26th September 2017 will be written in golden words in the history of Saudi Arabia as King Salman issued a Royal decree to allow women to drive in Saudi Arabia that day. It is a very positive step which will improve Saudization and reduce dependence from expat workforce in Saudi Arabia.
Although the Royal decree has been issued to allow women to drive in Saudi Arabia, Saudi Arabia still has to go a long distance to actually start issuing driving licenses to women. We believe that there are 7 Steps needed to start issuing driving licenses to women in Saudi Arabia.
Saudi Women replacing Expats: Currently, there are around 200000 women working in the private sector of Saudi Arabia. We believe that after allowing women to drive in Saudi Arabia, the women working in the private sector will be increased by 40% in the first year.[irp]
Currently, Saudi women target a minimum monthly salary of SR 6,000 onwards. They cannot afford to work for a salary lesser than this as they have to pay to the driver as well which costs them around SR 2,500 per month.
When you are targeting a salary of SR 6,000 onwards, you need to have some qualification and background. It also means that a majority of women who wanted to work were not able to work in the private sector due to not qualifying for the criteria.
As now the women are allowed to drive in Saudi Arabia, they will not have to incur the cost of SR 2,500 per month to provide them the transportation. They can drive themselves at a cost of maintaining the car which is not more than SR 400 per month for operating expenses.
It means that women will be targeting the jobs starting from SR 3,500 as for them the disposable income is the same. The women who were not able to enter the job market and private sector due to lower qualification or experience would be entering the market.
If you are living in Saudi Arabia, you must know that the jobs in the range of SR 3,500 are not currently targeted by the Saudis. You will not find a single Saudi working at this package. Men don’t want to work with this salary and women cannot afford to work at this salary.
If an expatriate earns SR 4,000 per month on average, it means that SR 800 million per month will be added to the incomes of Saudis. It also means that the new Saudi women workforce will be earning SR 9.6 billion a year.
The majority of the shopkeepers at the shopping malls, front desk jobs at rent a car provider, insurance and credit card agents, front desk officers in car leasing companies, sales representatives at car dealers will be the target jobs for this new stream of the workforce.
Yes, most of these jobs are held by expatriates from the Arab world and South Asian countries. Now this new stream of the workforce will be added into the economy and replace this expatriate workforce. For employers, it is very beneficial as every Saudi employee will improve their Nitaqat category.
It is also financially beneficial for an employer as starting from the year 2018, they have to pay SR 400 per month to the labor office for an expat employee. It will increase to SR 800 per month by 2020. We have explained the Calculation of Work Permit Levy in this link.
If you are working in an office where Saudi women are already working with you, you must have realized that Saudi women are more serious and dedicated towards their work as compared to Saudi men. Employers also prefer to hire Saudi women over Saudi men. In short, there are many reasons to believe that Saudi Economy will recover by allowing women to drive.
There are around 1.4 million domestic drivers in Saudi Arabia. At least 60% of these drivers will be terminated as women would love to drive themselves. An average driver draws a salary of SR 1,500 per month. Terminating 800,000 domestic drivers will save SR 20.6 billion a year.