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How Economic Realities in Saudi Arabia Can Benefit Women

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February 05, 2017 16:00 EDT

Two major Indian IT firms have set up women-only workplaces in Saudi Arabia. Will the initiative empower women to succeed?

Three years ago, technology services conglomerate Tata Consultancy Services (TCS) opened an office in Riyadh, Saudi Arabia, that was unlike any of their other offices in the world: It had an all-female workforce. Former Tata Group Chairman Cyrus Mistry explains the reason for this workforce decision: “The Tata Group has a long history of encouraging women to achieve their potential and contribute to the community.” In 2016, rival Wipro followed suit. “Over 50% of the university graduates in Saudi Arabia are women and the aim is to increase the participation of women in the workforce to 30%,” says Soumitro Ghosh, president of the India and Middle East Markets at Wipro.

But altruism, of course, is not the only motivator. As Saudi Arabia shifts toward a digital economy from one dominated by oil exports—especially with oil prices staying stagnant—it is waking up to the value of contributions by women. “In the past few years, the kingdom has been focused on a transformative journey, one in which it aims to move from an oil-based economy to a knowledge-based economy,” says Amal Fatani, head of the All-Women Business Process Services and IT Center in Saudi Arabia. “One of the key enablers of this transformation will be increased participation of women in the private sector and the involvement of organizations in paving the way for the same.”

Ghosh adds: “We are looking at supporting the kingdom and aligning closely with [the country’s] Vision 2030 and the national transformation program where diversification of the economy and employment of Saudi women are key priorities. These are early days and we are building the funnel, which looks reasonable as of now and is growing at a reasonable pace.” Wipro expects to create nearly 20,000 jobs for Saudi women over a 10-year period. TCS says its all-female office is now 1,000 strong but started with 20 female employees and two anchor customers: GE and Saudi Aramco, who are TCS’ partners in the venture.

The one-gender office is their solution around cultural practices in Saudi Arabia, where men and women cannot work together unless they are closely related. They also often use separate entrances. Recently, a KFC outlet in Riyadh was closed down when a crack appeared on the wall between the men’s and ladies’ sections. Also, most women find it difficult to get jobs even though they are actively encouraged to get an education.

Thus, the solution to employing more women, at least for now, is to have an all-female office. This is an important step toward true equality. “If history is any guide, getting more women into the workplace in Saudi Arabia will be necessary before gender equality measures are put in place,” says Janice Bellace, Wharton professor of legal studies and business ethics. “But the speed at which this will happen is impossible to predict.”

donate to nonprofit media organizationsWhile gender equality goes far further than offering more jobs to women, at least it mutes criticism from religious authorities on the mingling of men and women. And when foreign companies such as TCS and Wipro change their employment practices to cater to a country’s culture, it can speak volumes. “I think it does have an effect when a foreign company does something in response to the peculiarities of a home country’s culture or laws. If nothing else, it helps point out the absurdity of those practices,” says Wharton Management Professor Peter Cappelli.

Oil Price Drop Prompts Changes

Economic realities are prompting Saudi Arabia’s leaders to rethink their financial strategies, which has spilled over to cultural practices around women. “Historically, Saudi Arabia has relied on revenues from oil exports for over 90% of its budget,” says Bellace. However, oil prices have been in a slump because of increased global supply, particularly due to US shale oil, highlighting the need to review the nation’s budget. Vision 2030, unveiled in March 2016, aims to wean Saudi Arabia off its dependence on oil—especially since petroleum has paid for many benefits.

“The citizens of Saudi Arabia have become accustomed to generously subsidized health care, education and other key items such as gasoline,” Bellace says. “One way for the government to trim expenditure is to reduce the extent of subsidization. Another way is to increase the productivity of its adult population. At present, the labor force participation rate of women is extremely low, only 10%. Yet females are well-educated, comprising 60% of university students.”

Ironically, TCS and Wipro are promoting equality in Saudi Arabia when India itself could improve its own gender parity performance. India’s Bharatiya Mahila Bank was set up in 2013 to cater to female account holders and it was run by female staff. But the bank failed; mounting losses led to its proposed merger with the State Bank of India. In 2007, British banking giant Standard Chartered opened an all-female branch in Kolkata, India to much fanfare, but there has been no news about it since then.

“These are among the few examples we have of such initiatives,” whether they failed or not, says diversity consultant Nirmala Menon, founder and CEO of Interweave Consulting. US power systems manufacturer “Cummins has an all-women assembly unit near Pune (India). There is another manufacturing unit in Madhya Pradesh, which has only women employees. They are from backgrounds where they cannot be seen in public wearing their factory uniforms. These are organizations that are looking to meet practical needs so women can be in the game. As a way to get women [to participate more in] economic activity, these are very welcome initiatives.”

Cappelli adds that there is a “continuum of issues” in equality. “A century ago, it was about getting the right to vote, then about getting the right to certain jobs. The bigger issues come first, and in countries with more inequality, those issues are already dealt with, so they move onto other issues.” He notes that IBM once operated in Japan with a workforce that was heavily female, “in part because discrimination against women in Japan at the time made it easier to attract top-flight talent to a foreign company.”

Impact of Women-only Workplaces

The big question is whether women-only workplaces cause more divisions rather than break down walls. “Probably not, if the experience of other countries is any guide,” says Bellace. “Women have to be in the labor force before there is a widespread movement complaining about the lack of gender equality. This is the experience of Western countries. In many, the widespread movement for women to be granted voting rights occurred during or after major wars, as women went to work and took men’s places in factories.”

Bellace adds that in most countries, including the United States and the United Kingdom, the first demand by women was for equal pay, not for equal opportunity. “Women in factories, where jobs were sex-segregated, realized they were earning a lot less than equally skilled men. Once the pay issue is settled, women’s attention turns to the issue of access to higher-paying ‘male’ jobs.”

While developments in Saudi Arabia for working women are welcome changes, the experience of other countries shows that it will take a while for gender equality to take hold. In the US, the call for equal pay was heard during World Wars I and II, but it wasn’t until 1963 before equal pay for both genders became law.

*[This article was originally published by Knowledge@Wharton, a partner institution of Fair Observer.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

Photo Credit: Serts

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