The Islamic Welfare State

  • David Cowan
Chapter

Abstract

Saudi Arabia has an Islamic welfare state, this needs to be stated simply and in some respects it works in ways similar to other welfare systems. Like people in other economies, Saudis are increasingly worried about job security and the cost of living. In the past, the labor market and welfare state largely insulated them from any long-term economic impacts, as the state threw money at the people and allowed extended families to afford to support their relatives comfortably without jobs. In December 2015, there was a rude awakening for the citizens of Saudi when the government announced a tight budget, raised electricity rates for the largest consumers and ordered higher fuel, gas and water prices for everyone (https://www.kapsarc.org/wp-content/uploads/2017/08/KS-2017-DP018-Reforming-Industrial-Fuel-and-Residential-Electricity-Prices-in-Saudi-Arabia.pdf. The objective is to move closer toward parity with international standards, see https://www.bloomberg.com/news/articles/2017-09-18/saudis-said-to-weigh-raising-gasoline-prices-by-end-of-november). The following year, in September, austerity went deeper when the government cut public sector pay (https://www.reuters.com/article/us-saudi-economy/saudi-arabia-slashes-ministers-pay-cuts-public-sector-bonuses-idUSKCN11W1VS). However, in a popular move in April 2017, King Salman rescinded the public sector pay cuts by royal decree and backdated pay to October 2016, thus restoring the cuts made in the first place. This was the first reversal in two years of such austerity measures. To date it appears austerity measures have been accepted, especially with the added sweetener of reversals, but Saudis I have spoken to about the changes remain deeply worried about the future impact of these recent policies and what changes may lie ahead. As one Saudi executive told me it is more than just the money it is also the social fabric, which he explained in terms of family relationships. When inviting extended family to visit, it is customary to lay on quite a spread, including sacrificing a goat for all the family to share. This can be expensive but is now becoming more demanding on the household budget with less family gatherings likely to become the norm; to which he added, if it gets even worse, they might be lucky to buy a KFC chicken family bucket to share! He may have put it amusingly, but there is obvious concern about these types of budget changes, though one should put this into the context that such worries are commonplace in most economies, so it is perhaps more of a case that Saudis simply need to learn to deal with the plethora of bills and charges that people are used to in other economies. The concern is not, however, just the increased cost but the changes in welfare provision and the sense of security the welfare system allowed which is now undermined.

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Copyright information

© The Author(s) 2018

Authors and Affiliations

  • David Cowan
    • 1
  1. 1.Boston CollegeBostonUSA

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