More Saudi women join the workforce

This is an audio transcript of the FT News Briefing podcast episode: More Saudi women join the workforce

Marc Filippino
Good morning from the Financial Times. Today is Thursday, October 21st, and this is your FT News Briefing.

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Marc Filippino
The European Central Bank wants lenders in the EU to beef up their staffing, and it’s not as bad as a blacklist. Turkey is set to be put on a “grey list”. We’ll explain what exactly that is. Spoiler alert: it’s not good. Plus, Saudi Arabia wants more of its own citizens in the workforce, and that means women, too. I’m Marc Filippino. And here’s the news you need to start your day.

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Marc Filippino
The ECB has been pressuring banks to move more staff and capital to their post-Brexit operations in Europe. This affects banks from all around the world who have traditionally used London as their hub for providing services to clients in the EU. The ECB had suspended this requirement during the pandemic, but that reprieve has now ended. Bankers and lawyers told the FT that the ECB’s approach was tougher than they’d expected on these longstanding issues, one being where risk management staff handling EU trade should be located and the other issue being how much capital EU entities need to have. The new demands could also create conflict with the Bank of England, which earlier this year asked UK lenders to seek approval before relocating more jobs or operations to the EU. The ECB declined to comment.

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Marc Filippino
Today, a global finance watchdog is set to sanction Turkey for failing to adequately combat money laundering and terrorist financing. The move by the Financial Action Task Force, or FATF, could make it even harder for Turkey to attract crucial foreign capital. Here’s our correspondent in Ankara, Laura Pitel.

Laura Pitel
So Turkey was put on notice by the FATF back in 2019. It did a review of Turkey’s counter-money laundering and counter-terrorism financing measures and found that although it could have understood the risks that it faced with money laundering and terrorist financing, there were great “serious shortcomings in its framework to combat these crimes”. And then so it had this period of monitoring, and the Turkish government introduced a law passed last year by Parliament and that, it said, was a response to this criticism. But from what my sources tell me that the FATF is gonna conclude or has concluded that Turkey hasn’t gone far enough.

Marc Filippino
So, Laura, what kind of impact would this kind of sanction have on Turkey?

Laura Pitel
Well, it will mean that Turkey is subject to special monitoring and has to make certain commitments in terms of upgrading its provisions and legislation and enforcement if it wants to get off this list again. I think perhaps more important is the symbolic resonance. There are currently 22 countries on the list. The grey list includes Albania, the Cayman Islands, also Syria, Yemen, Zimbabwe, and it sends a not very good message about Turkey’s compliance and general investment climate in Turkey right now.

Marc Filippino
And you know, just to put this in context, this grey listing is coming at a time when Turkey is already struggling to attract foreign investment.

Laura Pitel
Well, grey listing for any country can be a huge blow because it can lead to outflows because investors don’t want to be putting their money or unable to put their money into countries that have question marks over their counter-money laundering measures. A study by the IMF that came out earlier this year found that actually, on average, countries that are grey-listed suffer a loss in foreign direct investment and in portfolio flows that are equivalent to about three per cent of gross domestic product. That’s three per cent for each of those categories. And in Turkey’s case, that would amount to about $23bn in outflows. Turkey needs foreign capital. The mayor has been under severe pressure in recent weeks. Today, the central bank is also meeting to discuss whether or not to cut interest rates. The markets expected to cut rates, despite that being the opposite of what a lot of economists think that they should do and what central banks around the world are doing right now. And so that could be further pressure on the Turkish lira. It’s kind of adding more negativity to a mood music that is already pretty negative around Turkey.

Marc Filippino
Laura Pitel is the FT’s Turkey correspondent.

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Marc Filippino
Saudi Arabia’s government under Crown Prince Mohammed bin Salman has grown increasingly authoritarian. At the same time, it’s also easing some social restrictions. One of them is on women working outside the home. Over the past four years, the number of women in the labour force has doubled to about 33 per cent, which is important for Saudi Arabia because the number of expatriate workers has dwindled. Our Middle East editor, Andrew England, was just in Riyadh, and he joins me now to talk more about this. Hi, Andrew?

