Training for skills and work ethic, focus on vocational education, an enabling regulatory environment and speeding up the diversification process can create job opportunities for young Omanis on a sustained basis. Mayank Singh reports
Though the decision had a been there, done that ring it still came as a surprise. More so as it lay bare the magnitude of an issue that most believed to have been addressed a few years ago. A meeting of the council of ministers on October 3, 2017, decided to provide jobs for 25,000 Omanis in the state’s public and private entities from December 2017. A series of executive steps were devised to facilitate the process. The decision had shades of the government’s plan in February 2011, when it announced the employment of 50,000 nationals and offered each Omani job seeker an allowance of RO150 per month, till he found employment.
Despite the similarities, it was hard to miss the stark differences. In 2011 the government absorbed a majority of the job seekers in the public sector and uniformed services, while in 2017 the responsibility of creating a majority of jobs is being rested at the doors of the private sector. The statement from the government reportedly stated – ‘The Council of Ministers has urged private sector establishments to accord maximum priority to Omanisation in their programmes and projects, noting that action will be taken against establishments which do not cooperate with the efforts of the government in its endeavour to support employment and Omanisation policies.” The minister of Manpower HE Abdullah bin Nasser Al Bakri amplified this – “After due consideration, it has been decided that the private sector would be given priority in job creation, as it is a productive sector.”
The shift in focus came as no surprise because of changed economic realities. In 2011 crude oil price averaged $111.27 per barrel against $54.25 per barrel in 2017, reducing the government’s ability to add to it’s budgetary expenditure. Moreover with 84 per cent of Omanisation in the public civil service, close to 197,000 Omanis (2016 NCSI figures) were already employed with the government. In contrast only 12.7 per cent or 234,987 Omanis were employed in the private sector compared to a 1.85 million expatriate workforce (January 2018 figures).
The velvet gloves are off too. On January 29, 2018 HE Abdullah Al Bakri issued ministerial decree 2018/38, imposing a six month ban on the issuance of visa for expatriates in ten sectors. The ban would impact 87 categories of jobs in – information technology, accounting and finance, marketing and sales, administration and human resources, insurance, information and media, medical, airport related professions, technical and engineering.
The government’s efforts seem to be paying off as the number of Omanis employed in the private sector has grown by 2,060 in a space of three months from November 2017 till January 2018 (See interview with Salim bin Nasser al Hadhrami, DG, Ministry of Manpower). There are others who strike a cautionary note. Shahswar Al Balushi, CEO, Oman Society of Contractors says, “The absorption of 25,000 job seekers in the private sector has proven challenging. Companies are restructuring, streamlining, consolidating and retrenching staff. There are not enough projects to take the economy forward. Job seekers with degrees will continue to flow at a rate of 30,000 annually and if we do not stimulate and transition the economy to the private sector fast enough we are going to have a massive challenge on our hands.”
The government cannot be blamed for taking stern measures as they have an unemployment problem on their hands with around 30,000-50,000 young Omani job seekers coming into the job market every year. As per a National Centre for Statistics and Information survey in 2015, half of Omani job seekers took three and a half years to get a job. For women this figure is as high as four and a half years. With 15-29 year olds making up 30 per cent of the Omani population and 64 per cent being in the working age bracket, there is need to employ them to gain a demographic dividend.
Surprisingly, high unemployment for Omanis has persisted despite good economic growth. The Sultanate’s economy averaged an annual GDP growth of 3.96 per cent from 2000-2016. An extrapolation of the growth rate on a total workforce of 2,282,403 works out to the creation of 90,000 jobs plus per annum. Given this scenario, absorbing 50,000 Omanis does not look like a major issue, but it has been so due to a number of underlining factors.
Mismatch in profiles
HE Tawfeek Juma AlLawati, member, Majlis Al Shura questions the concept of Omanisation, “The concept of Omanisation itself is wrong, because it means that employing Omanis is an exception. In countries where there are not enough nationals this is acceptable, but in Oman where you have a large population of young Omanis this is not valid.” The lack of a large number of educated Omanis in the 1970s and 1980s necessitated the influx of expatriates to partake in the rapid economic development of the country that followed in the wake of the Blessed Renaissance. “It is time to reverse the wheel. Companies operating in Oman should be asked to hire Omanis. If they can prove that there are no suitable nationals for a job, only then should visas will be issued to expatriates, with a mandate for them to train Omanis to take over the job in a certain span of time,” adds HE Tawfeek.
