The status of Saudi women in the private Sector
Using online job ads to explore the demand and wages for Saudi women
Over a month ago, I wrote an article that explores whether certain private companies have a preference to employ Saudi women in jobs that may be otherwise suitable for both genders. In this article, I present an update on this indicator along with various measures such as the median gender wage gap categorized by educational attainment.[1] I further introduce a new indicator that calculates median wages by gender while controlling for the required years of experience for each job ads to investigate whether this closes the gender wage gap between Saudi males and females.[3] I then compare the 1) median wages for Saudi females across Saudi cities, and 2) explore which cities have the highest demand for Saudi females.[2]
As mentioned previously, I create a proxy indicator to test a somewhat common idea on Twitter that Saudi firms prefer hiring Saudi females over men and some would go as far as arguing that firms have already replaced Saudi males with newly hired Saudi females. Unfortunately, the latter claim is difficult to rigorously study without accessing granular GOSI data. However, we can test the former claim by measuring the share of online of job ads in a given month that are strictly looking to hire Saudi females in occupations appropriate for both genders. The graph below suggests that again while some firms indeed a have a preference to recruit Saudi women, this figure is small relative to all online job ads in a given month. The average monthly share of jobs that exclusively preferred Saudi females was 4.5% between March and May 2023.
Graph 1. Share of jobs strictly recruiting Saudi females Feb-May 2023[4]
Another valuable aspect of utilizing online job postings is that we can obtain information on offered median monthly wages, which I use to compare between jobs that are exclusively recruiting Saudi women versus those without a gender preference in May 2023. The gender wage gap is approximately 1,000 Riyals per month, which is an increase from last month’s estimate of 800 Riyals. This might lead some to argue that this gender wage gap is driven by 1) differences in educational attainment and 2) the variation in the required years of experience for the job. I challenge both hypotheses in the following paragraphs.
Graph 2. Median monthly wages based on the stated gender preference May 2023
In graph 3, I present the median gender wage gap while controlling for educational attainment. There is no gender wage gap for jobs recruiting high school graduates regardless of whether they are looking to employ Saudi females or citizens in general but with no gender preference. This is good news for low-skilled citizens with a HS degree who are typically working in tourism and retail jobs. However, the outlook looks bleak for Saudi females with a college-degree as employers offer them drastically lower wages at 5K Riyals per month for jobs where they specify a preference to recruit women compared to 8K Riyals for jobs without a gender preference. I find this puzzling given that the wages for Saudi females are subsidized at a higher rate than Saudi men, which thus makes them cheaper to hire yet firms still start with lower salary offers for women. One would anticipate, at least theoretically, that subsidizing a group of workers should lead to higher wages for those employees.
Graph 3. Median monthly wages by gender preference and qualifications
Another hypothesis that is frequently proposed to explain the gender wage gap is that it is explained by differences in the work experience between Saudi men and women. Specifically, the argument is that Saudi men on average, have more private sector work experience compared to women who have only entered the labor force in recent years. As a result, I extracted the required years of experience for every job posting and I compare median offered wages for jobs with a preference to hire Saudi women versus those with no preference.[5] Unfortunately, the wage gap is persistent even after controlling for work experience. For jobs that are recruiting Saudi females with 5 years of experience, the median offer is 6K Riyals versus 8K Riyals for those with no gender preference. This does not imply that men with 5 years of work experience are earning 2K per month than women, however, the result does suggest that firms start negotiations at 2K Riyals less when they are specifically recruiting Saudi women.
Graph 4. Median monthly wages by gender preference and required years of experience[6]
After the last article where I explored how the economic composition of sectors varies by Saudi cities, I have decided to test whether median wages for Saudi women differ in the country’s three largest cities. For example, it’s insightful to learn whether a local economy’s diversification level has any relationship with wages? AlDhahran, which is where Aramco is headquartered, recorded the highest median wage for Saudi women compared to Riyadh and Jeddah, although its economy is much less diverse than other cities.
In graph 6, I explore if higher wages for Saudi women are correlated with a higher labor demand for Saudi women? Theoretically, one would expect that in a local economy where demand for Saudi women is higher, females should have a higher negotiation leverage against employers and thus may demand higher wages. Interestingly, however, labor demand for Saudi women is the highest in the capital yet median offered wages for females are also lower in Riyadh than in Dhahran and Jeddah. In other words, the high median salaries are likely a reflection of AlDhahran’s prosperous energy-based economy.
Graph 5. Median monthly wages for Saudi females by city[7]
Graph 6. Monthly share of jobs strictly recruiting Saudi females by city
[1] The gender wage gap is estimated based on the median offered wages for jobs that are strictly recruiting Saudi women versus those without a gender preference.
[2] The time period covered for this indicator is Feb through May 2023.
[3] 83% of jobs in the dataset specified a required number of years for experience for job candidate.
[4] This is simply calculated by dividing the number of jobs recruiting Saudi females in a given month by the total number of jobs in the same month.
[5] The years of experience with one green bar only (e.g., 4, 6 through 8) are those where no jobs exclusively recruiting Saudi females.
[6] The time period covered for this indicator is Feb through May 2023.
[7] Here I combined data for AlDhahran, AlDammam, and Alkhobar under one category, Dhahran.
Thank you for writing this article, I enjoyed reading it. I just wonder do you think its discrimination or a supply issue?, means there are more women who are unemployed so the bargaining power shift to the employer from the beginning