Poverty in the Kingdom of Gold

It is not easy for Saudi Arabia to acknowledge that poverty exists in its society, writes Ahmad Dohman. Part of the growing problem is that the Saudi economy is linked to the Federal Reserve, but it is time for the government to address its high unemployment rate, solve the housing crisis and acknowledge the existence of its poor citizens.

al-monitor A man looks at a jewelery shop near the Grand Mosque in Saudi Arabia.  Photo by REUTERS/Amr Abdallah Dalsh.

Topics covered

saudi arabian economy, saudi, poverty

Nov 2, 2012

It is not easy for Saudi Arabia to acknowledge that poverty exists in its society. The third richest country in the world — known for its wealth of oil and natural resources, which fills its coffers with money — is not expected to accept its growing poverty crisis. The stereotypical image of Saudis places them nowhere near poverty. It portrays them as rich individuals that squander their money to fulfill their desire to consume unnecessary goods and wants. One cannot imagine a poor Saudi citizen living in a modest home and spending three-quarters of his salary to secure basic needs of food and water. Saudi Arabia is a financially stable country that grants a lot of donations and aid to surrounding countries. It also supports global development funds and has its doors open to millions of workers. That said, how could this country leave its own people destitute at home?

Acknowledging the presence of poor citizens

It took the kingdom quite a long time to concede to the presence of poor people. Perhaps the openness of Saudis to the virtual world and social networking sites pushed this reality to the forefront of the minds of officials and people. Many short films, videos and pictures exposed cases of poverty and introduced it to the government and citizens. These films discussed the suffering of families living under the poverty line, and showed men discussing the details of their miserable lives characterized by their low-incomes, which sometimes does not exceed $50 per month. One Saudi discussed how he is supporting his family, which is made up of eight married and unemployed men, while another spoke about how he was arbitrarily fired and posted his appeal to the king on YouTube.

What went wrong and how did the situation in the kingdom deteriorate to that extent?

The absence of accurate figures and official statistics for a long time made the issue of poverty in Saudi Arabia highly debatable. Everyone had a say on this issue, yet no one was able to propose a solution to uproot it. So far, no one has acknowledged the fact that the crisis is snowballing and that poverty is affecting the healthy environment that the kingdom wants to secure for its citizens. According to this year’s statistics, the government announced that the social security services have benefited around 800,000 cases. A case is a unit indicating one Saudi family, with the average family size in Saudi Arabia being between six to eight people. The Ministry of Social Affairs announced later on that its services would include families of up to 15 persons. Hence, according to calculations based on the aforementioned data, the number of poor people in Saudi Arabia exceeds 6 million out of 20 million, which is the estimated population of Saudi Arabia. The increase in the number of beneficiaries from social security services indicates a decrease in the size of the middle class, thus turning the latter into lower class.

Link to the US Federal Reserve

The Saudi economy suffers from being associated with the policies of the US Federal Reserve, which has suffered from a number of disadvantages in the past ten years. This link made the Saudi economy prone to massive inflation and led to a decline in the purchasing power of the Saudi riyal. This is despite the support provided by the government for basic goods and materials. The rapid increase in commodity prices did not go hand-in-hand with an increase in salaries, which led many families to suffer from the high cost of living. The society attempted to deal with this situation by pressuring the owners of companies and wealthy men to stop the increase in food costs, by boycotting them. The recent campaign was to boycott the purchase of chicken after the price doubled.

High cost of living and housing crisis

In addition to the high cost of basic needs, the recent period witnessed a housing crisis and an increase in the cost of rents. Statistics have shown that 80% of Saudis live in rented houses, and owning a house has become a dream for Saudis due to the rise in land prices and construction costs, which have reached unimaginable rates. This rise further pressured citizens earning minimum wage (which does not exceed $600 a month), who are paying for food, water and housing for families that are made up of at least six members.

Unemployment, which has spread throughout Saudi society and plagued a large segment of its citizens due to the presence of a foreign workforce, has led to further worsening the issue of poverty. The concept of family in Saudi Arabia falls within the scope of the extended family, in other words the children after marriage continue to live with their families.

What is the strategy?

The kingdom attempted to set a strategy to fight poverty. According to the minister of social affairs, the present plan is intended to treat corruption and its four main causes:
1. Finding a solution to unemployment that led Saudi Arabia rank second after Iraq with the highest unemployment rate in the Middle East and the Arab world.
2. Finding a solution to the housing crisis and the rising cost of rents.
3. Finding a solution to the issue of minimum wages and the rising cost of living.
4. Accelerating the implementation of development projects and balanced development projects between different areas.

Pumping money into the economy is not a radical solution to the issue of poverty; it is rather a temporary numbing of the situation that will make individuals further depend on aid. It would have been better to treat the roots of the crisis, instead of focusing on treating the surface of the crisis by distributing food supplies and depending on charity aid. The government could have provided the needy with food stamps, which would allow them to buy food at reasonable prices in shopping centers.

Jazan is the poorest city in Saudi Arabia. It is situated in the south of the country and the number of families suffering from extreme poverty amounts to 19,700. Al-Qasim is the least poor area in Saudi Arabia. According to the anti-poverty national strategy “the percentage of families living under poverty line in Jazan is 34%.” Najranin in southern Saudi Arabia is the second poorest area with 24.53% of its families living under poverty line, followed by al-Madinah, situated in the west, with 24.07%, and the area situated at the northern border with 23%.

The above article was translated from As-Safir Al-Arabi, a special supplement of As-Safir newspaper whose content is provided through a joint venture of As-Safir and Al-Monitor.

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