Saudi labour reforms add 600,000 private sector jobs

* Deputy labour minister says male unemployment fell to 6.1

pct

* Says a third of new Saudi hires are women

* Jobs market skewed by heavy use of cheaper foreign labour

By Angus McDowall

RIYADH, March 19 (Reuters) - Saudi Arabia's attempts to

reform its expatriate-heavy labour market have put more than

600,000 locals into jobs at private companies, a senior official

said on Tuesday, a sharp increase over previous rates.

Unemployment among men last year dropped to 6.1 percent, the

lowest figure since 2000, deputy Labour Minister Mofraj

al-Haqbani told Reuters after a press conference in Riyadh.

"It is the lowest since 13 years ago... I think next year,

God willing, we will see better results," he said.

The Middle East's largest economy grew by 6.8 percent last

year, but private companies have traditionally been reluctant to

employ Saudi workers, who are paid more than foreigners and

enjoy more job protection.

Employment statistics are also skewed by the low level of

women in work due to religious restrictions on gender mixing.

The world's top oil exporter sees low employment among

nationals as a long-term strategic challenge, a view given added

impetus after joblessness in nearby countries contributed to the

Arab spring uprisings.

Central bank figures from 2011 showed around nine in 10

Saudis in work were employed by the state, while more than 6

million foreign workers held roughly the same proportion of jobs

at private companies.

The Labour Ministry has aggressively pushed reforms,

overhauling an existing system of quotas for Saudi and foreign

employment in the private sector and fining companies that

employ more expatriate than local workers.

The changes have provoked anger among some Saudi companies,

which say they cannot find Saudis willing to do jobs seen as

menial, such as in the labour-heavy construction sector.

The quota system, called "Nitaqat", categorises companies by

sector and size to determine what proportion of foreign

employees they should have. Firms that miss their targets are

penalised with fines and hiring restrictions. It was started in

late 2011.

Economists have said it is too early to assess the wider

impact of the labour reforms on the kingdom's job market and

private sector.

EXPATRIATE LEVY

In November, the Labour Ministry also announced a new policy

of charging companies a fee of 2,400 riyals ($640) for each

foreign worker they employ over the number of Saudi staff. The

fee was introduced immediately and must be paid when an

expatriate's work permit comes up for renewal.

"We employed more than 600,000 since Nitaqat was launched,"

said Haqbani, adding that previously 50,000-80,000 Saudis joined

the private sector workforce each year.

In a sign of the government's push to raise female

employment, women represented a third of the new private sector

employees, Haqbani said.

"In history (before Nitaqat) we only employed about 70,000,"

he said.

Labour Minister Adel al-Fakeih was quoted in al-Eqtisadiah

newspaper on Tuesday as saying the number of women employed by

private companies in Saudi Arabia had doubled from a year ago.

He also said the ministry was working on 100 initiatives to

improve Saudis' employment prospects with private firms,

including a system of monitoring wages to prevent companies

cheating existing requirements.

Haqbani said he did not know how much money the SR 2,400

levy on foreign workers would raise for the government, and he

also did not know how much an unemployment benefit of SR 2,000 a

month, payable for up to one year, had cost the country.

More than 1 million people are on the unemployment benefit,

known as Hafez, he said, and around 86 percent of them are

women. He said most of the people who had found new jobs had

been on the Hafez programme.

The government last year introduced new rules making some

retail jobs, such as for lingerie and cosmetics, women only. It

has also sent tens of thousands of women abroad on scholarship

programmes, alongside men, aimed at improving their job

prospects.

(Reporting By Angus McDowall and Marwa Rashad; Editing by John

Stonestreet)