New infrastructure projects and nationalisation signal healthy salary growth in Oman, says Hay Group

In 2012 the average basic salary increase was 5.7% across all sectors with the oil and gas sector leading the way.

Hay Group's Warren D'Cruz, author of the report, commented on the findings, "The rise in salaries over the last 12 months has predominantly taken the form of an increment on basic salary which has risen by 5.7%. This is due to the optimistic economic climate and investments in national infrastructure. The pressure on allowances is not the same as elsewhere in the GCC, so we see employers increasing salaries rather than adding to allowances such as housing, transport and education."

He continued, "We have witnessed sizeable pay rises of 7.0% on average in the oil and gas sector which is still Oman's principal industry. The majority of pay rises were awarded to supervisory and management level employees. This is largely a knock-on effect from last year's minimum wage increase which was highest in the oil and gas sector."

D'Cruz added, "In 2011 pay increases were awarded to entry level and semi-skilled employees with a monthly salary of less than OR270. This has put upward pressure on the salaries of more senior employees over the course of the year."

Harish Bhatia from Hay Group who also worked on the report said that as a result of healthy growth in salaries over the past four years, Oman's salary levels today stand in the mid-ranks of the regional economies, "If we look at 'real' pay rises which take into account inflation, the stable inflation rate and economic environment in Oman result in larger rises in real terms compared with other GCC countries."

While Hay Group finds that the banking and oil and gas sectors still dominate, the gap between pay in these sectors and the rest of the market is less pronounced than in other GCC markets.

Mr Bhatia commented, "The Omani national workforce, although concentrated in the prime sectors of oil and gas and banking, is also well represented across other industries. This is unlike the UAE and Qatar where more than 70% of the national private sector workforce is employed in these prime sectors, thus skewing the market in terms of pay."

He continued, "There are still challenges for Oman's nationalisation agenda especially in the retail and FMCG sectors. However, overall nationals are contributing across the spectrum which smoothes the pattern of salaries from sector to sector."

Mr. Bhatia concluded, "Oman's healthy growth and surplus GDP mean the government can make significant investments in infrastructure both in Muscat and further afield. This is a positive step for the country which will directly impact upon the workforce. For the government it is an enviable position to hold, especially if one compares it to the economic growth policies of governments worldwide."