Choosy Omanis Add To Government’s Unemployment Headache

The IMF says reducing unemployment will require diversifying the economy away from oil as well as better education and training, since neither the hydrocarbon sector nor new energy-intensive industries provided many jobs.

One positive sign this month was news that three companies from Oman, Saudi Arabia and the United Arab Emirates had formed a joint venture to build a $400 million steel plant in the southern city of Salalah.

The venture, which is the country’s second steel firm, said it would create job opportunities for over 1,000 Omanis. Demand for the steel is expected to come from the oil industry and a OMR5 billion project to build a national railway.

But many more such companies will be needed if the government is to meet its projection of seeing between 200,000 and 275,000 job opportunities created in 2011-2015. Authorities say they will focus on fostering labour-intensive sectors and smaller firms, while improving education and training.

ESCAPE ROUTE

Meanwhile, the launch of the new unemployment benefit has given some Omanis an escape from the private sector. Many find jobs there unattractive because of harder work, longer hours, and often smaller pay and benefits compared to the state sector.

“I used to work for 12 hours a day, earning just OMR290 a month as a waiter,” said a 24-year old school graduate who did not want to be identified. “Why should I do it when I am getting the unemployment benefit of OMR150 rials a month?”

Mohammed al-Harthy, human resources officer at property developer Al Mouj Al Khaleej Co, said many young people took advantage of the unemployment benefit and never really looked for jobs: “We had 54 of them rejecting positions in the last six months, citing long working hours and lower salaries.”

Omanis formed a mere 14 per cent of the private sector labour force of 1.3 million in 2011, a central bank report shows, only slightly more than 10 per cent in neighbouring Saudi Arabia.

Worryingly for the government, this ratio may have stopped rising. After the number of Omanis working in the private sector jumped 11 per cent a year on average in 2008-2010, it fell two per cent to 174,441 last year. At the same time, employment of expatriates soared 17 per cent to 1.1 million in 2011.

Minister of Manpower Sheikh Abdullah al-Bakri, in a recent newspaper interview, urged job seekers to take any available employment because “there is no shame” in working long hours for less pay.

The IMF said Oman might need to consider raising the cost for foreigners of obtaining work visas, or introducing temporary employment subsidies for Omanis in the private sector, to create the right incentives for more local people to enter employment.

The first measure might slow economic growth, however, if it reduced companies’ ability to hire capable and competitively priced foreign workers. The second step could prove expensive for the government, committing it to another big spending programme that would be difficult to wind down without risking a renewed exodus of Omanis from private employment.