There is unanimity that employing Omanis is a more rationale and cost effective choice. An expatriate incurs additional costs in terms of visa fee, accommodation, to and fro tickets and medical for dependents. In addition, there is a productivity loss during the initial months of an expatriate’s tenure as he acclimatises to his new environment. If this is a no brainer, then what is impeding the recruitment of Omanis? Says Khalid Ansari of KPMG, “The private sector wants to hire Omanis, the challenge is what the private sector wants and the skills available in the market.” A mismatch in skills is the primary reason for the corporate sector’s reticence in recruiting Omanis. Ansari cites an on ground example – there are around 1,300 qualified expatriate chartered accountants in Oman compared to 100 Omani qualified chartered accountants, with the latter being in great demand. There is an acute shortage and this gap needs to filled.
Pankaj Khimji, director, Khimji Ramdas adds a few other pre requisite to skills, “Even if we were to double the number of job seekers every year and need to create 100,000 jobs for Omanis, by replacing expatriates it is not rocket science. The issue is simple – do they possess the right skills and attitude to meet those job requirements? Are they disposed to work in an urban area while living in rural areas?” For example, social, cultural norms coupled with safety, comfort and logistical issues also dissuades women, who make up 50 per cent of the workforce from seeking work far from home. This probably accounts for Omani women taking longer to find jobs. HE Tawfeek posits a counter narrative, “There is a need to distribute the fruits of development all across Oman. The less prosperous parts should have reverse discrimination in their favour. An Omani looking for a job in Jalan, Sharqiya or Haima should find a job there. Why should a young Omani have to drive two-four hours every day to go to work for a small salary.”
The gender split of students coupled with cultural norms restricts the availability of Omani candidates for certain professions. Omani engineering colleges graduate around 3,000 engineers annually with a majority of them being women. “The recent six month restriction on bringing experienced foreign civil, mechanical, electrical, architectural, and structural engineers is detrimental to the construction sector. National output of theses skill sets is very limited, requiring experience profile to be built up. These disciplines work in the field and as the majority of the output are women who prefer to work indoor, we have an issue.” says Shahswar.
The marked preference for public sector jobs against corporate ones, makes the retention of Omani staff a tough ask. Says Hatim Al-Shanfari, faculty member in the Department of Economics and Finance at Sultan Qaboos University, “A number of Omanis look at the resources of the country as their own and expect to get a job as a right. This outlook is driven by a rentier economy, and has not been addressed in the past. Employment in the private sector is not attractive for them and given a choice they would go in for employment in the public sector as it is guaranteed for life and comfortable.” There is a perception that a job in the private sector translates to low income, long working hours and hard work. It is important that this view is dispelled along with the inculcation of the right attitude and work ethic. “If the government made two announcements simultaneously stating there are no jobs in the public sector except for selective openings and the ones who find employment with the government will not be entitled to the old pay scale of RO900 for university graduates and RO600 for diploma holders, it would send a strong signal that private sector employment is for good and not just transitional,” adds Hatim. This view is challenged by HE Tawfeek, “Omanis may have a preference for government jobs but it does not mean that they will not work in the private sector if they do not have a choice.” The numbers corroborate his reasoning – the private sector employed over 234,000 Omanis in January 2018 compared to around 195,000 (2016 figures) in the public sector. This reflects the willingness of Omanis to take up gainful employment in the private sector.
A slice and dice of registered companies gives a clearer picture of the root of the employment problem. There are around 200,000 registered commercial companies in Oman. Out of these over two-thirds are grade two, three and four category companies, and they employ 50 per cent of the expatriate work force (upwards of 700,000) but less than 50,000 Omanis. In addition, there are 35,000-50,000 grade one, international and professional companies providing employment to about 700,000 expatriates and 200,000 plus Omanis. The level of Omanisation in grade one companies is over 30 per cent. The problem of non-employment of Omanis in the private sector is a major issue in grade two, three and four companies. Their inability to recruit Omanis is either because they do not have adequate revenues, attractive remuneration or attractive enough jobs for Omanis. Encouraging company’s in these categories to hire more Omanis is thus of critical importance.
Claimedly, a number of large companies hire a company under the guise of providing service or consultancy and use it to provide them with expatriate manpower. These companies provide manpower as per the salary structure of the company along with a hefty 20-30 per cent surcharge. It is also suggested that a large number of expatriates amounts to importing inflation as the private sector has to match the salary structure of the expatriate’s country of origin.
