Salary hike will boost growth in Sultanate

The minimum salary increase for Omani nationals has been the main talking point for private organisations in the country this past week. The new minimum which is effective as of 1st July 2013 is the second minimum wage increase in the Sultanate in the last 18 months. The latest announcement is targeted at the private sector and is almost a 60 per cent increase on the previous minimum of OMR 200 to a gross monthly salary of OMR 325.

Both this and the announcement at the end of January that the government will restrict foreign workers to 33 per cent indicate that Oman may be taking a more hands-on approach to private sector nationalisation in 2013 and beyond.

The private sector has long been dominated by expatriate workers and the government's new stance received a mixed reception from business leaders. The new minimum wage is now comparable to some other GCC nations that define a minimum monthly salary for nationals: Saudi Arabia has a minimum wage of SAR 3,000 (OMR 308) while Kuwait pays KD 250 (OMR 342) and Bahrain BD 300 (OMR 306). The new minimum salary will certainly have a large impact on inflation in the months following July as the price of goods and services will increase to bear increased employment costs.

With a growing number of nationals entering the workforce each year, it can be argued that a higher minimum wage will encourage young nationals to join the ever growing private sector. However, others believe the wage increase will deter private sector organisations from recruiting Omanis into junior roles as it will have a direct impact on the bottom line.

On the positive side, Omanis will find working in the private sector more lucrative than before, and more on par with the public sector at junior levels, therefore creating momentum for organisations to hire and train nationals. In the public-private arena there has been a significant amount of churn in the last 12 months. Since the creation of 36,000 public sector jobs, vacancies have risen steeply in the private sector as Omanis, particularly in junior to mid-level roles, made a move to the public sector.

Whilst it is reassuring that the government is acting to fill the vacancies with country nationals, the challenge of attracting the right expertise is unlikely to be lessened by an increase in the minimum wage.

Research shows that the demographics of Omanis leaving the private sector for government jobs are well educated graduates in their twenties and thirties who are alert to the opportunities a public sector job can offer. At the same time, those in the older age band are looking to move in the opposite direction; once they can retire from government service they have the skills to take a senior private sector job. 

Pay is often cited as the culprit in the UAE and Qatar where demographics put nationals in the minority, but in Oman where nationals are in the majority, why are companies still struggling to attract and retain the Omanis they need?

In its efforts to support private sector nationalisation, the Ministry of Manpower has gone so far as to offer open days where private sector employers can meet potential candidates. Such a pro-active approach is welcomed by businesses looking to employ nationals.

Employers commonly find they are being offered a limited talent pool based on geographical location rather than candidates who present a good match to vacant roles or have a desire to progress in a given discipline or sector. In missing out a vital step of matching people to roles, the risk of the employee leaving within six months is significantly high.

By objectively matching candidates' skills, experience, and aspirations to job roles, the private sector will have a much greater chance of engaging with and retaining Omani nationals in discussions beyond pay.

Looking to the future, Oman's Vision 2020 strives to diversify the economy making it vital that the education system and corporate training schemes support the vision by providing curricula that nurtures work-ready nationals.

In order to create a truly diversified, sustainable national economy, the education system and training schemes in collaboration with the private sector, must be inherently linked to the workforce required to deliver it.

Senior officials have made it clear that nationalisation beyond the public sector is Oman's key to sustainable development and part of the Vision 2020 for the Sultanate. However, a reduction in private sector expatriate labour would be a far greater achievement as an indirect effect of long-term nationalisation policies.

In order to make long term sustained change, private sector businesses need the opportunity to liaise with the government to input into policies that will get the right Omanis in the right roles in the right companies.

This is not exclusively at the policy formulation level but also in the practical implementation of nationalisation initiatives. Beyond this, a national, grass roots approach aligning the education curriculum with Oman's Vision 2020 will help the 90,000 Omanis currently in higher education to make a fulfilled contribution to the development and diversification of Oman's economy.

The author is a management consultant and a specialist about Oman market. All the views and opinions expressed in the article are solely those of the author and do not reflect those of Times of Oman.


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