Prosperity Without Relief: Why Many Saudis Feel Squeezed Amid an Economic Boom
Growth, Reform, and Rising Costs in the Era of Vision 2030
Saudi Arabia is frequently portrayed as a nation in the midst of a historic economic transformation. Mega-projects rise from the desert, foreign investment conferences draw global CEOs, non-oil revenues are expanding, and the Kingdom’s Vision 2030 reform agenda is regularly praised as bold and ambitious. On paper, the economy appears dynamic and forward-looking.
Yet beneath the headlines of growth and diversification, many ordinary Saudis report a different experience—one marked by financial pressure, rising living costs, and economic uncertainty. The paradox is striking: how can citizens feel squeezed when the national economy is booming?
The answer lies in the complex transition from a state-driven welfare model to a more diversified, market-oriented system—one that is generating opportunity but also redistributing economic burdens in ways that not all households find comfortable.
The End of the Old Social Contract
For decades, Saudi Arabia operated under a distinct social contract. Oil wealth funded generous public sector employment, subsidized fuel and utilities, free education and healthcare, and broad state support. Citizens enjoyed relatively low taxes and minimal direct financial pressures compared to many other countries.
Vision 2030 aims to reduce reliance on oil and build a sustainable, diversified economy. But reform has required difficult adjustments. Subsidies have been reduced. Energy prices have risen. A value-added tax (VAT), initially introduced at 5% in 2018, was tripled to 15% in 2020. Various fees and levies have expanded.
While these reforms strengthen fiscal stability and prepare the country for a post-oil future, they have altered daily financial realities. Households that once benefited from heavily subsidized living now face higher utility bills, fuel costs, and consumer prices.
The macroeconomy may be improving, but the microeconomy—household budgets—often feels tighter.
Rising Costs of Living
One of the most frequently cited concerns among Saudis is the rising cost of living. Housing prices in major cities such as Riyadh and Jeddah have climbed significantly. Property demand has surged, driven by urban expansion, population growth, and large-scale development projects. As homeownership initiatives encourage citizens to buy, market prices in desirable areas have increased.
Rent, too, has become a major burden for middle-income families. In rapidly developing districts, rental prices have jumped, sometimes outpacing salary growth. For younger Saudis trying to establish independent households, affordability can be a serious challenge.
At the same time, VAT affects nearly all consumer goods and services. Even small increases in food, transportation, education, and healthcare costs accumulate over time. While the government provides targeted support programs for lower-income families, many middle-class households feel they do not qualify for aid yet still struggle with higher expenses.
In essence, economic modernization has introduced new financial disciplines that many citizens are still adjusting to.
Public vs. Private Sector Realities
Another key factor is the evolving labor market. Traditionally, many Saudis preferred public sector jobs due to their stability, shorter working hours, and generous benefits. However, Vision 2030 seeks to reduce the public payroll and expand private sector employment.
The private sector often offers performance-based compensation, longer hours, and less job security compared to government roles. While this shift encourages productivity and competitiveness, it also introduces uncertainty. Young Saudis entering the workforce may find the transition demanding.
Moreover, wage growth has not always kept pace with inflation and rising living costs. Even as employment opportunities increase in sectors like tourism, entertainment, technology, and logistics, some workers feel their purchasing power has declined.
The result is a perception gap: national employment statistics may improve, but individual financial comfort does not automatically follow.
Mega-Projects and Perception Gaps
Saudi Arabia’s giga-projects—NEOM, the Red Sea Project, Qiddiya, Diriyah Gate—symbolize ambition and global relevance. They promise tourism, innovation, sustainability, and economic diversification.
However, some citizens question how directly these projects benefit them in the short term. While they create jobs and stimulate investment, the immediate impact on household finances may not be obvious. Large-scale infrastructure projects often generate returns over long timelines.
This creates a psychological dimension to the squeeze. Citizens see cranes, new districts, entertainment venues, and luxury developments—but they may still feel financial strain in their daily expenses. The visible signs of prosperity can amplify personal frustration if individual circumstances do not improve at the same pace.
Demographics and Aspirations
Saudi Arabia is a young country. A significant portion of the population is under 35. Younger generations have higher aspirations, shaped by global exposure, digital connectivity, and expanded lifestyle options.
As entertainment, travel, dining, and cultural experiences become more accessible domestically, consumption patterns are shifting. While this enriches quality of life, it can also increase spending expectations.
In addition, social norms are evolving. Marriage, housing, and career expectations are changing. Starting a family or buying a home now often requires substantial financial planning. Younger Saudis may feel caught between modern aspirations and economic realities.
The pressure is not merely about income—it is about matching income with rising expectations and opportunities.
Inflation and Global Pressures
Saudi Arabia does not operate in isolation. Global inflation, supply chain disruptions, and geopolitical tensions have influenced food and commodity prices worldwide. Even with careful fiscal management, imported inflation affects domestic markets.
Although the Saudi riyal’s peg to the U.S. dollar provides currency stability, global economic shifts still ripple through local prices. For households, external economic pressures are often indistinguishable from domestic reform effects—they simply experience higher costs.
Government Mitigation Efforts
It is important to note that the government has implemented support programs to cushion reform impacts. Citizen Account cash transfers, housing initiatives, wage support programs, and employment incentives aim to ease transitions.
Non-oil revenues have grown significantly, reducing fiscal vulnerability. Tourism numbers are rising. Female labor force participation has increased dramatically, expanding household earning potential. Entrepreneurship and small business activity are also growing.
From a structural perspective, these are transformative achievements. Yet structural reform takes time to translate into widespread, felt prosperity.
The Transition Paradox
Saudi Arabia’s economic transformation is real and substantial. Diversification is advancing, infrastructure is modernizing, and global integration is deepening. The Kingdom is positioning itself for long-term resilience in a world where oil demand may eventually decline.
But transitions are rarely painless. Moving from a subsidy-driven model to a productivity-driven one inevitably redistributes costs and responsibilities. Citizens are being asked to adapt—to new taxes, new labor expectations, new spending habits, and new economic norms.
The sense of being “squeezed” does not necessarily contradict economic growth. Rather, it reflects the tension between macro-level success and micro-level adjustment.
In time, if wages grow alongside productivity and diversification generates broad-based income expansion, the pressure may ease. For now, however, many Saudis find themselves navigating a period where national prosperity and personal financial strain coexist—a reminder that economic transformation is as much a social journey as it is a fiscal one.
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