Thursday, February 27, 2014

Remittances (10% of Oman's GDP flows outward) / Private vs Public Sector Jobs in Oman

Oman's remittance outflow is about 10% of the GDP according the World Bank. 

As reported by the Migration and Remittances Factbook 2011 put out by the World Bank, Oman has a remittance outward flow of 5.3 billion USD which is 10% of Oman's GDP.  According to rankings, Oman is 3rd in the world in outward flow remittances as a percentage of GDP and 12th in dollar amount. 

One may ask the question, has the outward flow become a drain on Oman or do the benefits of migrant labour outweigh the financial depletion? The inward flow is only 39 million USD. A few months ago, there was discussion of taxing remittances at 2%, but the thought has been put on hold for further study. One area where remittance issues and jobs intersect is in the private sector. According to figures in Gulf Business:

'Out of 1,533, 679 private sector employees, Omanis constituted around 224,698 of the workforce while the number of expat employees rose to 1,308,981 as of 2013, according to the Ministry of Manpower.'

If you calculate outward remittances with total expat workforce of about 1.2 million, the remittance per expat is about $4400 per year.

Some of the migrant labour hold jobs in construction or domestic help earning salaries in the range of 100 to 250 USD per month plus accommodation which is much less than the average expat remittance per year. This unskilled labour force most likely adds to the economy as construction projects can be built cheaply while most Omanis would not take such jobs. They also for the most part live separated from society in labour camps without much leisure time in what Westerners may classify as 'slave like' conditions even though the horrible reality is that the conditions for them back home may even be worse.

In addition, the jobs for highly qualified experts involving specialized skills in engineering, medicine and finance which expats often fill due to a lack of number of qualified Omanis most likely brings a value-added benefit to the economy and society especially in sectors such as oil and healthcare. 

However, many of the jobs for the skilled workforce in the private sector are held by expats especially those from the Indian subcontinent. According to the 2010 census, 657,443 or 80.6% of expats hail from India, Bangladesh or Pakistan. These are the jobs which are becoming in contention. Many Omanis are now qualified for these jobs with the improvement of the development of education in Oman. However, many Omanis leave the private sector or prefer only to work in the public sector. An exception may be public employees who retire and then take a senior level post in the private sector.

This is a symptom of some real dysfunction going on the private sector in regard to how to attract the Omanis with the skills and how to develop and retain them which seems to be failing in the private sector with the exception of larger international companies. It is unclear if the benefits outweigh the negatives in bringing migrant labour for the jobs Omanis can effectively handle when many Omanis are unemployed or are recent graduates and need to join the work force. 

Many of the expats have made significant contributions to the development of Oman over the last forty years as Oman ramped up its education and infrastructure.  One issue that is not discussed much openly is that some expats in the private sector are resisting the influx of Omani workers from taking the skilled jobs in the private sector and from doing well in indirect and overt ways. Sometimes, people remark that the Omanis are 'lazy',  'unskilled' or other such negativisms which may be true in some cases, but many Omanis are skilled and come out of school excited wanting to progress and do try hard.

"The World Bank report on Sustainable Growth and Economic Diversification for Oman stated, “private sector expatriate employers have revealed a tendency, for linguistic or cultural reasons, to favour their own nationals over Omanis when hiring new workers.” "

This seems a natural progression as the job has been the expat's income source (many with much higher salaries than they would receive back in the 'subcontinent'), but, now, the educated Omani is a competitor and threat to the expat's financial security and visa in Oman. Many of these expats have spent many years working in Oman and have families. This plays out in many ways in the private sector such as not training the Omani (as there is little incentive to train someone to take over one's job), backstabbing the Omani, only hiring the Omani to meet nationalization quotas but then bringing over other expats in the same position to give them a chance at earning the salary, making life difficult at the job for the Omani, ganging up on the Omani with the expat's copatriots,  etc. 

Although it's a sensitive issue, it does happen in the work force. If you ask around or just listen, you can find many Omanis who say they have experienced this and even go as far to describe the phenomena with phrases such as the 'Mumbai Mafia', etc. If one were to peruse forums such as Sablat Oman in the 'politics and government' section, one would find there is no dearth of rants on the subject.