Scaling them up
Says HE Tawfeek, “While investors should be encouraged and protected, we should not exonerate them of their responsibilities. The private sector has not done its job and we need to give them an ultimatum. They should be forced to give a 5-10 year plan on how they are going to Omanise senior level positions by 50, 80 or 100 per cent. This will not happen overnight, but it is achievable with concerted efforts.”
Shahswar counter the charge of private sector not playing its due role, “There are 1.6 million expatriate workforce in Oman excluding domestic labourers. These job opportunities were created by the private sector. The talk is, the private sector has not created enough job opportunities for Omanis. If that is true, then the question is, why Omani workforce is not the first choice for the private sector and how the implementation of labour legislation and Omanisation have influenced this end result. There is a need to make Omanis more attractive for companies, so that they are the first choice of employment and not the second. If we are able to achieve this soon their demand will overshoot the supply as Omanis are small in numbers compared to expatriates.”
He spells out his formula for upping the employability quotient of Omanis – One, let companies manage their own human resources, just as the government does not get involved in the way an entity manages all its other resources. Two, the regulator should create a mechanism which will make employing Omanis a smart business choice. Three, regulators should allow for legislations that will increase the productivity of Omani workforce. Four, regulators should focus on the total quality of the national human capital, which comprises of Omanis and expatriates. Five, the regulator should not segregate the national human capital into Omanis and expatriate. In my opinion this is the primary cause for rendering Omanis less attractive. Six, the regulator should implement succession schemes rather than Omanisation targets, the former delivers local employment and experience profile buildup while the latter is mainly number games.
“Presently the government micro manages HR as a resource and it should not. The conditions under which Omanis need to be hired makes them unwanted. Expatriates are easy to manage, easy to release, cost effective and productive. Omanis not as easy to manage, release, not as cost effective and the productivity profile is still low. The way the legislation is implemented makes Omanis complacent and not as productive. A business unit which is driven by profitability and value for money would be reluctant to take an Omani resource versus an expatriate resource,”
The imposition of salaries for Omani diploma holders and graduates is another bugbear for the private sector. According to the labour law, the minimum salary for Omanis needs to be RO325 per month, with at least three per cent increment every year. For graduates the figure is above RO500. Says Khimji, “The decision on salaries should be left to the employer and the candidate. Today the government puts a benchmark on what diploma holder or a graduate should earn. Worldwide, anyone graduating starts at a small salary and then moves up. You need to be remunerated based on your skills and not on your qualifications.” His suggests that a minimum wage or salary should be set and subsequently Omanis should be given a two year contract. Once the two year contract lapses, he should be appraised and evaluated on international best practices. The contract should be renewed or terminated based on performance. “We also need to accept job shedding and lay-offs if businesses are shrinking. There is going to be certain number of expatriate jobs which will be replaced by Omani graduates and certain jobs that they will have to start taking. There are good supervisory jobs in the market, but we need to change mindsets,” says Pankaj.
Train and skill
There is unanimity that skilling and training Omanis is the panacea to generating sustainable job opportunities. Says Ansari, “The solution to bridging the skill gap lies in creating on the job training and experience. Between pre-employment and full employment there should be a period when a graduate or diploma holder gets intensive on the job training. This will ensure that he or she is productive from day one, PDO is the best example in the country for training and employing Omani and all other sectors should learn from PDO’s experiences.” Large organisations like Omantel and Bank Muscat are already playing their part as they have the resources and budgets to train people for a two to three year period. Dr. Ghalib Al Hosni, chief people officer, Omantel, explains, “At Omantel we do not look at the Omanisation percentage but at know how and knowledge transfer, because that is what is going to lead to higher Omanisation. We assign two individuals to work with an expatriate and once the Omanis are ready they can take over, the expatriate is moved into another role where he can still contribute, so there is no threat.”
While bigger companies are doing their part, it’s the mid and small size companies that are unable to train and skill Omanis because they don’t have deep pocket training budgets. The logistics of training is another challenge as a 100 member strong company can probably take on 10 Omanis to skill, but they can’t hire 50 trainees, as then there won’t be enough people to give adequate training to the trainees. The National Training Fund set up by Royal Decree 48/2016 is expected to help in this direction. The Fund aims to build the capabilities of the Omani workforce in order to bridge the gap between the market supply and demand.
There is also a need to start focusing on vocational education from the early years in school. Says Khimji, “We need to focus on skill development as an integral part of basic education, at the primary and secondary levels. In developed countries two thirds of students by the age of 14 are migrating to a vocational school rather than pursuing academics. In Oman students wait till the age of 18 when they pass out of school to inculcate any skill based training. There needs to be a paradigm shift and we need to imbibe best practices and bring about a mindset change at the statutory level.”