Andrew England
Hi, how are you doing?

Marc Filippino
I’m good. So, Andrew, getting more women into the workforce as part of a broader push to get more Saudi nationals in general working — what did you see when you were out and about in Riyadh?

Andrew England
Yeah, I’ve been visiting Saudi Arabia since 2007. If you go back then you would see very few Saudis working in cafés, shops, restaurants, supermarkets, that kind of thing. You would see some Saudis in banks, but you wouldn’t see a big amount of Saudis in kind of customer-facing jobs. If you go to Saudi Arabia today, then you go into a mall. It’s all Saudi women now working in the shops.

Marc Filippino
So were the women that you talked to you excited about their newfound opportunities?

Andrew England
No, absolutely. Yeah. I mean, you know, there’s no doubt that women are excited and they are finding themselves in demand and they are, you know, taking up the mantle and working, you know? I mean, we mustn’t forget there are still many issues here. You know, I spoke to a manager in a Starbucks who where two young women, Saudi women, were starting out for the first time and I could see they were being trained. The manager said his biggest concern was, you know, would these Saudis stay? And he said, you know, they look at it from the outside. I think it’s great. And then when they come in and start doing their work, it’s — OK, This is too hard. This is not for me. And gave the examples that in the past two months, they’ve had 10 Saudis come and go and there’s still this. People still talk about concern that there’s a sense of entitlement around young Saudis that they want better pay, that the work ethic isn’t always as good as the foreign worker. That means companies are hiring Saudis, being forced to hire Saudis, essentially paying them more as they face rising costs and perhaps getting less product, productivity.

Marc Filippino
So more largely, Andrew, how does getting women into the workforce fit into the Crown Prince’s Vision 2030 reform plan?

Andrew England
One of his key economic and social reforms easing the restrictions on women. So suddenly, it’s become much easier for Saudi women to move around, to live more independent lives. And he’s also been encouraging women to work. One of the main aims of his economic reform programme is to reduce unemployment, and unemployment has been incredibly high for a long, long time. And a big portion of that unemployment comes from women not working and women not working because of cultural reasons, social reasons, because of the restrictions that have been there all their lives. And so if you want to bring unemployment down, one way to bring that sort of downward momentum is to get more women into work.

Marc Filippino
So does this mean that Saudi Arabia has turned a corner and no longer relies on expatriate workers?

Andrew England
No, not at all. I think the Saudis themselves recognise that they’re still very dependent. I mean, historically, more than 80 per cent of the private sector has been dependent on foreign workers. Still 77 per cent today. What the government is trying to do is say they’re putting a tariffs on foreign workers and their dependents to try and narrow the gap between how much a expatriate is paid and the higher salary paid or demanded by the Saudi worker. And to get more Saudis in areas where they feel they can be doing some of these jobs. So there’s not gonna be a total exodus of foreign workers. Foreign workers will still be needed. But Saudi authorities are trying to balance that gap as part of their efforts to bring down Saudi unemployment.

Marc Filippino
So, Andrew, how do reforms like this fit with the image, especially that those in the West have, of Prince Mohammed as the autocrat?

Andrew England
The great paradox, of course, is he’s done this while being or overseeing, you know, a crackdown against any form of dissent. So women activists who campaigned for women to be allowed to drive were among those arrested. So on the one hand, he’s kind of reaching out to what he sees as his main constituency, which is the young Saudi. And this is a country where something like half the population is (aged up to 25). But on the other hand, he’s making sure that he totally controls the narrative.

Marc Filippino
Andrew England is the FT’s Middle East editor. Thank you, Andrew.

Andrew England
Thank you.

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Marc Filippino
We asked you in yesterday’s show to vote for us in the Lovie Awards Best News in Politics Podcast category and wow, you guys really came through. Today is the last full day you can vote, so if you haven’t already, please back the Briefing in the Lovie Awards. We put a link in the show notes. And thanks again. We really can’t tell you how much this means to us. And one last thing, we have a small correction to make. In yesterday’s show, we said that the co-working company WeWork will list today on the Nasdaq. It is in fact planning to float on the New York Stock Exchange.

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Marc Filippino
You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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