Despite the pleasant appearances and affected smiles, underneath it all it seems rather doggie dog for survival for some of the expats which rarely people talk about publicly. There are reported cases where lecturers have paid bribes to recruiters in India to place them in a lucrative teaching position in Oman which is totally counter productive to Oman as it totally forgoes any chance of getting the highly qualified teachers based on merit. There are, of course, many expats not engaging in such behaviors.(

In addition, it is not uncommon for the expat's salary to be higher than the Omani's salary in the private sector for similar work for mid-level or entry jobs (not necessarily in high level positions). Even if, at first, the Omani is less qualified but then catches up, his or her salary is still less than the expat's. This may be considered unfair and does not inspire work cooperation.

Even in primates, it has been shown that equity is important; two monkeys will do the same trick for the same treat. But, when one monkey got a better treat such as a grape in the experiment,  the other monkey refused to do the same trick again, threw his lesser treat back and banged on his cage. ( /  Time 12:45)

Fairness seems deeply embedded  in the human psyche, so if it were your country and you were getting less than the outsiders for the same work while making sincere efforts on the job front; it would be understandable one might 'bail' on the private sector and would get a job in the public sector where there is job security, schedule of promotions, more 'perks', status and a majority Omani workforce where Arabic is the main language spoken. 

Public sector jobs are becoming more costly to the Omani government in terms of the budget. It seems through programs such as Omanisation and limits on expat visa numbers, the Omani government is trying to increase the number of Omanis in the private sector; however, indicators show the number of expat workers have been increasing.

Sometimes, officials ask Omanis through press releases to 'do their duty as citizens' and work in the private sector, but this coaxing has not worked all that well. In general, there are more 'perks' in working in the public sector over the private sector. 10% of GDP is quite an outflow; even a partial reinvestment into the Omani economy would be beneficial. Below is a list of various factors that may contribute to why many Omanis would choose public sector. 

Public vs Private (from the best of my understanding)

In general, salaries are higher for an entry & mid-level worker (not necessarily senior positions) in the public sector. Bachelor degree holders can expect around 900 OMR; whereas is the private sector 400-650 OMR. Private sector employers may bring cheaper expat employees compared to the cost to hire and train an Omani. 

There are more observed holidays in the public sector and additional perks such as yearly 'gifts' such as turbans and  'bonuses'. The public sector has more job security as far as reliable payment and long-term viability of the government job. Private companies may struggle to pay their employees or go out of business.

Pensions may be collected after 15 years of service in the public sector but after 26 years in the private. Pensions are calculated up to 80% of gross salary (includes allowances) in the public sector, but in the private sector based upon the base salary which can be significantly lower. Some equalization is supposed to take place in the future.

Generally, based upon years of service according to a schedule in the public sector. Normally, every three to four years, one will move up a grade. In the private sector, it's subject to company rules and whims. 

Work Environment:

The public sector consists of 70-75% Omani workers; where as the private sector is 25-35% Omani depending on what statistics you look at. Expats dominate Omanis in the private sector in numbers and some Omani prefer the comfort of working with fellow citizens and the job security in the public sector. Working in the public sector may be seen as more acceptable to certain families. The private sector may pose a language barrier to some Omanis as many expats only speak English and their native languages. 

Some overall observations about the Omani workforce in both sectors are: 

1) There is system in place in which does not support employee motivation based upon merits. This leads to inefficiency and lack of innovation and initiative in the whole job market. Many jobs are promoted based upon 'wasta', nepotism and on promotion cycle not on actual merit. Even in the private sector, manager expats may nominate and support others from their same region back home completely ignoring the merit's of others at the company.  Therefore, there is no incentive to do anything more than what you are told unless the individual has an inner drive or quest for achievement greater than the repression.

 2) It is very difficult to fire an Omani at a job. Basically, unless they show up to work with whiskey bottle in hand staggering around shouting vulgarities and the evidence cannot be disputed, it is extremely hard to 'can' someone. Omanis know this, and it is ultimately a work de-motivator. This also goes to the merits, if the standard of keeping a job is so low then why bother to push the envelop or be competitive.  

3) The job training and internship opportunities are quite inadequate unless at a large international company and even then there are not enough opportunities available to the younger generation of Omanis coming onto the job scene. And, the practical job skills are not quite there yet. 

There is an idea that a certificate makes you an expert or qualified and practical experience and actual skill is well underrated. Promotion is based on certificates and seniority if not wasta not necessarily on job performance - another downer for job merits. The education is still not up to par - I think mostly due to the lack of qualified teaching professionals at the university level and lack of practical skills training.