The process of training and skill enhancement can be further incentivised by the government in various ways. One, the private sector can be given tax breaks. If some entity takes up such a programme they could be granted expatriate visas in the interim, so that these company’s operate profitably and fund the training programme. Says HE Tawfeek, “Today the supply of skilled Omanis is less than the demand, hence the private sector is taking advantage and bringing in expatriates. The government is equally responsible as there are not enough young graduates coming out of higher education institutes with the requisite skills. Government should partner with the private sector to skill them. For instance the levy that the private sector pays for getting expatriates should be given back to company’s for training and skilling Omanis.”
There are skeptics who cite the failure of previous skilling and training initiatives like On Job Training (OJT) and National Vocational Qualification (NVQ) arguing that future initiatives will meet the same fate. Ansari tends to differ, “These initiatives did not work because training institutes tried to make it into a commercial activity. Everybody tried to make money out of them. It was not structured properly and classroom training alone is not a solution. What is missing is on the job, hands on training along with imparting soft skills such as work ethic, discipline etc. The new programme should hopefully address these gaps. If it is practical based training backed by internationally recognised qualifications it will work.”
Creating 50,000 jobs every year is a tough ask and needs concerted effort. At a macroeconomic level it requires the transformation of Oman from a largely government driven economy to one led by the private sector. This transition is expected to take time as the private sector is not yet strong enough to drive the economy forward independently. Attracting foreign direct investment and multinational companies could accelerate the process. FDI flows in turn depend on metrics like the country’s financial ratings, geopolitical stability and resources availability. Despite a challenging economic environment, Oman has been successful in attracting significant FDI. In 2015 the Sultanate attracted RO6.67bn worth of foreign investment which went upto RO7.4 bn in 2016. This should help the cause of job creation in future.
Says Hatim, “We need to rethink our investment model, generate jobs that are attractive for our graduates and allow the private sector to operate and grow. If you hinder the growth of the private sector due to regulatory pressures it will make the problem more vicious, as the government cannot absorb many job seekers.” In the short term Omanis who have some value to contribute to the economy should be enabled to set up a business. These should preferably focus on services compared to projects that has a three to four year gestation period. A service related company can be set up in three to four months and can start providing its offerings to the GCC region.
Says Dr. Ghalib, “Even though Oman’s GDP is growing by two-three per cent, it won’t be easy to create jobs for 50,000 youngsters every year unless we open up the country. Tourism is a huge opportunity, as you don’t need to create it thanks to Oman’s natural beauty and all that it requires is building facilities. Manufacturing, port and logistics are other areas that offer potential to grow, if those happen then we can create 50,000 or even 100,000 jobs every year.”
Other’s echo the sentiment, “Creating 50,000 jobs per year is possible if the government’s stated policy of diversification into tourism, logistics, manufacturing, fisheries and mining is fully implemented. Diversification would require bringing in new investment to create jobs, new jobs in large scale cannot happen in the current structure as the public sector, banking and finance and oil and gas are already saturated so job creation will happen with diversification and last but not the least in the SME sector which is currently dominated by expatriates employees,” says Khalid.
Oman’s diversification efforts have not matched upto its intended vision. In the 1980s the Sultanate looked at agriculture as an option, followed by manufacturing and tourism in the 1990s. Intermittently a knowledge economy was explored, but it did not go all the way. Says Hatim, “You need a bit of each and cannot say that this one sector is the solution to our problems. Tourism is very sensitive to geopolitical stability of the region, in industry we don’t have a competitive advantage. So we need to look at our competitive advantage and then build upon that, but this takes time.”
The other problem with the Sultanate’s diversification efforts has been its sporadic nature. When oil prices go down, diversification takes centrestage only to be put on the backburner when oil prices rebound. Private sector investment goes into those businesses where they see a higher return and hence it flows into established sectors which yield a higher return compared to sunrise sectors.
“The big advantage of the Gulf is that we have a small population and huge financial wealth. This has not helped, as other countries with a larger population and less resources have diversified successfully,” says Hatim. Money will flow where investors see attractive good returns. If such opportunities can be created in new sectors it will have a positive bearing on the employment market. Overall, the job market and employment opportunities will need to scale up to the business rather than expect businesses to scale down to the requirements of the job market. This may also prove to be a better and more sustainable model for job creation compared to Omanisation and punitive regulations. If not, the government will be left with no choice but to come up with periodic impositions to create jobs for Omanis. The choice for the private sector is clear – do the needful or bear the consequences.