Analysts predict allowing women to drive could potentially encourage many to enter workforce and save billions
Saudi Arabia’s decision to allow women to drive had some sounding the death knell for ride-hailing apps like Careem, but its co-founder expects business to flourish and even plans to hire thousands of female drivers.
Permitting driving licenses for women, the kingdom’s most striking reform which takes effect next June, was catalyzed in large measure by what experts characterize as economic pain owing to a protracted oil slump. It could put not just millions of women behind the wheel but potentially many more into the workforce and cause billions of dollars in savings, analysts predict, as the country seeks to revitalize its oil-dependent economy.
The reform was expected to hit Careem’s business as most of its customers are women, but it plans to hire 100,000 female workers to capture a new market segment in the gender-segregated kingdom where many are culturally averse to being driven by men. “I began receiving ‘condolence’ messages [for our business] after the historic decision… but I only see hope,” the company’s co-founder and CEO Abdullah Elias told AFP. “There are many who are currently not using our service because they want female captains [drivers]. This is a new customer segment. Job creation, new products and overall access to a bigger market… that’s driving our hope.”
The reform is credited to 32-year-old Crown Prince Mohammed bin Salman, who styles himself as a modernizer in the deeply conservative kingdom, where more than half the population is aged under 25. Unlike previous rulers, he has shown a willingness to tackle entrenched Saudi taboos, and is seen as catering to the aspirations of youth with an array of entertainment options and promoting more women in the workforce.
His “Vision 2030” program for social and economic reform seeks to increase women’s participation in the labor force to 30 percent by 2030 from 22 percent now. His latest reform is expected to socially—and financially—liberate women, who are heavily reliant on foreign drivers or male relatives.
“Allowing women to drive will remove a significant barrier to their ability to work as well as relieve many families of the costly burden of hiring a driver or arranging for a male family member to transport them,” said Graham Griffiths, senior analyst at the consultancy Control Risks. “Women seeking low skill positions will significantly benefit [and] employers will also have greater access to highly educated and motivated women who may have been unable to work due to the ban.”
The move could also boost car sales, especially in the coming months before a scheduled imposition of a government value-added tax in January 2018.
Capitalizing on the reform, American automaker Ford tweeted: “Welcome to the driver’s seat. #SaudiWomenMove #SaudiWomenCanDrive”
“There will be more borrowing to buy automobiles and the insurance sector will surge,” said Mazen Al Sudairi, head of research at the Riyadh-based Al Rajhi Capital, describing the impact of ending the ban. “Retail consumption will also see a boost from the domestic savings from not having to hire drivers.”
But hundreds of thousands of male chauffeurs employed to drive women around, most from south and southeast Asia, risk losing their jobs which would hit outflows of foreign remittances. The government expects billions of dollars in savings if women are permitted to drive.
Saudi Arabia spends more than 25 billion riyals on annual salaries of its 1.38 million foreign drivers, on top of additional expenses for their entry and residence permits, housing and healthcare.
Research firm Capital Economics said that while increasing the female labor force will boost GDP growth, a number of hurdles could hinder their pursuit of employment, including the country’s guardianship system. Saudi Arabia mandates that a male family member—normally the father, husband or brother—must grant permission for a woman’s study, travel and other activities.
“The guardianship system means that a male guardian still has the authority to take a number of critical decisions on the behalf on women,” Capital Economics said.
Analysts predict that allowing women to drive could eventually raise pressure to remove such obstacles. “Gender segregation is costly,” Kristin Diwan, of the Arab Gulf States Institute in Washington, told AFP. “As Saudi Arabia’s reliance on oil becomes untenable the kingdom will need a more productive workforce and that includes women.”