Also, the Omani grade school curriculum needs to be re-inspired to fit the course of study at the universities and job skills.  For example, only about one subject is taught in English in Omani school, but then Omani students are expected to obtain certain scores on the British IELTs or American TOEFL English language tests or an in-house  'foundation English test' to gain entrance to the universities here. In grade school, math is taught using Arabic numbers and wording with some English translation, but then at university the math and science is taught in English causing a lot of  unnecessary failures. Furthermore, generally, the English system is used in private sector jobs. Kids that attend international schools fare better.  

Omani universities need more diversity in teaching professionals who have quality work experience in their fields. It may be more expensive to bring more qualified people, but in the long run it will be well worth it. The teacher recruiting for the university system in Oman is seriously corrupted and needs a total overhaul. In some university English departments, it is hard to find a native English speaker. Other GCC countries have faced similar challenges. Saudi has dealt with it by sending 100,000 students abroad to study, and the UAE has brought some top educators and partnered with top international universities in the UAE. (

Oman does not tax salaries in Oman, so the expats remit the money without putting money back into the public system all while using the public subsidized services such as roads, petrol, electricity, etc  for which Oman pays. About 1/3 of the population are expats, so it adds up. Many expats especially from Asian and the 'subcontinent', in general, save as much as possible and remit almost all their money to their country each month (which seriously mitigates any money multiplier effect if they spent or were taxed on the money in Oman). The interest rates on savings deposits in India, for example, are much higher than in Oman.

Oman discussed putting a 2% tax on remittances which seemed unpopular, but putting some restrictions on remittances may be in order such as requiring a percentage of the funds from workers at a certain salary level to be reinvested or held in Oman for those who remain here long term - say more than five years.  In contrast, many European expats tend to spend a larger proportion of their incomes in Oman and hold their more of their money in Omani banks while in the country. Also, many European expats tend to stay in Oman for shorter stints; whereas, other expat migrant groups tend to be 'lifers' staying in excess of 20 years or more and only returning to their countries to retire. Unlike the case in other countries with a migrant work force, expats in Oman are not integrated (probably purposely so) and keep a separate or even 'sub' existence from Omanis even if living in Oman almost their whole life which I find ultimately not beneficial for the groups. 

Overall, Oman has made enormous strides if one looks at their progress over the last 40 or so years; however, the workforce transition seems to have its challenges. Oman will need to incentivize the private sector in such a way that personal job interests of employees and expats, company aims and Oman's goals line-up better. In addition, new fair methods to promote innovation and to reward Omanis for their merits and  accomplishments at work and at school are needed. 10% of Oman's GDP is flowing outward through remittances while many Omani remain underemployed. 

Some recent comments on the issue from Times of Oman:

  • Comment (names redacted) 
    The omani people are the son of this soil and it is the basic right for each omani to seek employment in his/her own country. the expatriate who do small and medium business wants to eat away all profit and send it to their own country. they employ contract workers from manpower supply and complete their manpower requirement the ministry has to crack such people who operate internally in industrial areas .
  • Comment
    The postive side is new jobs for young generation but loopholes within laws will open backdoors for unethical activities. Proxy trading, visa selling & 5% commission is way of Omanis doing duet jobs. You can't blame them but blame the corrupted system in placed.
    • Comment
      You should first train & educate them , so they don't become burden for the organisations..supporting nationals is duty of sultanate, but not in a way that you forget the humanity. Expatriates are not alien, they shouldn't be deprived of their basic rights of earning, if they decided to work in Oman.
      • Comment
        Why are you yelling so much! You could have said same thing to your government back home...Ask them to increase job opportunity....Let me tell you onething...They will get trained once they get a job...Its their country...their home land....Will you feed outsider and keep your family hungry??..

      • Comment
        its in ur thinkung that they are getting trained, infact companies are paying to unskilled omanis by dealing with them, so they can just show to ministries that they have omanis. expats are more skilfull than them, and point here is not to remind me of my country, point is how to deal with workers irrespective of national discremination, over which u are yelling my brother.


    1. During the 70s, Oman witnessed an awakening in terms of its education system. Sultan Quaboos who took over believed in educating as many people as possible. It was P Mohamed Ali who took this opportunity to contribute to the education sector in Oman. Over the years he built many schools. It is his will to help that made him the Chief patron of CSM Central School. P Mohamed Ali believed in a higher quality of education and so provided efficient infrastructure with superior provisions.

    2. I have had the opportunity of training and employing more than 25 Omanis in our company and many of them became professionals in various fields. They respected me well and I looked after them well. What is mentioned in the article are hard facts.