Friday 19 / April / 2024
Read also: Fuel hoarding can prove fatal, warn officials in Oman
Muscat: Companies are skipping paying bonuses and slashing the percentage of increments, as Oman’s government tightens spending due to the global oil price dip, a top banking official confirmed.
“Companies are finding ways to reduce costs due to the decline in oil prices. We are already hearing that companies have skipped paying bonuses, and slashed percentage of increments paid,” the banking official said.
A senior official from a construction company said that with the market dipping all over Oman, the chances of bonus looked bleak.
“There is a very little chance of salary hikes or bonuses,” said Mohammad Kabir Ahmed, managing director of United Dreams LLC.
However, he also said people are optimistic about the market improving in the next few months, which is when companies might be able to pay bonuses and other increments.
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Cost reduction
Meanwhile, an Oman Chamber of Commerce and Industry (OCCI) official said even though he had not come across any such cases, he said companies would be forced to adopt multiple steps to reduce costs, such as scaling back increments and skipping bonuses in 2016, as it would be a tough time economically for them.
“While the government has adopted austerity measures, it will surely have an impact on the market,” he added.
The banking official added that there may also be a marginal increase in the cost of living and obviously, the overall effect of the increase in the cost of living would impact people’s purchasing power, as they will find lesser disposable income to spend on leisure, travel and entertainment.
“The household will be squeezed between lesser income and higher expenditure. One can expect a perceptible decline in purchasing power of people in the face of this critical situation. Definitely, 2016 will be a testing time for everyone. We are already hearing visible signs of this, when we interact with corporate executives,” the banking official added.
Meanwhile, Anchan CK, another economic expert, said the hike in fuel prices will add to existing cost pressures exerted on the consumer price inflation rate‚ which could result in interest rate hikes.
On January 2, Oman had unveiled details its state budget, with major austerity measures and steps announced to raise non-oil income.
The total revenue is estimated to be OMR8.6 billion, reflecting a drop of 4 per cent, compared with the actual expected revenues of 2015.
