Muscat: Oman Society of Contractors (OSC), the umbrella body of construction firms in the Sultanate, has urged the government to reimburse additional cost arising from a recent mandatory rise in minimum wage of Omani workers with effect from July.
The demand is for meeting the cost escalation of ongoing projects, which were initially estimated on the basis of the existing minimum wage of Omani workers at OMR220, which has now been raised by OMR105 to OMR325.
"The contractors are asking to protect them from any financial damage. Any additional cost, which is arising from this decision, has to be reimbursed by the government or by the clients who have awarded the contract," Dr P. Mohammed Ali, Chairman of Oman Society of Contractors (OSC), told journalists, while addressing a media briefing.
"Otherwise, many contracting firms will run into financial difficulties and it may cause some uncertainty within the industry. Many contractors may not be able to sustain. We have to protect the construction industry, which is the most important sector for the development of the country, the economic activities as well as employment. We would like to see the small and medium-sized contracting firms to remain in a healthy financial position," he added. As many as 18,000 active contracting firms are registered with the Tender Board.
Amer Suliemani, General Secretary of OSC, said that contracting firms employ a total of 57,000 Omani workers, which is expected to touch 60,000-65,000 by July this year. "A bulk of them, say around 70-80 per cent, are in the lower wage structure. Most of them are either drivers or semi-skilled people,"noted Suliemani.
Dr Mohammed Ali, who is also the vice-chairman and managing director of Galfar Engineering and Contracting, said the association is going to take up the matter with the ministries finance, commerce and industry and Tender Board.
While welcoming the initiative of the government in raising minimum salary of Omani workers, he said that majority of OSC members, in its meeting attended by 100 firms on Monday, have agreed to implement the revision from July onwards. Dr. Mohammed Ali said it is a great step, which will enhance and help the industry to increase Omanisation.
However, he said that a majority of OSC members have expressed concern on the Ministry of Manpower's decision not to process labour clearances, until they sign up for OMR325 minimum salary now onwards.
"We have requested the ministry that the members have agreed to abide by the rules from July onwards. The contractors can prepare themselves to meet this incremental cost," noted Dr Mohamemd Ali.
There is no clarity on whether private sector will have to revise the gratuity of those who earn more than the minimum wage. Citing similar salary revision few years ago, he said all oil companies have reimbursed 80 per cent of the additional cost arising from the wage revision.
Although government also said that they would reimburse the money, the contracting firms have not yet received the money, which is affecting their cash flow. Even when the diesel price was raised, the government authorities timely compensated the private sector. The clause 70 of government contracts stipulated on reimbursing additional cost arising from ministerial decree. However, in the case of private sector, it varies from contract to contract, depending on the conditions. The contractors are eager to Omanise as much as possible.
"We want the ministry or government to focus more on training Omanis to work in the industry. " Responding to a question on whether the contracting firms will have to revise the salary of expatriate workers, he said; "As the salary of Omani workers increase, it will have an impact on inflation rate of the country. Such inflation rate has to be addressed."
The press meet was also addressed by Salim Talib Al Sheedi, CEO of OSC and Yusuf Nalwala, a member of OSC and MD of Al Ansari Group of Companies.