By Johannes Koettl, Senior Economist, World Bank

and Sofia Gomez Tamayo, Economist, World Bank.

The economic impact of women's participation in the labor market is significant. Increasing the female labor force not only fosters gender equality but also drives broader economic growth and resilience. When women are excluded from the economy, it represents a missed opportunity, leading to substantial losses in productivity, innovation, and economic diversification. This exclusion also exacerbates income inequality and impedes progress toward poverty reduction.

In the Middle East and North Africa (MENA) region, women's participation in the labor market remains low and stagnant. In 2023, the participation rate for women in MENA was just 19%, the lowest in the world and significantly below the global average of 48%. This figure has remained virtually unchanged since the 2000s, consistently hovering around 20%. Moreover, the region exhibits the largest gender gap in labor force participation, with men participating at a rate of 71% compared to only 19% for women—resulting in a staggering gap of 52 percentage points. In contrast, the second-largest gap is found in South Asia, where the difference is 45 percentage points.

Several factors contribute to the low and stagnant levels of women's participation. Legal restrictions significantly limit women's access to certain jobs, with many countries imposing barriers. Thirteen countries restrict women from jobs deemed dangerous, while six lack laws prohibiting employment discrimination based on gender, including protections against sexual harassment in the workplace. Moreover, women in the region bear a disproportionate burden of unpaid work, with MENA having one of the highest gaps in this regard globally. Low preschool enrollment further exacerbates the care responsibilities placed on women, making it even more challenging for them to enter the workforce.

Amid this stagnation, Saudi Arabia has experienced one of the most significant increases in female labor force participation in recent history. Between 2017 and 2023, the participation rate for Saudi women surged by 84%. In comparison, the next highest increases in the MENA region during the same period were 30% in Oman and Bahrain. Notably, this growth in Saudi Arabia has been inclusive, with women from diverse age groups and educational backgrounds entering the workforce. Moreover, most of these new entrants have not just started job search, they have actually found jobs.

Structure of Adult Saudi Women Population by Labor Force

StatusSource: GaStat LFS

What happened in Saudi Arabia?

The surge in the participation of Saudi women can be attributed to a set of factors that jointly contributed to this change, including changes in legislation and the work environment, labor absorption capacity, and effective communication. While the participation rate was initially around 18%, the implementation of labor strategy reforms for women has rapidly driven the rate to surpass its target of 35%, showcasing the country's dedication to developing a robust and inclusive labor market.

Firstly, a set of institutional reforms took place to meet the Saudi Vision 2030 goal of increasing women’s participation. Launched in April 2016, "Saudi Vision 2030" aims to diversify the economy beyond oil and gas while recognizing the importance of its citizens, especially women, as key contributors to sustainable development. It emphasizes that the nation’s greatest resource is its people and seeks to create opportunities for all, regardless of gender or age. The Vision specifically highlights Saudi women as a valuable asset and includes initiatives to boost their participation in the workforce. A set of KPIs relating to women’s involvement in the workforce were set, and initiatives were assigned to government entities.

Second, several legal reforms were introduced to achieve the targets outlined in Saudi Vision 2030. These reforms included granting women the right to drive, which significantly increased their mobility and access to jobs. Anti-harassment laws were enacted to protect female employees, and legal barriers preventing women from working in the military, passport control, and public prosecution were removed. A unified guide was created to standardize work environments for women, enhancing their working conditions by setting parameters on working hours and job roles. These guidelines also mandate equal opportunities for women in recruitment and prohibits wage discrimination, ensuring fair compensation for work of equal value along with corresponding benefits.

In addition to legal reforms, Saudi Arabia implemented various initiatives and policies to prepare and support women in the labor market. These measures included active labor market programs, enhancements to childcare services, options for flexible employment, and expanded education and training opportunities. Notably, some policies—especially those focusing on childcare—were specifically designed to increase female workforce participation. For instance, two programs, Wusool and Qurrah, were launched to assist working women with transportation and childcare costs. Furthermore, broader improvements in the care economy, the availability of flexible work options, and increased access to service jobs have fostered a more supportive environment for women in the labor market.

Alongside legal reforms, Saudi Arabia implemented various initiatives and policies to prepare and support women in the labor market. These included active labor market programs, enhancements in childcare services, options for flexible employment, and expanded education and training opportunities. Some policies, particularly those targeting childcare, were specifically designed to boost female workforce participation. For example, two programs were rolled out to support working women by providing assistance with transportation and childcare costs, namely Wusool and Qurrah. Meanwhile, broader improvements in the care economy, the availability of flexible work options, and increased access to service jobs indirectly fostered a more supportive environment for women in the labor market.

Lastly, the private sector's capacity to absorb workers played a key role, further enhanced by the COVID-19 pandemic. Saudization efforts, introduced to increase the representation of the Saudi workforce in the private sector, led to a reduction in the hiring of expatriates, opening doors for Saudi women to take some of these jobs. This dynamic was then enhanced during the pandemic, where initially many expatriates had to leave the country due to sanitary restrictions. When the economy reopened, these expatriates were no longer available, leading the private sector to face large labor constraints. Saudi women stepped up to fill open positions and retained them even as expatriates returned to the country.

Year over year difference in employment in the private sector

Source: GaStat LFS

In conclusion, Saudi Arabia’s unique experience is the result of a combination of factors, including a supportive legal and institutional environment and a private sector capable of integrating new entrants. Policies that promote women’s participation—such as expanded childcare services and legal frameworks protecting women in the workforce—can significantly increase the number of women entering the labor force. For these policies to be effective, the capacity of the labor market to absorb new entrants, along with a potential positive demand shock, is essential for helping women secure employment and encouraging others to join the workforce.