Shariah Law. While the decision warrants celebration in the context of women’s rights, the economic implications have, however, significant and undoubtedly forced King Salman and Crown Prince bin Salman, his son, to lift the longstanding ban.
As recently as last spring, Saudi officials preached patience instead of action. “[Allowing women to drive is] not a religious issue as much as it is an issue that relates to the community itself that either accepts it or refuses it,” the Crown Prince said in a Gulf News report.
Tuesday’s decree was approved by the Council of Senior Scholars, the Sunni state’s highest religious authority. It also aligns with the precepts of Crown Prince bin Salman’s “Saudi Vision 2030” plan, which aims to diversify the country’s economy, bolster its private sector and reduce its dependence on petrol. Since its announcement in April 2016, Saudi Vision has been scrutinized, and economists have frequently questioned its feasibility.
Saudi Arabia is a quintessential rentier state, and its petrol rents (international market value minus production costs) constitute 23 percent of its GDP, according to the World Bank. Non-renewable resources which exist in competitive markets increase supply until demand diminishes and enjoy profits well above their production costs. These rents become problematic when they are not used to purchase or produce additional economic resources while the country’s capital stock diminishes.
Historically, Saudi Arabia has failed to adequately reinvest in private industries and, instead, has attempted to appease its population with lavish public spending and high-paying government jobs. As petrol prices continue to falter since their peak in 2014, alternative sources of capital are desperately needed.
King Salman hopes that women, once an underutilized Saudi labor base, will use their newfound mobility to participate in private industries identified by consulting giant McKinsey & Company in 2015. Target sectors include “mining and metals, petrochemicals, manufacturing, retail and wholesale trade, tourism and hospitality, healthcare, finance, and construction.” With large corporations like General Electric and the Dow Chemical Company pledging to invest in the country, highly-educated workers will be needed in higher demand, and Saudi women are equipped for the job.
The World Economic Forum currently reports that only 20 percent of Saudi women participate in the work force, and that those who work earn a paltry annual salary of approximately 18,000 USD. In comparison, 80 percent of Saudi men are in the work force, and earn an average salary of 75,000 USD. Despite the disparity in these figures, Saudi men and women complete their secondary and tertiary educations at an equal rate.
Perhaps, then, the greatest victory for women’s rights is yet to come: private-employment parity in the most lucrative, critical Saudi industries in a post-petrol age.