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Oman’s labour reforms will have positive impact on economy – IMF

25 Sep 2021 By OUR CORRESPONDENT

Muscat – Oman’s planned labour market reforms, in particular the recent removal of regulations that require employer consent – No Objection Certificate (NoC) – before expatriates switch employers, will have a ‘positive impact’ on the sultanate’s economy, International Monetary Fund (IMF) has stated.

According to IMF, labour market reforms are important to raise competitiveness and foster the creation of private sector jobs.

‘Adopting more flexible expatriate labour policies, the recent removal of regulations that require employer consent before expatriates switch employers is a welcome step,’ IMF said in its Article IV Consultation Staff Report.

The report also stated that more comparable wages and compensation between the private and public sectors would reduce risks of skills mismatch or labour shortages in rapidly expanding sectors.

‘Plans to further reduce the wage gap between Omanis and expatriates by increasing fees for hiring expatriates should be implemented with caution to avoid undermining competitiveness. Further improving social protection, notably pension scheme for expatriates, would help attract more talent from abroad,’ the report stated.

Omani authorities and IMF staff agreed on the key aspects of the labour market reforms including promoting employment in the private sector.

‘Incentivise Omanis to take private sector jobs; clear expectations about the limited prospects for future public-sector employment is helpful. The growth of public sector wages and benefits should not outpace that of the private sector,’ the report said.

With regard to women employment, the report stated that measures that further improve working environment for women such as extending maternity benefits, improving childcare, and facilitating job searching would help better utilise the skills of women and promote inclusive growth.
‘Encouraging female entrepreneurs under SME initiatives could generate positive effects to increase female labour participation.’

IMF also called for increasing the efficiency of public spending on education and vocational training.

‘Efforts to improve the quality of education and vocational training to afford jobseekers with necessary skills to enter the labour market and raise their productivity are important. The government’s ongoing efforts to promote training and employment programmes in partnership with the private sector are welcome.’

To facilitate reallocation of workers from hard-hit sectors and help mitigate the impact of the COVID-19 pandemic and fiscal consolidation on the vulnerable, IMF said authorities have taken several measures, including simplifying the multiple minimum wages linked to qualification levels to a single minimum wage of RO325 per month, a time-bound wage subsidy of RO200 per month for first time Omani jobseekers to facilitate private sector employment of Omanis (initially expected to cover about 15,000 persons) and hiring of 15,000 jobseekers in the public sector.

‘The update to Oman labour law is ongoing and is expected to improve the flexibility of the labour market.’

With Oman Vision 2040, setting out the goal for a knowledge-based society and competitive national talents via inclusive education, lifelong learning, and scientific research, the reforms, if fully implemented, are expected to improve human resources and help improve labour productivity over the medium term.

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