Complex Made Simple

Omanization in full swing as expat population quickly decelerates

Oman is going ahead with programs aimed at replacing foreign workers with locals and making it tougher to hire expatriates

Jobs in administration, finance, student affairs, and student and career guidance would be given to Omanis The expat population in Oman declined by about 12% last year, S&P said Hiring non-nationals under the new structure will cost nearly $5,198 for top positions

Oman pushed forward its program of replacing foreign workers with locals with a decision to allocate many jobs at higher education establishments to citizens, the labor ministry said.

Oman’s government has in recent weeks intensified a long-standing policy, known as Omanization, to create employment opportunities for its citizens to help shore-up an economy weakened by low oil prices and the coronavirus crisis.

In the latest move to create jobs for Omanis, the ministry of labor said jobs in administration, finance, student affairs, and student and career guidance would be given to Omanis in the country’s 28 private higher education institutions when existing work permits expire.

In a shake-up of the labor system for 2021, the labor ministry last month said it would be raising fees for bringing in non-Omani workers, targeting senior and specialized positions.

It also announced plans for sector-specific training programs for Omanis, and to make the benefits of working in the private sector closer to those obtained by workers in government jobs.

Foreign workers in Oman fell by 15.7% during 2020, 4.2% in 2019, and 3.6% in 2018, national statistics agency data shows.

The expat population in Oman declined by about 12% last year, S&P said.

Oman and Gulf states rely heavily on expatriate workers, in sectors ranging from financial services to healthcare and construction.

Oman’s ruler Sultan Haitham has accelerated administrative and sensitive economic reforms, including introducing value-added tax since taking power a year ago after his predecessor, Sultan Qaboos, passed away. 

Read: Big changes are coming to Oman in 2021, aimed at fixing economy, employment

Read: Oman’s decision to impose income tax on the wealthy likely to be emulated by the GCC

Oman Air Omanization

Oman Air recently gave a presentation on the company’s vision, saying the Omanization percentage in the company until the end of the month of December of 2016 amounted to 61%, which included Omanis in senior leadership positions such as executive management (executive-vice president / senior vice-president/vice-president) which stood at 66%. 

The total percentage of Omanis in middle management levels is at 54%, while at the administration level (officer ranks), Omanis accounted for 68%.

The presentation said the company increased the proportion of Omanis to 70% at the end of 2020.

Higher fees for foreign hires

To increase Omanization, Oman’s Ministry of Labor released a new fee structure for employers with increased fees for expatriate hires, according to the daily Times of Oman.

Hiring non-nationals under the new structure will cost nearly $5,198 for top positions, $2,600 for mid-levels, and $1,561 for technical and skilled workers. 

Companies will also have to pay additional fees for job switching and updating a hiree’s employment status.

However, some exceptions have been made to owners of small and medium enterprises (SMEs). 

These are for “employers tasked with managing these companies, which are registered under the Public Authority for SME Development (Riyada) and insured by the Public Authority for Social Insurance (PASI),” said the Ministry of Labour. SMEs can benefit from these regulations for up to two years from the time of their establishment.

Oman’s omanization part of diversification away from oil 

Oman is set to run out of its current oil and gas reserves in less than two decades

Indeed, hydrocarbons, which are the sultanate’s top exports, generated 68% to 85% of yearly government revenues over the last 30 years. 

The sultanate’s overreliance on oil has become even more problematic given the 2020 fall in global oil prices, which strained both the country’s gross domestic product (GDP) expansion and its fiscal and current account balances.

Sultan Haitham pledged to address Oman’s economic challenges.  

In the immediate future, the new sultan could prioritize diversifying Oman’s economy away from natural resources by focusing on sectors with potential for high revenues, such as tourism

He could prioritize not only job creation and Omanization of labor, but also closing the training gap between nationals and expatriates, like training nationals for specific sectors in which they are employed to a lesser extent than expatriate workers, such as education, engineering, and medicine.