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E-Commerce can solve Saudi youth and women unemployment

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By Joe Tawfik, CEO of Kinetic BPO

GCC Low productivity graphElectronic Commerce requires an organisation to shift their channel of customer interaction from traditional bricks and mortar to digital channels. This channel shift towards digital is consistent with a worldwide trend to meet the changing preferences of consumers. KSA (Kingdom of Saudi Arabia) currently lags the rest of the world in its adoption of digital channels for consumers to interact with organisations.

Increasing the pace of electronic commerce rollout has the potential to create industries that will absorb unemployed nationals.

A recent initiative organised by the World Economic Forum explored the complexity of unemployment in the Arab world. The World Economic Forum engaged leaders from business, government, civil society and academia in a series of conversations between August 2013 and January 2014 to develop a comprehensive analysis of the employment system in Arab resource-endowed economies, with a particular emphasis on GCC countries, shedding light on the fundamental reasons for youth and female unemployment and their interdependencies.

Easy access to, and heavy reliance on generally cheap, low-skilled, non-national labour has impacted incentives to innovate and invest in technology.

One of the key findings was the drop in private sector productivity and the link with the rising unemployment over the past 30 years. Easy access to, and heavy reliance on generally cheap, low-skilled, non-national labour has impacted incentives to innovate and invest in technology.  Over time this has led to stagnant low productivity in the private sector. The figure below demonstrates that productivity dropped precipitously in the early 1980s (this can be partly linked to the import of low-skilled labour, which replaced mid-skilled labour) and has stagnated since then.

The low productivity from the private sector has compounded the problem of reliance on public sector jobs by nationals. This trend can be reversed if there was sufficient incentive for the private sector to invest in technology based solutions for transacting commerce.

The investment in ecommerce will make it easier for customers to undertake commerce with private sector companies. If the KSA government continues to liberalise its markets by making it easier for international trade then private sector companies will be able to increase their trade. This increase in business might also create new markets or extend market reach beyond traditional borders. The result would be increased employment opportunities for nationals in the knowledge industry.

The diversification of the economy is a critical topic in KSA, especially at the moment with the decline of the oil price. The government’s efforts need to be focused on making it attractive for the private sector to invest in electronic commerce. The payback for the government will come in the form of new knowledge based jobs for nationals. The contact centre industry, for example, has the potential to provide thousands of women and young nationals with an opportunity to enter the knowledge industry with no or little work experience. Such an industry is critical in providing the necessary stepping stone into more skilled knowledge jobs.

Joe Tawfik, CEO of KineticBPO

Joe Tawfik, CEO of KineticBPO


April 7, 2015
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